Just transition in practice: what it would take for the private sector to move this forward

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Anna Triponel | 5 October 2021

Remarks delivered on 5 November as part of COP26 session ‘Business and Government Contributions to a Just Low-Carbon Transition’ at the International Chamber of Commerce (ICC) Make Climate Action Everyone’s Business Forum, convened by the World Benchmarking Alliance (WBA)

Thank you.

It’s a pleasure to be here, and I’d like to congratulate the World Benchmarking Alliance (WBA) team, and everyone who played a role in the assessment. Such important and timely work. There has not been a session this week in Glasgow for COP26 where I have not heard someone reference the need for a ‘just transition’ – and yet your work here shows us in no uncertain terms actually how much more work needs to be done to make this a reality.

A few years ago, I was out in Thailand, helping a company assess its supply chain. It was a lovely company – a family-owned company that had grown with time. Workers who greeted me looking happy; posters on the wall with worker photos, acknowledging their hard work; and a real tangible ethos that people came first. And yet, at the end of the assessment, the owner sat me down and the tone changed to one of desperation. He informed me that the majority of the company’s buyers had provided him notice that they would stop sourcing from this factory. They were moving their supply chains elsewhere and he had already started firing people. Why? Because this was a plastic container factory, and it no longer served buyers’ environmental targets of plastic reduction to source from here.

The just transition is not a theoretical concept.

It’s about people:

• It’s about people who create, and work for, a plastic factory
• It’s about people who specialise in oilwell drilling
• It’s about people who live close to mine sites of minerals needed for electric cars
• It’s about people whose jobs are financed through tax paid by energy companies

The World Resources Institute (WRI) recently issued findings on just transition, and found that there were a number of examples where a just transition had taken place. These examples range from how Germany managed the loss of coal jobs in the Ruhr region, to how Canada managed the shift away from coal in the province of Alberta, to how expansion into solar energy in Morocco took place in a way that engaged and benefited local communities.

So just transition is possible.

So why is it then that we’ve heard from the World Benchmarking Alliance that just transition is not happening. Why is it that here at Glasgow, the recurrent theme is that it is not happening.

We have Professor Tahseen Jafry stating that we’re talking a lot about just transition, and we are in a rush, but that we are not seeing the metrics or the processes that demonstrate that the transition is being just.

We have Al Gore asserting that the value of people – workers, their families, communities – is not being considered by companies, and that companies don’t have the processes in place to do so.

And we have youth leaders like Malala Yousafzai, Greta Thunberg and Vanessa Nakate underscoring that women are being left behind in the transition – that girls and women are at the frontlines of the community crisis, and yet have contributed the least to it and are absent from relevant processes where decisions are being made.

I have the privilege of working with a number of leading companies that are looking to embed human rights respect into their business. Yet, as the WBA finds in its assessment, how companies are progressing on human rights due diligence is somehow distinct from how companies are progressing on just transition.

Why?

Companies are not yet structured to embed the concept of just transition into their business:

• We have siloed areas of expertise – with environmental specialists, climate specialists, social specialists, human rights specialists
• We have siloed strategies and governance arrangement – with separate pillars, separate indicators, governance structures that run in parallel
• We have ESG investors that are not connecting the E, with the S or the G. I’ve surveyed a number of companies on this. Have any of you come across interesting ‘just transition’ targets or questions from your investors? Are they pushing you to consider neighbouring communities in your drive to meet renewable energy targets? Would emissions reduction targets come with corresponding expectations to engage with affected workers? Are you being asked to play a role on broader policy? The answer is: no.

But this is changing.

And by 2030, company structures will look very different to what they look like today.

So what would it take to move from where we are now, to where we need to be?

We can draw some interesting precedent from the business and human rights space here. Fifteen years ago, when I started working in this field, the idea that companies could have impacts on human rights, and that they could have a responsibility for these impacts – even where there was no legal liability – was still pretty revolutionary. And yet look today at any major forward-looking company’s website and you’ll see a page on human rights, and what they are doing to tackle the topic.

What did it take?

• Number one: precision. It took an understanding of the specific expectations and what companies needed to work toward. This WBA methodology is part of the answer. And companies need to translate this into specific internal just transition targets that are tailored to their sector and to their individual transition plans.
• Number two: education. It took an emphasis on building awareness through trainings, senior leadership messaging and other means. We can envision here creating just transition labs and trainings, highlighting actual just transition case studies that resonate for those in the business, and creating spaces for internal dialogue.
• Number three: structure. It took bringing together in a structured way those with human rights expertise, with those making the decisions that could lead to impacts (HR, procurement, etc.). We can envision here the creation of cross-functional just transition committees and working groups, where those who are helping push forward environmental metrics come together with those working on social impacts, in tandem with the business.
• Number four: empowerment, engagement and remedy. It took creating processes to empower workers and community members to speak up, and to engage with the company. It took creating channels to provide remedy to people who had been harmed. One here can envision expanding, or creating new, channels and structures that seek to empower, engage and provide remedy to those impacted by the transition.
• Number five: working with others. It took talking about what is working and what is not working, to find ways to advance on issues together with peers, governments, civil society, trade unions and others. To find ways to create positive enabling environments. The assessment’s findings that companies are not looking at their role within broader policy reform is worrying but not surprising. There are some interesting precedents here of how companies have engaged with governments, the ILO and other players on the future of work, and on bringing along workers impacted by automation. We can envision creating just transition labs with other stakeholders to enable companies to discuss what it would take to advance on just transition in practice, and to align on concrete policy asks.

To conclude, I started my remarks with the example of plastic factory workers. That was intentional. While the focus is rightly on the energy sector in WBA’s assessment, all sectors will need to transform, and find ways to bring workers and communities along with them. We will see significant change to business operations and supply chains over the next ten years, and preparing for and implementing just transition in concrete terms today will set companies on the path for tomorrow.

Even though this is the right thing to do, this is not about doing the right thing. Just transition is the only way to fully achieve environmental ambitions and targets, for we’ll never achieve them, if workers and communities are threatened by them.

I look forward to hearing participants views on what they are seeing in their companies, and what they see as possible ways forward for us.