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TIPS sets out to create a South Africa-focused Just Transition Transaction Framework

Transaction Framework
August 22, 2023

by nfdeklerk 0 comment

TIPS sets out to create a South Africa-focused Just Transition Transaction Framework

Independent, nonprofit economic research institution Trade & Industrial Policy Strategies (TIPS) has launched research on a proposed Just Transition Transaction Framework.

During a webinar on August 17, the institution introduced the content of the framework and the process for improving the framework over time through learning by doing, evidence collection and analysis.

“The framework is being launched in response to a measurable shift we’re seeing in the discourse in relation to just transition financing,” TIPS research fellow Sandra Lowitt said.

She explained that the South African just transition financing discourse had been dominated by issues of the global north, local private sector fund mobilisation and the unlocking of existing funding commitments.

However, of late, researchers and decision-makers had been thinking about when and if the deployment of such funds began to flow, she pointed out.

“What this framework is being designed to do is to try and answer the question of how can we help navigate what is a context-specific South African just transition transaction. What is that going to look like?” Lowitt explained.

Just transition fund deployment will require decision-making about capital allocation to projects and investments. To achieve this, decision-makers will need to have a method by which to test what will constitute a just transition transaction and how to rank just transition transactions against each other.

“There are three really big scary questions that need to be answered. The first one is: What is going to be good enough to count as a just transition investment? The second one is: What do we need to measure to confirm that a project is actually delivering a just outcome and impact? And thirdly: How are we going to compare and contrast investments?” Lowitt noted.

She said the pre-screening phase would immediately exclude any activities related to new fossil fuels, armaments, tobacco and the sex trade. The activity would also have to comply with South African laws and the Constitution.

Importantly, projects would need to include a community and/or labour voice.

This should include having an engagement strategy implementation plan and budget. Lastly, internal approval and some funding would need to be confirmed.

An important part of the evaluation process would be what Lowitt called “the Green Gate”.

Green objectives would include aspects such as climate change mitigation and adaptation, the sustainable use of water and marine resources, pollution prevention, sustainable resource use, circularity and ecosystem protection and restoration.

Projects that had identified relevant objectives and qualifying activities under this section would be allowed to progress through the framework. Lowitt noted that the framework sought to provide direction without being overly prescriptive, although the framework was based on green finance taxonomy.

In addition to the Green Gate, there is also the highlighted socioeconomic improvement gate where support for employment and livelihood opportunities needs to be addressed, or perhaps access to services improved.

The support, strengthening and development of existing and new supply chains, as well as the improvement of community spaces, organisations and services would also be important.

Just Energy Transition Partnership (JETP) Presidential project management finance manager Neil Cole, Agence Francaise de Development (AFD) senior researcher Anda David and Anglo American sustainability relations head Hermien Botes collectively covered issues related to the demand for just transition decision-making frameworks and referred to several examples of how project justice and socioeconomic outcomes could be included, defined and measured.

The first iteration of the framework will be continuously improved through testing, evidence gathering and analysis and further iterations will be developed to increase acceptability and applicability with an evolving set of stakeholders.

“In terms of just transition ambition, we believe projects can and will become more ambitious. We believe it’s important that the framework incentivises this increase in ambition,” Lowitt said.

Cole emphasised that there would be a fair degree of experimentation that is allowed and expected at this stage of the framework development, along with an opportunity to learn from both successes and mistakes that are likely to be made along the way.

“This is going to be a really complex process. Going forward, I think there are going to be many unknowns in terms of not everyone agreeing on what the challenge is that we that we need to tackle and certainly lots of disagreement around what the possible solutions are going to be. The framework is going to provide valuable input,” Cole said.

Source: https://www.engineeringnews.co.za/