The transition to a sustainable and equitable economy that benefits both economic growth and natural and social systems has become an increasingly urgent policy objective in many countries and within international forums. Governments are introducing policies and regulations to address climate change, biodiversity loss, macroeconomic instability, effects on costs of living etc. However, these reforms are often pursued in isolation to each other, and with insufficient influence over business-as-usual public policy and business strategy. And while the flow of capital towards sustainability goals has increased, it is yet not at the scale needed.
This paper argues that an effective policy approach to redress decades of market and government failures on environmental and social issues needs to be the responsibility of governments as a whole and needs to be executed as such. It sets out what is understood by a sustainable, just economic transition, and presents a high-level framework to support governments in pursuing such a transition. It also examines how key jurisdictions are approaching the economic transition – particularly with regards to climate change – and finally explains how investors might best support governments in their efforts.
The report builds on discussions with investors, regulators, policy makers, intergovernmental and civil society organisations. It represents a first step in the PRI’s engagement on the topic of the economic transition, and its findings are intended to start a conversation. This report will be followed by further research, including country-focused analysis, and engagement over the coming year to further drive policy change in support of a just, ambitious and sustainable economic transition.