Scotland enters this new parliamentary term facing a stark economic reality. For many households, living standards have barely improved since the financial crisis. Rising costs, weak wage growth and stretched public services have left many people feeling that the economy is no longer delivering the progress it once promised. At the same time, Scotland’s climate targets have been repeatedly missed at a time when the impacts of climate change are becoming increasingly visible.

That makes this Parliament unusually significant. With half of all MSPs entering Holyrood for the first time, there is an opportunity to reshape Scotland’s economic direction – not just to meet climate goals, but to improve jobs, reduce poverty, and raise living standards through a just transition.

This is where the idea of a just transition matters. Too often, climate policy is framed as a choice between environmental action and economic prosperity. But Scotland's net zero transition also represents one of the biggest economic opportunities of the coming decades. If managed well, the investment required to decarbonise homes, transport, industry and energy can support new industries, create secure jobs, strengthen communities and spread prosperity more widely across the country.

The challenge is ensuring that this opportunity is captured. Our new report sets out key priorities across four areas: climate and nature, poverty and inequality, the labour market, and funding the transition. Across all four, a common theme emerges: Scotland has made important progress in building the foundations of a just transition, but a significant gap remains between ambition and implementation.

In climate and nature, the challenge is no longer setting targets but delivering action in the sectors where progress has stalled, particularly transport, buildings, agriculture and land use. This Parliament will determine whether Scotland can move from long-term ambition to credible implementation.

In the labour market, the transition away from fossil fuels is already underway, driven as much by economics and geology as by climate policy. The key priority is for Scotland to move from a reactive to a proactive position, by developing the industrial strategy, workforce planning and investment needed to create good jobs and ensure workers and communities benefit from the opportunities of the transition.

In tackling poverty and inequality, Scotland has made meaningful progress through more progressive taxation and social security. But a just transition requires these redistributive policies to be complemented by an expansion of Community Wealth Building to create more equal outcomes by design, ensuring that such large inequalities don’t arise in the first place. This Parliament must also prioritise "win-win" policy areas like heat, housing and transport that can reduce emissions and inequality at the same time.

And underpinning all of this is the challenge of funding the transition. No party entered the election with a fully credible plan for meeting these costs while maintaining long-term fiscal sustainability. But a just transition will require progressive tax reform and a rethink of infrastructure spending priorities. Key priorities also include reforming public investment institutions and expanding public, local authority and community-led investment.

Taken together, these priorities point towards the need for a step change in approach. Until now, Scotland’s narrative around net zero has seen climate action primarily as a cost or a target. The concept of a just transition offers a different perspective. It asks how the transition itself can become a vehicle for economic renewal.

Take offshore wind, for example, which Scotland has in abundance. Scotland has been very successful in reducing emissions from electricity supply. But despite large-scale offshore renewable developments such as ScotWind, a significant share of value creation, supply chain activity, and high-skilled employment continues to accrue outside Scotland. Perversely, governments in neighbouring countries such as Ireland, Sweden, and Denmark stand to capture a larger share of ScotWind’s rewards than the Scottish Government itself, and local employment growth has not matched the growth in turnover of the sector. 

Other countries have been more successful in local job creation and wealth retention from energy. As a result, in our report we recommend that the Scottish Government should take minority public equity stakes in future offshore leasing rounds. While this approach would require investment up front, it would also give Scotland a stake in the industries of the future. Norway used public ownership to ensure the benefits of oil and gas flowed to the public for generations. Scotland now has the chance to do something similar with renewable energy. Instead of treating ScotWind revenues as a one-off windfall, we could use them to build a lasting source of public wealth that supports the transition and wider economic development long into the future.

Done well, the transition can support new industries, create high-quality jobs, reduce poverty, strengthen public services, restore nature and improve living standards. But none of these outcomes will happen automatically. Delivering this agenda will require the Scottish Government to use the full range of tools available to it. That means not only climate policy, but also industrial strategy, public investment, procurement, skills policy, social security, tax reform, and new approaches to economic development such as Community Wealth Building. It also means being willing to take a more active role in shaping markets and directing investment towards long-term public goals.

The choices made during this Parliament will determine whether Scotland simply manages the inevitable decline of oil and gas, or uses it as a catalyst to build a fairer, greener and more prosperous economy. Our new report sets out how that can be achieved, using the powers we already have. We look forward to working with any MSPs who want to turn that vision into reality.