Introduction

Climate change is projected to have significant adverse effects on employment, incomes, and poverty, undermining progress on the Sustainable Development Goals (SDGs). Projected impacts include the loss of 80 million jobs due to heat stress by 2030, an additional 130 million people moving into poverty within the next decade, and up to 216 million people facing internal migration by 2050. Furthermore, 1.2 billion jobs dependent on healthy ecosystems are expected to be adversely affected. Climate change mitigation policies aimed at achieving net zero are also likely to impact poverty through the contraction of employment in carbon-intensive sectors and increased costs for commodities such as transport, food, and fuel. The concept of the just transition is a response to this challenge, requiring the creation of environmentally sustainable economies that are fair and inclusive for workers, enterprises, and communities.

The just transition

The concept of the ‘just transition’ emerged from concerns regarding how environmental and economic change would affect jobs, incomes, and social stability. It was included in the 2015 Paris Agreement, which commits governments to reducing emissions while taking into account the imperatives of a just transition for the workforce and the creation of decent work. Achieving a just transition requires managing the social and economic impacts of moving to resilient economies while addressing inequality and exclusion. Despite high political ambition, resources to finance this extension are increasingly constrained. Both domestic finance and Official Development Assistance (ODA) for climate and social protection are under strain as governments face competing expenditure priorities, including rising defence and security spending.

The role of social protection in facilitating a just transition

Social protection is defined as a set of policies and programmes aimed at preventing and protecting all people against poverty, vulnerability, and social exclusion throughout their life cycle. Main instruments include social assistance (cash and in-kind transfers), social insurance (contributory benefits such as unemployment insurance), and active labour market policies (skills training and job creation). These tools can address poverty and equity challenges by compensating for price increases through direct transfers and by providing income security during labour market disruptions. Social protection is also essential for ensuring the political acceptability of net zero policies by mitigating negative impacts on affected populations and building broad-based coalition support.

However, implementing social protection is contingent on having functioning national systems, which are currently under development in many settings. Less than 10% of populations in the 20 most climate-affected countries are covered by any form of social protection, and only 25% in the 50 most climate-affected countries. Overall, less than 50% of the global population is covered. There is an estimated gap between current expenditure and that needed for basic protection of $0.56 trillion per year in low- or middle-income countries, excluding climate or transition impacts.

Roles for philanthropy in developing social protection systems that support just transitions

Philanthropies have the potential to play a catalytic role by funding innovation not adequately supported through public budgets. Priority requirements for developing systems include extending coverage to non-traditional populations affected by climate policies, strengthening administrative capacities (such as registries and payment mechanisms), and aligning social protection with national climate policies like Nationally Determined Contributions (NDCs). Philanthropic interventions occur across various arenas, including building capacity for policy development. For instance, Yellow Woods in South Africa financed staff within the Presidency to support labour market initiatives linked to the just transition, including the Presidential Employment Stimulus, which has benefited over 1 million people.

Other roles include enabling social dialogue and stakeholder participation, such as the Global South Just Transition Fund launched in 2023 with a $20 million investment from the IKEA Foundation and Laudes Foundation. Philanthropies also fund research and evidence, such as scenarios for the textile and apparel industries in Bangladesh and garment sector protections in Cambodia. Additionally, they support skills development, exemplified by the RES4Africa network which channels corporate contributions into training programmes. Catalytic financing initiatives like the Global Energy Alliance for People and Planet (GEAPP) aim to unlock $100 billion in public and private capital to tackle power, climate, and jobs issues simultaneously.

Conclusions

There is significant potential for philanthropies to address the challenges currently limiting the justice component in net zero transitions internationally. By promoting philanthropic coordination, funding ‘unfundable’ initiatives restricted by legal or political constraints, and bridging the gap between research and implementation, they can act as a catalyst for equitable climate transitions. It is critical to ensure that new jobs created are climate-resilient, decent, and include social protection provision. Ultimately, philanthropies can help ensure the ‘just’ element of transition is not overlooked, supporting governments and multilateral agencies to address the impoverishment and inequities arising from the decarbonisation of the global economy.