Building Fair Transitions: Legal Frameworks for a Low-Carbon, Inclusive Future

The report by the World Bank and UNDP explains that achieving a fair, inclusive shift to a low-carbon economy depends on strong national legal frameworks grounded in labor rights, human rights, and environmental governance. It shows how countries can embed these principles into laws on energy, minerals, land, and finance to ensure transitions protect workers and communities.

A joint report by the World Bank Group and the United Nations Development Programme (UNDP) positions law as the backbone of the global shift toward a low-carbon, climate-resilient economy. Far from being a purely technical or financial challenge, the transition depends on rules that protect workers, empower communities, and align national economies with international climate and biodiversity commitments. The authors caution that without solid legal foundations, countries risk regulatory uncertainty, social backlash, human-rights violations, and costly litigation, while also missing out on the economic opportunities of the emerging green economy.

From Labor Movements to Global Climate Governance

Just transition began as a labor-union demand in the 1970s, but its meaning has expanded dramatically. The concept entered international climate law through the Paris Agreement’s preamble and has since been operationalized through UNFCCC decisions, including the Glasgow Climate Pact and the establishment of the UAE-led Just Transition Work Programme. These mechanisms have transformed broad aspirations into structured dialogues and expectations on countries, guiding how they integrate worker protection, regional development, and social inclusion into their Nationally Determined Contributions and long-term decarbonization plans. Despite this evolution, the report notes significant disparities in how nations incorporate and enforce just transition commitments.

Human Rights, Labor Standards, and Natural Resources as Pillars

International labor law forms one of the strongest normative pillars. Foundational ILO conventions, from freedom of association and equal remuneration to occupational safety and child-labor prohibitions, create enforceable obligations that shape how countries handle industrial restructuring. The 2015 ILO Just Transition Guidelines and the 2023 International Labour Conference resolution go further by detailing principles of gender equality, decent work, and social dialogue, framing just transition as a global standard rather than an optional policy tool.

Parallel to labor standards, human rights law increasingly shapes expectations for fairness. Treaties such as the ICESCR, ICCPR, CEDAW, CERD, and CRC require governments to safeguard livelihoods, prevent discrimination, protect children and women, ensure access to information, and enable meaningful participation. Recent milestones, such as the UN General Assembly’s recognition of the right to a clean, healthy, and sustainable environment and the 2025 ICJ advisory opinion linking climate action to human-rights obligations, raise the bar for national transition strategies. Natural resource governance also enters the equation through the Convention on Biological Diversity, the Kunming–Montreal Global Biodiversity Framework, the UNCCD, UNCLOS, and the new BBNJ Agreement. These require equitable benefit-sharing, Indigenous participation, and careful stewardship of ecosystems during mineral extraction, renewable-energy development, and land-use change.

National Laws Are the Engine of Real-World Change

Across the world, countries are crafting laws to translate global principles into practical protections. The report highlights the expansion of national frameworks for income support, retraining, unemployment insurance, and early retirement meant to cushion workers in coal regions, industrial zones, and fossil-fuel-dependent communities. Energy laws now increasingly mandate fossil-fuel phase-outs, reform subsidies, shape clean-energy investment conditions, and regulate private-sector contributions to social and environmental goals. Meanwhile, the boom in critical minerals has led to new licensing rules, benefit-sharing obligations, supply-chain transparency requirements, and Indigenous consultation laws.

Agriculture and natural-resource sectors, home to millions of livelihoods, are also experiencing legal transformation. Countries are adopting constitutional environmental rights, land-tenure protections, incentives for regenerative farming, and policies that correct historical inequities in access to land and forests. These reforms reflect the emerging recognition that food security, ecosystem restoration, and rural development must be embedded in transition planning.

Financing, Legal Risks, and the Expanding Role of Development Banks

Financing is a central hurdle, and the report shows how legal frameworks can guide it. Some countries earmark carbon-pricing revenues for social protection; others are legislating debt-for-climate swaps, blended-finance structures, and due diligence requirements for private investors. However, stronger climate action also increases exposure to legal risk. Poorly designed measures may trigger investor-state arbitration, WTO trade disputes, constitutional lawsuits, or administrative challenges. To minimize these risks, governments must articulate clear environmental objectives, conduct inclusive consultations, and align policies with international law.

Development institutions, especially multilateral development banks and UN agencies, play a growing role in shaping national legal systems. Through technical assistance, financing, and policy dialogue, they help governments map gaps, coordinate across ministries, and design laws that embed social justice into climate action. The report concludes with a call for integrating just transition into all aspects of legal and institutional planning, noting that the legal toolbox is now extensive but must be deployed strategically to ensure transitions that are not only green and rapid but also fair, participatory, and enduring.