Just Transition

Our future will look different to our past. The transition of the economy, away from extraction to renewables, is underway. 

The biggest challenge we face is how we steward change to ensure that everyone is part of the future. Our transition needs to be just.

For many, the experience in the UK 40 years ago was an example of a transition that was unjust, leaving communities, towns and people behind. The impact of the abrupt closure of deep coal minds in the 1980s still reverberates throughout communities across the UK.  The ultimate impact of closing coal mines has been overshadowed by the devastation of communities.

We need to think holistically about change. Unintended consequences often arise when we fail to recognise the need for systemic changes. 

The insurance industry is an important example.  Market drivers mean that many places will soon become uninsurable because of climate change. The people most likely to live in ‘at risk’ environments are the people least able to pay high rates of insurance but the most likely to require it. This not only creates a protection gap but also highlights the need for climate justice. 

The balancing act required to tackle climate justice is important. Insurance companies play an important role in the system as their actions can disproportionately affect the most vulnerable. There is an opportunity to lead by embracing innovative business models and products to support the future growth of those most at risk. Take parametric insurance as an example.  It offers pre-specified pay outs based upon a trigger event (such as a hurricanes) and can achieve things impossible with conventional insurance products.

Taking action to mitigate climate change is essential but demands systemic thinking. We need to consider the impact of climate action on our societies to create a sustainable economy.  And vice versa.  

We need to think about the transition risks. Climate action plans must ensure no one is left behind. That means recognising the need for a just transition - and operating in a tangle of competing concerns.