Authors:

Bidisha Sarkar Datta

Abstract:

As the global economy pivots toward environmental sustainability, the process of transitioning to greener systems is proving to be as complex as it is necessary. While climate action plans, carbon reduction strategies, and renewable energy goals are driving progress, they are also disrupting industries, displacing workers, and altering investment landscapes. In response to these socio-economic shifts, transition insurance has emerged as an innovative and vital tool. This paper explores the concept of transition insurance, a financial mechanism designed to provide support to individuals, businesses, and investors affected by environmentally driven changes in policy and market structures.

Drawing on secondary research and global case studies, the paper investigates how transition insurance can help balance ecological goals with economic stability and social equity. It highlights how this insurance can protect assets, assist displaced workers through retraining and financial support, and offer reassurance to investors venturing into green technologies. Case examples from the European Union, Germany, Canada, and the private sector illustrate how transition insurance models are already being implemented.

The discussion also considers the challenges of integrating such mechanisms into broader climate and economic policy frameworks, including concerns around funding, moral hazard, and effective risk modelling. Ultimately, the paper argues that transition insurance is not merely a safety net—it is a strategic enabler of a just and inclusive green transition. As developing economies like India face mounting pressure to decarbonize, embedding such tools into policy planning could help safeguard both people and progress on the path to sustainability.

Keywords:

transition insurance, climate, economic policy, ecological goals

Vol & Issue:

VOL.17, ISSUE No.1, March 2025