Why climate justice matters for companies

Anna Triponel

October 21, 2022
Our key takeaway: Beyond a focus on greenhouse gas emissions and net-zero, companies need to apply a climate justice lens to their efforts—both for their own benefit and for the benefit of people in their value chain, like workers, customers and suppliers. Experts Zahid Torres Rahman, Jane Nelson and Tara Shine, under the auspices of their respective institutions, have proposed a climate justice framework with seven core principles: taking a people-centered and rights-based approach; planning for a just transition; sharing burdens and benefits of climate action fairly; increasing participation of stakeholders, transparency and accountability; prioritising diversity, equity and inclusion in climate efforts; growing education and skills for a net-zero transition; and partnering with others to tackle the joint large-scale challenges of climate change and injustice. 

Zahid Torres Rahman, Jane Nelson and Tara Shine published A Framework for Business Action on Climate Justice (October 2022) in the Stanford Social Innovation Review. The piece explains “[w]hy we need to move business from the margins to the mainstream on climate justice, and how to get there” and puts forward a seven-principle framework:

  • What is climate justice?: Our developing and changing world has rapidly been pushing companies to “act urgently, not just on climate change but also on climate justice: the process of finding solutions to climate change that also address social inequities due to gender, race, ethnicity, geography, income, and other factors.” Per the authors, “Acting on climate justice is important, because social inequities increase the severity of the risks and costs that vulnerable people face as a result of climate change. They also diminish people’s ability to participate in opportunities that will accompany the world’s transition to a lower-carbon, more resource-efficient, and more socially inclusive green economy.”
  • Why climate justice matters for companies: Climate justice becomes more important in light of recent trends and events that are shifting the business landscape. These include the COVID-19 pandemic, which “exacerbated deep social inequities and vulnerabilities” and “also highlighted human and environmental interconnectedness and galvanized large-scale, rapid collective action to respond and recover. As a result, business is increasingly interested in approaching environmental, social, and governance goals more holistically.” In addition, a company’s stakeholders—including investors, consumers, employees and the public—increasingly expect companies to definitively act on climate change and social inequality. Also, political action on climate justice has grown, creating an environment that pressures companies to act. And, companies are realising that the risks of climate change are not just financial: “Increasingly, these include risks related to jobs; human rights; supply chain resilience; and even business models, security, and competitiveness. … Unless companies actively pursue climate justice across their supply chains, they not only threaten the speed and scale of the transition to net-zero, but also risk exacerbating inequality and losing brand equity and stakeholder trust.” 
  • Seven principles of climate justice: The authors’ respective institutions, including Business Fights Poverty, the Corporate Responsibility Initiative at Harvard Kennedy School, and the sustainability and climate-focused consultancy Change by Degrees have developed an action framework for businesses. The framework includes seven principles based on the Climate Justice Principles developed by the Mary Robinson Foundation: “(1) Taking a people-centered and rights-based approach: Is the company committed to respecting human rights across its operations and its supply chains? Does it support the UN Guiding Principles on Business and Human Rights and apply these to the company's due diligence on environmental issues, including climate commitments?; (2) Planning for a just transition: Does the company have a just plan to transition away from carbon? Are employees, workers, and host communities involved in planning for the transition? Do they have access to the training, skills, capabilities, and resources they will need to cope with and benefit from the energy transition?; (3) Sharing burdens and benefits fairly: Do the company’s climate strategy and investments protect the most vulnerable people and communities from the impacts of climate change, the energy transition, and related policies? Are the benefits of the company’s climate actions (such as clean air, technological advances, and green jobs) accessible to all?; (4) Participation, transparency, and accountability: How do the needs of the people most impacted by climate change and the energy transition inform the company’s policies and products? Who holds the company to account? How does the company make its commitments and actions transparent to employees, customers, suppliers, and host communities?; (5) Diversity, equity, and inclusion: Has the company identified how different people and groups are vulnerable to both climate change and climate action? Does a diverse and inclusive group of stakeholders contribute to climate-related decisions? Are the company’s commitments to diversity, equity, and inclusion linked to its climate commitments?; (6) Education and skills: Is the company investing in skills training, tools, and knowledge to promote climate justice, and improve future opportunities and resilience among employees and across the supply chain?; and (7) Partnerships: Is the company actively partnering with governments, suppliers, NGOs, and employee groups to overcome obstacles to advancing climate justice, and scale impact?”

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