A new set of tools aims to help banks assess their alignment with just transition principles, enabling rapid climate action while creating social and economic opportunities for communities.
Climate Finance Asia, secretariat of the Facility-level Just Transition Working Group (F-JTWG), has launched the world’s first facility-level just transition (F-JT) guidelines for banks, along with assessment tools.
Formed in September 2024, the F-JTWG comprises 13 major banks, non-governmental organisations and philanthropic organisations, including the Climate Bond Initiative, International Labour Organization and Oversea-Chinese Banking Corporation (OCBC).
It was formed to develop practical ways to integrate just transition best principles into the financing of phasing out coal-fired power plants (CFPP) in the transition to renewable energy.
The new F-JT assessment tools and upcoming scorecard provide concrete mechanisms for banks and borrowers to implement these principles, reads an April 9 announcement.
The planning assessment tool includes topics relevant to the design and oversight of a JT Plan, spanning six focus areas: energy, environment, labour, livelihoods, gender and governance.
See also: UOB enhances sustainable financing frameworks, granting SMEs easier access
A scorecard, which will be made available later, will provide banks with a structured assessment of their performance in managing the JT Plan that a borrower implements when they finance the phaseout of a CFPP.
This assessment, designed to be conducted by an independent party, covers the bank's alignment with just transition principles, its due diligence and monitoring of the borrower's JT Plan, and the quality of the borrower's plan itself.
Featuring indicators across the six focus areas, the F-JT scorecard offers an overall score and a dimensional view of the focus areas of the JT Plan, identifying strengths and weaknesses in JT planning and enabling comparisons against other JT Plans in similar CFPP phase-out projects.
Mike Ng, group chief sustainability officer at OCBC, says: “We are proud to have contributed to this industry collaborative effort to develop practical applications of Just Transition principles when financial institutions are considering to finance the phase-out of coal-fired power plants. Such efforts are particularly relevant in the context of Asia, where CFPPs still make up a significant share of the power system in many markets. The Just Transition tools provide a good starting point for us to guide our clients in discussions around the elements of just transition that they need to consider and manage in the transition from CFPPs to renewable energy.”
The F-JT resources are now available for use by working group members, banks and other stakeholders. Climate Finance Asia encourages continuing feedback and collaboration as these tools are implemented and refined.
