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COP28: A roadmap to Green Economy

First roadmap from COP28 for the financial sector to support a just transition to low-carbon, resilient economies is here.
Just Transition Finance: Pathways for Banking and Insurance, is released at COP28 by UNEP, FI and the International Labor Organization (ILO).

The first roadmap for the financial sector to support a just transition to low-carbon, resource-efficient economies named Just Transition Finance: Pathways for Banking and Insurance. It is released at COP28 combinedly by UNEP, FI and the International Labor Organization (ILO).In order to ensure a climate transition that leaves no one behind, the new guidance will assist UNEP FI members and the larger financial sector in integrating just transition practices into their daily operations.

Climate change poses challenge to entire ecosystems and the wellbeing of everything on Earth. The Paris Agreement’s climate goals of limiting global warming to 1.5 degrees and achieving net-zero emissions by 2050 will necessitate a significant transformation of the world economy. For a just and green transition we need to put efforts for maximizing economic opportunities of environmental actions, enabling them for eco-friendly enterprises and reducing the Challanges put forward by it.

UNEP, FI and ILO release Just Transition Finance: Pathways for Banking and Insurance
UNEP, FI and ILO release Just Transition Finance: Pathways for Banking and Insurance

Technological innovation, creation of jobs and the building of resilient societies all can be accelerated and greatly enhanced by the just transition to low-carbon and sustainable economies. The financial sector can play a crucial role in ensuring that the shift to low-carbon economies is fair and inclusive by rerouting financial flows towards green technologies, adaptation strategies, and creative enterprises. Insurers in particular are critical actors in building resilient societies by adopting risk-management strategies that address social and environmental challenges and ensuring adequate coverage for all communities.

For this, insurers play a vital role in creating resilient societies by implementing risk-management techniques that tackle environmental and social issues and guarantee sufficient coverage for every community. This report encourages banks and insurance companies to participate in the realization of a just transition by outlining the social and economic effects of the low-carbon transition.

It gives financial institutions useful guidance and illustrations of cutting-edge approaches on how to incorporate just transition considerations into their products and business operations in line with the objectives of the Paris Agreement, enhancing the ILO Just Transition Finance Tool for Banking and Investing activities.

The recommendations will enable a significant positive social impact while assisting institutions in ensuring compliance with social performance standards that are in line with human rights frameworks.

COP28: Going greener
COP28: Going greener

Creating goods and services to support just transition projects and activities with funding and insurance, Improving financial inclusion and closing the protection gap to improve client resilience to climate transition, all this the are steps in right direction.

This can further be enhanced by considering following Steps-

  • identifying and evaluating the social risks and opportunities that financial institutions are facing as a result of the climate change in order to comprehend the context-specificity of the application of just transition principles
  • encouraging clients to commit to a just transition by educating and involving them in the process
  • forming strategic alliances with other stakeholders and the industry to spur action for a fair transition

Though the report primarily focuses on the social impacts, risks, and opportunities associated with climate change, its recommendations can also be used to address other environmental challenges, such as pollution and biodiversity loss.

The resource also acknowledges that particular social and economic effects of the shift vary greatly depending on the context and need to be evaluated thoroughly.

More than forty banks, insurance companies, international financial institutions, academic institutions, and civil society organizations contributed to the development of the UNPE FI-ILO report.

Upcoming years, UNEP FI will provide more tools, direction, and assistance to help its members create and carry out their just transition plans more smoothly.

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