Accelerating a just transition through renewable energy (UN Global Compact)

Anna Triponel

May 19, 2023
Our key takeaway: The energy transition is creating new opportunities for employment, making renewable energy affordable and widely available, and inspiring optimism that we can curb the worst effects of climate change. That said, none of this can happen sustainably if we continue to perpetuate social and economic inequality. An unjust transition can risk some people losing their jobs without viable alternatives or social safety nets, can prevent other people from accessing affordable and reliable clean energy, and can harm still more people by displacing them from their traditional lands or destroying their livelihoods. Per a new brief from the UN Global Compact, the answer to these challenges lies in businesses meeting their responsibility to “embrace the urgency of a just energy transition, set ambitious targets, develop just transition plans and publicly report on progress”; “creat[ing] an enabling environment for companies to advance ambitious and effective just transition initiatives”; advocating for responsible energy policies and backing up their words with action; and respecting human rights, protecting ecosystems, prioritising stakeholder engagement and ensuring transparency in all of their activities and throughout the energy value chain. The brief is directed towards energy producers and providers, offtakers (large consumers of renewable electricity or zero emission fuels such as data centres, electric vehicles (EV) charging networks and shipping companies) and other businesses like grid operators, EV designers, storage companies, materials and components producers and developers of demand-side and digital management tools. However, the insights from the brief are also relevant for businesses who have any of these providers in their value chains—as well as companies looking at just transition principles more generally - covering just about every company!

The UN Global Compact published Just Transition and Renewable Energy: A Business Brief (May 2023), as part of a series developed by the Think Lab on Just Transition: 

  • Why it matters: The brief underscores the importance not only of tackling climate change through increasing production and purchasing of renewable energy towards a net-zero transition, but also ensuring that this transition is just—that is, making sure “no one is left behind.” “While a net increase in jobs is anticipated as a result of the green transition, misalignments will occur as jobs lost in a given community or industry will not necessarily be replaced immediately with comparable jobs in the same place or require the same skills. Governments and businesses have roles to play in minimizing misalignments, providing social safety nets and retraining/ reskilling workers for decent work that meets the needs of the renewable energy economy.”
  • Priorities for advocacy with governments: There are a number of different areas where businesses can conduct advocacy with governments and policymakers to accelerate the just transition. For example, companies can urge government to create incentives for job creation and skills training in the transition economy, while also increasing access to affordable clean energy for all by promoting private investment in the renewable energy sector in developing countries. Other advocacy priorities include balancing price considerations with environmental and social expectations when considering bids from energy companies; supporting small and medium-size enterprises to undertake just transition measures and increase access to renewable energy; creating “harmonized rules and standards for a renewables revolution” that puts diverse companies and countries on a level playing field; and ensuring equitable access to renewable energy-related technologies and infrastructure, especially for marginalised populations that are more likely to lose out on benefits.
  • Ten recommendations for business: The brief highlights ten actions for companies, which apply beyond the energy sector. These include: (1) Developing and implementing a just transition plan including a net-zero commitment aligned with the ILO Just Transition Guidelines; (2) Setting 100% renewable energy targets throughout the full value chain, and communicating about them publicly for full transparency and accountability; (3) Creating spaces for “dialogue between employers and labour … as well as between companies and communities in which new investments will take place and, where relevant, with indigenous peoples.” This should include conducting environmental impact assessments that include human rights considerations and are transparent and participatory with those who could be affected by projects; (4) Ensuring that respect for human rights, in line with the UN Guiding Principles on Business and Human Rights, remains central to all project development, operation and decommissioning, and continuing dialogue with stakeholders to address concerns throughout the life of the project; (5) Investing “in local skills training systems in new investment areas” and “pay[ing] attention to ensuring greater diversity in the workforce — gender, age and ethnic minorities. They can also work with others in their sector to support shared skills initiatives; (6) Investing in local communities affected by the transition away from fossil fuels, and where possible, investing via renewable projects. In addition, “[e]nsuring that new jobs are decent jobs will be critical to gaining the buy-in of workers. Also, communities that benefit from renewable energy investments — including through shared ownership — are more likely to embrace local developments”; (7) Recognising that “there are no jobs on a dead planet”—throughout the full value chain, renewable energy projects “should avoid biodiversity loss and the degradation of forests or other ecosystems.” This approach will also help avoid adverse impacts on communities that depend on these ecosystems; (8) Advocating for a just transition by using “their considerable resources and influence with governments to strengthen climate and energy policy” including by ensuring that all trade associations they belong to are not undermining the energy transition; (9) Changing “the dominant narrative to showcase the opportunities for people-centred climate action.” In particular, “[b]usiness leaders have both the opportunity and responsibility to counter narratives which suggest that a renewable energy future is too costly, too unreliable or simply too difficult”; (10) Applying these lessons across other sectors, including automotive, agriculture, maritime industries and manufacturing. Ultimately, no matter the sector, “[t]he most successful transitions are rooted in social dialogue and stakeholder consultation more broadly. They set ambitious targets, publicly communicate them, engage in social dialogue and work in partnership with stakeholders to secure results."

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