Making just transition finance work in practice

Our project “Making just transition finance work in practice” (2025-2027) focuses on developing methodologies for financial institutions that make just transition finance operational. While the concept of a “just transition” is widely recognised in international frameworks, it remains underdeveloped in day-to-day financial practice. Financial institutions face practical questions such as:

• What does credible just transition practice look like at portfolio level?
• How can climate transition and social risks be addressed together?
• How can this be embedded into real investment and lending processes?

This project moves beyond principles and co-develops testable, replicable methodologies together with financial institutions that can be integrated into risk screening, stewardship, and product development.

The project is financed by the Laudes Foundation, kicked off in September 2025 and will last for the next 2.5 years.

The financial sector plays a crucial role in the transition to a low-carbon economy. However, the social dimension of this transition remains insufficiently integrated into mainstream financial practice. Despite growing international recognition – from the Paris Agreement to emerging disclosure frameworks – financial markets still face four persistent challenges:

• Limited traction in day-to-day financing and investment decisions
• Uncertainty about what “good” just transition practice looks like
• Inadequate policy rules and incentives
• A shortage of real-world case studies that peers can replicate

As regulatory frameworks evolve (e.g. transition plans, product categories under SFDR), there is a window of opportunity to shape practical, credible approaches that are both ambitious and implementable.

The project is structured around two complementary pilot programmes that reflect how financial institutions typically approach sustainability in practice: first, a portfolio-wide, sector-agnostic screening approach; second, a sector-specific deep dive.

1. Pilot A – Portfolio-Level Just Transition Methodology

Pilot A develops and tests a practical methodology for integrating climate transition and social considerations into portfolio-level decision-making. Working directly with selected financial institutions, we translate the concept of just transition into a structured screening logic that can be embedded into due diligence processes, stewardship strategies and product development. Among others, the pilot delivers:

• A tested Just Transition Due Diligence Framework for listed equity portfolios
• A structured screening approach combining climate and social indicators
• A documented case study demonstrating real-world application
• Practical guidance for replication by peers

2. Pilot B – Sector-specific deep dive

Building on the portfolio methodology, Pilot B applies and refines the approach within a priority sector (e.g. energy, agri-food, garment & footwear, construction or transport). This deep dive moves from high-level screening to sector-specific implementation.

From Pilot to Market Practice

The pilots are not an end in themselves. They are designed to generate practice-based insights that can inform broader market standards and regulatory discussions. Climate & Company has longstanding experience in connecting financial institutions with policymakers. Lessons learned from the pilots will be shared broadly with network partners and fed into regulatory windows of opportunity (via structured exchanges with regulators and standard setters).

We collaborate with financial institutions as implementation partners (testing and refining the pilots in their portfolios or sector exposure), with knowledge partners (contributing expertise on data, sectors or regulation), and with financial sector network partners (supporting dissemination dialogue). For investors, participation offers early access to a tested Just Transition Framework and a sparring partner on your side. If you are interested in contributing or get involved in one way or another, please reach out to us.

Timeline of events

• September, 2025: Kick-Off of the project in Amsterdam with the Laudes Foundations.
• October, 2025: Ingmar Juergens speaking in Durham at the Second Annual International Conference “Just Transitions to a Net Zero World” (Title: “The Role of the Financial Sector in the Just Transition Toward a Nature Positive and Climate Neutral Future”)
• October, 2025: Preparation of targeted outreach materials on the SFDR 2.0.
• Q1, 2026 (upcoming): SFDR Policy Brief