Just Transition Strategy: How to Plan One and Fund It

A just transition strategy is a plan for cutting emissions that also protects the workers and communities who depend on high-carbon industries. It sets out who is affected, what support they get, who decides, and how the money is raised and spent. The LSE Grantham Institute describes the aim as fairer outcomes on the way to net zero: maximise the benefits of climate action and minimise its negative effects on workers and communities. This guide covers what a strategy contains, how to build one, and where just transition funding comes from.

Key Takeaways

• A just transition strategy has four working parts: a map of who is affected, a consultation process with real decision-making weight, a package of support (skills, social protection, new jobs), and a funding plan.

• Vague commitments fail. The ILO says specific, monitorable commitments are needed rather than general references.

• Funding is a mix: grants, concessional loans, guarantees, green bonds and blended finance. Public money usually unlocks private money.

• Real programmes already exist across Europe and Africa, from the EU Just Transition Fund to Eskom’s Komati project in South Africa.

• Access to funding usually depends on a defined territory or a formal plan, so the strategy document often comes before the money.

What a just transition strategy actually is

The phrase covers anything from a national policy to a single company’s plan to close a site. What they share is a refusal to treat decarbonisation as a purely technical problem. Climate change and the measures to tackle it hit people unevenly, and the LSE explainer notes that involving affected parties can help win political acceptance of climate action and avoid delays.

The concept also has a rights dimension. UNDP frames it as inherently focused on human rights, taking in intergenerational injustice, loss and damage from climate impacts, and unequal access to clean energy and finance.

A strategy can sit at three levels:

• National: often linked to a country’s climate pledge. The ILO’s practice brief on nationally determined contributions calls the design phase critical, and says building just transition into those pledges helps build broad support for climate ambition.

• Regional or territorial: aimed at the places most exposed, such as a coalfield, a peat region or a port economy.

• Organisational: a company, utility or municipality planning closures, redeployment and retraining.

If you run a business, you are probably writing the third kind, but it works best when it fits the first two.

The principles a strategy should follow

You do not need to invent principles. The International Labour Organization’s guidelines for a just transition list the core ones:

• social dialogue and ongoing consultation with stakeholders;

• fundamental rights at work;

• gender equality;

• coherent policies across government;

• decent jobs, social protection and skills development;

• policies tailored to each country’s conditions.

The G20’s ten voluntary principles for just and inclusive energy transitions, published through the IEA, add emphasis on ending energy poverty, quality jobs with reskilling, and local value creation so that benefits stay in the communities that carry the change.

The multilateral development banks take a similar line. Their joint high-level principles say support should spread costs and benefits fairly, address job losses for workers and communities, and widen access to transition opportunities.

Turning principles into a document means answering concrete questions. Which jobs end, and when? Which roles can people move into, and what do they need to qualify? What happens to the tax base of a town when a plant closes? Strategies that skip these questions read well and deliver little.

How to build a just transition strategy, step by step

1. Map who is affected

Start with data, not assumptions. List the sites, jobs, suppliers and households that depend on the activity being wound down or changed. Include contractors and local suppliers, who are often missed. Add the groups who face particular barriers: older workers, women in male-dominated sectors, young people entering a shrinking labour market.

2. Set up governance with a mandate

The World Bank’s guidance on just transition planning suggests governments establish inclusive structures, such as interdepartmental committees or working groups, with clear mandates, resources, transparent processes and stakeholder representation. The same logic applies to a company or a city: name an owner, give them a budget, and say how decisions get recorded.

3. Consult in a way that changes the plan

The ILO describes formalised tripartite social dialogue, bringing together government, employers and workers’ organisations, as critical for broad support and for preventing backlash during implementation. Consultation that happens after decisions are made does not count. Publish what you heard and what you changed in response.

Our own article on stakeholders and business sustainability explains how to identify and prioritise the groups you need to engage.

4. Design the support package

Workers and communities typically benefit through targeted reskilling, social protection, local job creation in green sectors and wider economic diversification, according to the ILO brief. Match each support measure to a named group and a timeline. “Retraining” with no provider, budget or start date is a wish.

5. Sequence and monitor

The World Bank guidance also points to place-based economic strategies, monitoring of progress and sequencing of support measures. In practice that means support starts before closures, not after. Set indicators you can report on: jobs transitioned, people trained, local procurement spend, household energy costs.

6. Cost it and fund it

A strategy without a funding plan is a policy statement. The next sections deal with money.

Just transition funding: what it pays for and where it comes from

The World Bank lists the sources: public and private finance, grants, subsidies, concessional financing, tax incentives, risk guarantees, green bonds, venture capital, blended finance and sustainability-linked lending. It adds that the money can support workforce development and community initiatives, not only infrastructure.

A useful way to think about it is by what each source is good at:

Blended finance deserves a closer look if you are building a business case, because it is the usual route for making transition projects bankable. Our explainer what is blended finance walks through how public and private money are combined, and the story of a $760 million blended finance fund for emerging markets shows it at work.

Examples from Europe and Africa

EU Modernisation Fund. Financed by auctions of emission allowances under the EU Emissions Trading System, it provided nearly €898.43 million in its first year, 2021, to eight beneficiary countries. Projects covered renewable energy, network modernisation and energy efficiency.

