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A just transition

2024 Outlook

Insight
5 December 2023 |
Active ESGImpactSustainable
Hope comes in many forms but any attempt to tackle the climate crisis will have to work for the world’s haves as well as the have-nots.
The Federated Hermes 2024 Outlook

My great hope for the COP28 summit is to see actionable commitments, from governments, industry leaders and financial institutions, to invest in a just transition. If the ever-increasing action gaps remain, economic losses from global warming will balloon, making the inevitable transition more painful. As we look ahead to 2024, it is clear that the next twelve months will be critical to delivering success.

However, investments will not be enough. The consumers and citizens of the world must join our journey. Yet without access to affordable food and energy and the availability of income-generating and interesting jobs, they will simply not share our goals.

Those in the Global South will look to the Global North for support to fund the required investments.

This ‘just transition’ will take different forms. The first form will be country to country. Those in the Global South will look to the Global North for support to fund the required investments. We expect this to be evidenced through an increasing use of the Loss and Damage Fund and more Just Energy Transition Partnerships. There will need to be multilateral agreements on how to compensate poorer countries for as yet untapped fossil fuel reserves.

Secondly, food and energy supplies form a significant part of the lives of the poorest in our societies. Therefore, policymakers will need to consider how to make these commodities affordable through progressive subsidies, possibly financed by taxation of those emitting carbon. Providing education so consumers can make informed choices on food waste, their use of energy and other consumer behaviours will also be vital if we are going to achieve a just transition.

Thirdly, companies whose activities will inevitably change thanks to the just transition will need to retrain their employees. Paying the living wage and offering living hours will also be important. Specific industries could benefit from the just transition in other ways. For example, retail banks can offer residential mortgages that cover the cost of solar panels, heat pumps or insulation.

Finally, the investment industry, through meaningful stewardship, should encourage its investees to support the just transition. The industry should continue to make direct investments in primary markets which have a positive social or environmental impact. Be that in reforestation, regenerative agriculture, education or the like.

Without a ‘just’ transition there will be no transition.

Just cause: Why the transition matters

Global Hunger Index, 2000-2023

The Federated Hermes 2024 Outlook

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