Do Both

It was fitting to host this dinner in the city that birthed the European Green Deal and where debates over its social component (or lack thereof) echo in various halls of power. From a trade union leader to an investment manager from a sovereign wealth fund. Also present were economists, investors, policy wonks, philanthropists and market builders; all attendees had in common a leadership role and an informed opinion on how to make sure decarbonizing our economies don’t leave people behind.  

Our tablemates took it as a given that that the green transition is not currently an inclusive one. Changing that was at the core of the night’s discussion. “If not fair and social,” said one leader at the table, “the green transition will fail.”  

“Is there a business case for treating people with respect?”   

We aimed to be provocative with this question. Leslie asked it in response to a strand of the discussion about whether the just transition is good for business. Tablemates then tried to make a business case for fairness – while momentarily setting aside the emotion inherent to any discussion about fairness. A self-described “dry economist” gave the view from inside his think tank:   

“The tension between energy transition, climate transition and justice is the hardest for us to manage. I personally am trying to make a very dry economic case that scaling climate finance by an order of magnitude, at least 10x, is simply in the interest of economically advanced countries. And that the main reason why we're not doing that is because people haven't completely understood it.” The economist went on to explain the value of making a fact-based argument for the just transition more well-known.   

Another insider’s view, highlighting a barrier to the just transition, came from an investment manager. Ecological investments, she explained, are often a fit for her fund’s ticket size; social investments, much less so. That’s because the co-investors she needs to find in Belgium are few; they may focus on social or environmental, but rarely both.  

This exemplified a theme that ran through the night: we need to intervene for environmental and social impact – hand-in-hand – but the organisations that “do both” are rare. Some leading ones were sitting at the table with us.  

Miner concern   

A trade unionist who’d recently visited with miners in Silesia shared these workers’ story, illustrating the real needs of people.    

“The phasing out of fossil fuels is not just about paying out the miners that lose their jobs,” he said. “It's about creating a new future for the region where their sons and daughters are still living... The miners say, ‘Please don't invest in bicycle parks, we want to have a new industry, we want to have new, decent jobs.’”  

The jobs, he stressed, must come from the private sector. And yet, in many of the countries where climate mitigation actions are most necessary, the private sector struggles to provide these jobs, as they often face more immediate economic problems.   

This points to a problematic power dynamic for impact actors seeking to intervene in poorer countries. “We’re straddling this very difficult tension,” an attendee noted, “between giving the richer countries some control of what's happening to the money, and giving poorer countries a sense of ownership and justice.” 

For some, this power dynamic recalled the legacy of colonialism. One person characterised the table as “very European. But what about the people in the Global South? We built our wealth on their raw materials.” National approaches to the just transition must confront these power imbalances; they become magnified when attempting to take a more global and collective approach. And yet, many agreed it was necessary to at least attempt global interventions. “If Europe stays on its own, I'm a little bit pessimistic,” said one attendee. “We need to make sure that the whole globe is working around climate action.” 

 “The transition needs to come from within.”  

We asked the table for some wishful thinking: if there's one thing you could change with your magic wand to accelerate a just transition, what would that be?  

Tablemates from the finance community named the regulations holding them back, including those curtailing impact investing for retail investors and pension funds. “I'm a board member for pension funds,” one attendee explained, “and I was really surprised about the short-term view on the investment policy.” 

Policy changes also made it on the wish list, as attendees discussed the distinction between a recommendation versus a mandate for the just transition – voluntary action vs. legal requirements. One called the decision for a European Green Deal “brave,” but went on, with exasperation, “‘social’ is crucial to get the public support, but then you leave it to a recommendation?” This, the attendee indicated, needed to change – to a mandate.   

Regulations, law and public policy in support of the just transition were on the wish list for many. But for some, change started at the level of individuals. One attendee pointed out the value of education in shifting mindsets on the topic. “The transition needs to come from within,” said another. “We need to see the system we are trying to change is also inside of us. So first, we need to become aware of a system that how we are influenced by it. This inner reflection and consciousness is key to the materialisation of the just transition.”  

Individual responsibility also became pronounced in the context of 2024 as an election year. “Half the world will vote,” as one attendee put it, but if the people don’t choose leaders who can fund, operationalise and remove barriers for the just transition, the night’s discussion will remain a thought exercise.  

The stakes of getting the just transition right are high. The stakes of getting it wrong may be even higher. Transitions of the past – communism to market economies, national to globalised economies – “have all had their winners and losers,” one attendee pointed out. The losers, he went on, have a habit of swinging political balances severely rightward.  

No matter how European elections turn out, the work of deciding EU budgets will begin later this year. That’s the leverage point for influencing policies that will determine to what extent the green transition will be a social one. Our tablemates were aware of their influential role in this moment. Beyond the policy sphere, they kept an open mind toward additional leverage points for influence, each according to their unique status in the financial and impact ecosystem. Impact leaders working together have the power – and, as many showed, the responsibility – to drive and accelerate this work.  

Next course   

Looking ahead, The Tables of Trust in 2024 will bring together a second group of leaders in Zurich in June. Then, the Impact Leaders gathering in Venice on 2-3 September will make tangible commitments to a green transition that “does both” – puts people and the planet on equal footing.