EU Just Transition Fund. The Commission lists it alongside the Innovation Fund, the Connecting Europe Facility and the Recovery and Resilience Facility as EU funding that can support industrial carbon management projects. Ireland shows how it works in a single country: the government’s page on its Territorial Just Transition Plan describes €84.5 million from the fund for 2021 to 2027, supporting investment of up to €169 million with national co-financing, aimed at the Midlands after the end of peat extraction for energy.

Scotland. The Scottish Government’s Just Transition Fund for the North East and Moray is a ten-year commitment launched in 2022, with separate streams for commercial and public sector projects and for community and social enterprise capital projects. Annual budgets and application windows change, so check the official page before planning a bid.

South Africa. The World Bank’s Eskom Just Energy Transition Project, a $497 million operation approved in November 2022, supports decommissioning the 56-year-old Komati coal-fired plant, repurposing the site with renewable energy and batteries, and creating opportunities for workers and communities.

Bosnia and Herzegovina. In May 2025 the World Bank approved a €79.90 million loan and a €2.89 million grant to support the country’s National Energy and Climate Plan, repurpose post-mining land, help close underground works in Zenica, and provide social protection and skills development.

The pattern across all of these: a defined place, a closure or change with a timeline, a mix of loans and grants, and a package that covers people as well as assets.

Who can access just transition funding, and what gets in the way

The money rarely goes to whoever asks first. It follows eligibility rules built around place and plan.

Territory first. Under the EU scheme, funding is directed to designated territories named in a national plan. Ireland’s designation covers whole counties and selected municipal districts tied to the peat industry, as set out in its government page. The same page notes that larger projects in transport, renewables or retrofitting, especially those sponsored by big private entities or public bodies, may fit better under the other pillars of the EU’s Just Transition Mechanism.

Size and type of applicant. Scotland’s fund separates larger commercial and public sector bids from smaller community and social enterprise projects, with different bid sizes for each, according to the applicant guidance. A small community group and a large developer are not competing for the same pot.

Plan quality. Development banks and national governments want to see a coherent plan. The MDB principles call for coordination across social development, health and economic planning and for integrating just transition into national climate pledges and long-term strategies. A project that fits a documented strategy is easier to fund than a stand-alone idea.

Timing. Funds run in programme periods and open and close windows. Treat the official fund page as the only reliable source for current deadlines.

Practical challenges you should plan for:

• Capacity. Small authorities and community groups often lack grant-writing and reporting staff. Budget for that support, or partner with a larger body.

• Co-financing. Many programmes need national or private match funding, as the Irish example shows.

• Evidence. Funders expect baseline data and indicators. The ILO’s point about monitorable, specific commitments applies to applicants too.

• Timing mismatch. Closures can move faster than funding cycles. Build in bridging measures.

What this means for businesses

Companies are not bystanders in a just transition. If your operations depend on fossil fuels, heavy industry or a supply chain tied to them, your own strategy should cover workforce planning, supplier and community engagement, and a credible link to your climate targets. Investors and regulators increasingly ask for that link, and our coverage of climate transition plans aligned with 1.5°C shows how quickly expectations are rising.

A workable organisational checklist:

1. Identify roles and sites affected by your decarbonisation plan, with dates.

2. Talk to workers and unions before finalising the plan.

3. Fund retraining and redeployment from the start of the programme.

4. Engage the local community and suppliers over closure timelines.

5. Report progress on people metrics alongside emissions metrics.

6. Check which public funds and financing instruments match your projects.

For the climate side of the picture, see our SDG 13 page on climate action and SDG 7 on clean energy. For the social and governance side, SDG 16 covers peaceful, just and inclusive societies.

How Exereco can help

We bring sustainability news and analysis for Europe and Africa together with ESG reporting software, advisory and compliance support, training courses and networking events. If your organisation is turning a decarbonisation plan into a transition plan that covers people and communities, our team can help you structure the work and the reporting around it.

Start at Exereco to see how our platform fits your needs, or build skills with our course on circular business models, which looks at how to do more with less.

FAQ

What is the difference between a just transition strategy and a net zero plan?

A net zero plan sets out how an organisation or country will cut emissions. A just transition strategy covers who bears the costs and who gains, and what support workers and communities receive along the way. The two should be developed together, because the ILO notes that the design phase of climate policy is where just transition outcomes are largely decided.

Who should be involved in drawing up a just transition strategy?

Government, employers and workers’ organisations should be at the table through formal social dialogue, as the ILO recommends. Local communities, suppliers and groups facing particular barriers, such as women and young people, should also have a say through ongoing consultation.

Where does just transition funding come from?

Sources include public and private finance, grants, subsidies, concessional loans, guarantees, green bonds and blended finance, according to the World Bank. Examples include the EU Just Transition Fund and Modernisation Fund, the Scottish Government’s fund for the North East and Moray, and World Bank operations such as the Eskom project in South Africa.

Can a small business or community group apply for just transition funding?

Often yes, but usually through a programme tied to a designated area. Scotland’s fund, for instance, has a separate stream for community and social enterprise capital projects with smaller bid sizes. Read the current applicant guidance for your fund, and check whether your project falls in the eligible territory.

What makes a just transition strategy credible?

Specific commitments with owners, budgets and indicators, rather than general references. Add genuine consultation with those affected, support that begins before closures, and a funding plan that matches the scale of the changes.