Just transition ranking for high-emitting sectors: decarbonisation and impacts to people

Decarbonisation of the economy is needed to tackle climate change – but these efforts will only succeed if people are not left behind in the transition. A just transition on the part of companies in high-emitting sectors is possible, so long as these companies work in tandem with communities, workers, unions and policymakers. The World Benchmarking Alliance’s new just transition benchmarking framework will assess 450 companies on their contributions to a just transition alongside their contributions to reducing emissions. The framework was born from the key role played by companies as both emitters and employers, as the creators of entire economies around their operations, and as players with major influence to drive the just transition.

Non-profit organisation the World Benchmarking Alliance (WBA) has launched a new framework for benchmarking companies on their contribution to advancing a just climate transition. This work builds on WBA’s system transformation model, which puts people at the center of progress on climate action, urban development, technological innovation, food systems and circular economy (read more about this in our previous week’s overview of WBA’s Social Transformation model).

Source: WBA, Assessing a just transition: measuring the decarbonisation and energy transformation that leaves no one behind (February 2021)

The just transition framework centers around Measuring the Decarbonisation and Energy Transformation That Leaves No One Behind. WBA highlights that “[s]ustainable development can only be achieved by striking the right balance between economic, environmental and social components. Decarbonisation of the economy will only succeed if climate justice includes solutions for workers and communities.” To achieve the just transition, the private sector is needed to drive innovation and investment to curb climate change—but this cannot be done without working with stakeholders, from communities to workers to trade unions to policymakers, “to ensure no one is left behind.”

Key takeaways from the framework

• The major role of companies as emitters and employers: The private sector contributes substantially to the release of greenhouse gas emissions, especially the highest emitters in the energy sector. What’s more, according to WBA around 28.4 million people work in the energy sector or supporting industries and an additional 1.4 billion people “have been identified as employed in sectors critical to climate stability.”
• Energy companies create new socioeconomic ecosystems around their operations, including by employing local workers, bringing foreign workers into the local community and creating a supporting market for goods and services aimed at energy operations and the influx of new workers. This means that they are linchpins of socioeconomic development in many places, especially poor, rural regions without other major economic opportunities. According to the WBA, “for sectors in which withdrawal of operations is necessary, this comes with responsibility to plan for those communities too.”
• With great influence comes the power to ensure a just transition: “Through engagement with workers and their communities, unions and policymakers, companies can act as a force for good in accelerating and implementing key elements of a just transition. Moreover, by contributing to a just transition, companies can take action towards both the Paris goals and the SDGS, in particular SDG 8 on Decent Work and Economic Growth.”

Source: WBA, Assessing a just transition: measuring the decarbonisation and energy transformation that leaves no one behind (February 2021)

Next steps for the framework

Within the SDG2000 (the 2,000 most influential companies to the SDGs), WBA finds that there are 450 companies that are the most influential for the decarbonisation and energy system transformation. These companies are from a range of sectors: automotive manufacturing, electric utilities, oil and gas, transport, real estate, cement, metals and mining, and heavy machinery. WBA will be assessing these companies (by 2023) on both how they are aligning with the Paris Agreement, and how they are addressing the social challenges of a low-carbon transition.

Currently, companies are assessed using the “Assessing low-Carbon Transition” (ACT) methodology. To factor in progress on the just transition, WBA will also begin integrating assessment against a core set of social criteria (applicable to all WBA benchmarked companies) and a specific set of just transition social indicators currently under development. Because different sectors will entail different responses to a just transition, there will be sector-agnostic just transition indicators as well as sector-specific indicators for each industry benchmarked.

Proposed topics, mapped to existing WBA core social and ACT indicators

Source: WBA, Assessing a just transition: measuring the decarbonisation and energy transformation that leaves no one behind (February 2021)

To learn more about the Just Transition Framework and the assessment methodology, you can read the full report here: WBA, Assessing a just transition: measuring the decarbonisation and energy transformation that leaves no one behind (February 2021)

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“Sustainable development can only be achieved by striking the right balance between economic, environmental and social components. Decarbonisation of our global economy will only succeed if climate justice includes solutions for workers and communities, also known as a ‘just transition’. Part of this just transition, according to the Paris Agreement, involves the creation of decent work and quality jobs. The private sector has a critical role to play in facilitating the shift towards a low-carbon world, but it must work in tandem with communities, workers, unions and policymakers to ensure no one is left behind.”                      

WBA, Assessing a just transition: measuring the decarbonisation and energy transformation that leaves no one behind (February 2021)