Just Nature: How finance can support a just transition at the interface of action on climate and biodiversity

To date, efforts to deliver a just transition to a net zero economy have focused on the energy system. However, the imperative of decent work and social inclusion applies equally to sectors that affect and are affected by nature.

This report defines a ‘just nature transition’ as a shift to a net zero and climate-resilient economy that delivers decent work, social inclusion and the eradication of poverty while simultaneously delivering biodiversity goals.

The authors explore how the financial sector can support positive outcomes for the just transition, focusing on four priority areas: delivering sustainable agriculture and food systems; ending deforestation; scaling up nature-based solutions; and restoring ocean ecosystems (see figure below). Examples of early-stage financial practice in these areas are provided throughout, such as from Climate Action 100+, the Investor Initiative for Sustainable Forests, Rabobank and the UNEP Sustainable Blue Economy Finance Initiative.

The just nature transition and the role of finance:

Main messages

  • The just transition to a net zero economy is increasingly understood as being critical to delivering ambitious climate action, but the focus must be expanded to consider the transformations needed in sectors that are integral to climate and biodiversity.
  • Progress in the just nature transition requires an unprecedented increase in investment this decade. Support from financial institutions is therefore crucial.
  • The just nature transition remains a new, complex area for policy and practice. While there are opportunities for delivering environmental progress through decent work and social inclusion, there are also a number of challenges to overcome.

Recommendations for the financial sector

Three summary principles to guide action in support of the just nature transition are:

  1. Integrate human rights and labour standards across climate and biodiversity action.
  2. Anticipate, analyse and address the social risks and opportunities of the transition to sustainability across sectors for workers, suppliers, communities and consumers.
  3. Ensure meaningful participation and partnership through social dialogue with workers as well as wider engagement with other affected stakeholders. This will often involve empowering groups excluded from decision-making, whether by income, gender or race.

More specific recommendations for financial institutions include:

  • Include just transition principles in their own plans for net zero, nature and biodiversity. The just transition also needs to be incorporated into collective finance initiatives such as those aiming to promote sustainable agriculture, end deforestation, expand nature-based solutions and restore the oceans.
  • Set just transition expectations of the businesses they lend to and invest in, based on international standards, and ensure these are included in the net zero and biodiversity plans of nature-exposed companies.
  • Channel finance to companies committed to and making progress to support a just nature transition for workers, suppliers, communities and consumers. This includes the development of innovative financial solutions to attract capital towards activities that benefit nature and people.
  • Engage with policymakers to reform agricultural, forestry and nature policies so that they support a just transition and provide the incentives, rules and catalytic public finance that is needed to scale up private investment.
  • Work to ensure that social and just transition factors are effectively included in key frameworks for reporting and transparency, such as the Task Force for Nature-related Financial Disclosures (TNFD). Financial institutions themselves should publicly disclose strategies, policies and performance on social issues in the transition to sustainability beyond the energy sector.