A Worker-Centred Framework for Financing the Just Transition

The report proposes a worker-centred alternative financing framework for South Africa's just transition to a low-carbon economy. It argues that the existing Just Energy Transition Investment Plan (JET-IP) over-relies on private funding and profit-driven models, which may fail to deliver social justice or sufficient green industrialisation. The proposed framework integrates worker demands with promotional fiscal and monetary policies and the reform of Development Finance Institutions (DFIs) to ensure the transition is treated as a public good.

• Existing climate finance in South Africa is insufficient and overly dependent on the private sector. Pledges under the Just Energy Transition Investment Plan (JET-IP) total $12.8 billion, which is a small portion of the R1.5 trillion estimated for the energy sector transition alone. In 2023, private sector funding accounted for 86% of total tracked climate finance, while grants declined to 1% between 2019 and 2021.
• The report proposes the creation of a Climate Response Fund (CRF), a pseudo-sovereign wealth fund designed to provide stable, long-term financing for adaptation and a worker-centred transition. The CRF is estimated to earn approximately R100 billion per annum in 2026 through the reallocation of carbon taxes, fuel levies, mineral royalties, budget restructuring savings, and retirement tax reform.
• To increase CRF revenue and influence behavior, the report recommends raising the effective carbon tax rate to R500 per ton of CO2 by 2040. This is a significant increase from the 2025 IMF estimate of an effective rate of R7 per ton, though it remains below the Paris Agreement-aligned rate of R1000 per ton.
• The framework advocates for a 'promotional monetary policy' to replace the current inflation-targeting framework, which the authors argue supports speculative financial investment over job creation. Proposed reforms include revising the South African Reserve Bank's (SARB) independence to allow better coordination with fiscal policy and integrating climate-related risks into financial stress tests and economic modelling.
• To counter the risk-averseness of financial institutions, the report suggests using credit allocation tools. This includes 'green-differentiated capital requirements'—lowering capital requirements for institutions financing low-carbon sectors while increasing them for those funding environmentally harmful activities.
• The report recommends a significant shift in the mandate of the Industrial Development Corporation (IDC), South Africa's largest DFI. It proposes reclassifying the IDC from a 'self-financing' entity to one that receives direct government support, allowing it to provide 'patient capital' for high-risk public good projects with loan terms of 20 to 30 years.
• Governance reforms for the IDC are proposed to democratise its Board. The report suggests reducing the number of representatives from the mining, energy, and finance sectors—particularly those with vested interests—and increasing representation from civil society, trade unions across all industries, and government departments tasked with the green transition.
• The framework is grounded in worker demands from COSATU's Just Transition Blueprint, which calls for an end to austerity and the implementation of an eco-socialist system. Key demands include the creation of a Universal Basic Income Grant (UBIG), funded relocation for workers, and the use of carbon tax revenue to finance just transition initiatives.

APA

Institute for Economic Justice (2025). A Worker-Centred Framework for Financing the Just Transition. https://iej.org.za/wp-content/uploads/2026/03/A-Worker-Centred-Framework_A4_Digital.pdf

Chicago

Institute for Economic Justice. A Worker-Centred Framework for Financing the Just Transition. 2025. https://iej.org.za/wp-content/uploads/2026/03/A-Worker-Centred-Framework_A4_Digital.pdf.

Wikipedia

{{cite report |author=Institute for Economic Justice |title=A Worker-Centred Framework for Financing the Just Transition |date=August 2025 |url=https://iej.org.za/wp-content/uploads/2026/03/A-Worker-Centred-Framework_A4_Digital.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{instituteforeconomicjustice2025workercentred, author = {{Institute for Economic Justice}}, title = {{A Worker-Centred Framework for Financing the Just Transition}}, institution = {Institute for Economic Justice}, year = {2025}, month = aug, url = {https://iej.org.za/wp-content/uploads/2026/03/A-Worker-Centred-Framework_A4_Digital.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }