Explained: What a 'Just Transition' means for coal workers, states and financial regulators?
The report, titled
Just Transition Financing
Ecosystem: Stakeholder Consultation, was released on July 7, 2025, and recommends a phased roadmap — starting from pilot schemes and fiscal incentives in the short term to structural reforms in the long term.
What is Just Transition in India's energy context?
Just Transition in India refers to an equitable shift away from carbon-intensive sectors like coal, steel, cement, and automotive. It means that those most affected — such as workers in
fossil fuel-based industries
and vulnerable communities — are not left behind as India builds a greener economy.
The
IEEFA report
notes that while
sustainable finance in India
is evolving, social priorities like worker reskilling, community resilience, and economic diversification remain underfunded.
Who are the stakeholders in Just Transition financing?
The report outlines a broad ecosystem of stakeholders. At the top are regulators like the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), which can enable a shift through policies on disclosure, lending norms, and green finance tools such as Priority Sector Lending (PSL) and Sustainability Linked Loans.
'Capital can be mobilised through public and private sources, guided by ministries via blended finance and incentives. Corporates and their supply chains are key to implementation, especially in high-emission sectors,' said Gaurav Upadhyay, Energy Finance Specialist, IEEFA.
Financial instruments like Green Deposits and Sovereign Green Bonds could also be modified to include JT-aligned eligibility and impact metrics.
What policy support is required?
Central ministries such as the Ministry of Finance (MoF), Ministry of Environment, Forest and Climate Change (MoEFCC), Ministry of Power (MoP), and Ministry of New and Renewable Energy (MNRE) are seen as key actors in setting the policy framework.
'The MoF can embed JT into India's fiscal framework by aligning green taxonomies, allocating resources, and creating a dedicated fund for affected regions and communities,' said Sangeeth Raja Selvaraju, Policy Fellow (India and ASEAN), Grantham Research Institute at LSE.
The MoEFCC could help align JT with national environmental policies and leverage programmes like the Green Skill Development Programme and Green Credit Programme. The ministry is also expected to tap into international funding like the Green Climate Fund for nature-based and community resilience solutions.
What's the role of SEBI and RBI?
SEBI's Business Responsibility and Sustainability Reporting (BRSR) framework and its ESG-linked product regulations could play a role, the report says.
'For instance, SEBI has initiated sustainability reporting through BRSR and ESG-linked products, but JT indicators are still missing. Expanding BRSR to include social risk and JT metrics could help channel capital toward companies with credible transition plans,' said Labanya Prakash Jena, co-author and sustainable finance consultant at IEEFA.
Are corporates prepared for Just Transition?
According to the report, corporates are starting to integrate JT in their business planning, but many face roadblocks. These include high transition costs, limited finance access for MSMEs, and supply chain constraints.
Companies are asking for clearer policy guidance, supportive regulation, and structured investor engagement. There's also a growing demand for integrating
social inclusion metrics
into Environmental, Social and Governance (ESG) frameworks.
What about state-level readiness?
A key gap is at the state level, especially in coal-dependent regions. 'The government must also look to boost state-level engagement, especially in coal-dependent regions, as many states lack the technical capacity to design, finance, or implement JT-aligned programmes,' said Jena.
What are the report's recommendations?
IEEFA advocates a three-phase approach to institutionalise JT financing:
1.
Short term
– Pilot schemes, fiscal incentives, and state-level engagement
2.
Medium term
– Regulatory scaling through integration of JT metrics in finance and ESG
3.
Long term
– Structural reforms such as dedicated JT funds, blended finance platforms, and community-level inclusion
'Ultimately, a successful JT will require sustained coordination between ministries, regulators, state governments, corporates, and civil society,' Upadhyay said. He added that investing in capacity building, financial innovation, and inclusive planning will help ensure that India's
energy transition
is not just green, but also equitable.
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