24 February 2022 Story Philanthropy

Accelerating our progress towards a Just Transition

If 2021 taught us anything, it was that the dual crises of climate change and inequality are deeply linked. Climate change impacts economic opportunity, poverty and inequality, which can lead to social unrest and polarisation, making support for climate action challenging. Given these links, these two crises demand an ambitious, global response.

Solutions on how to address them will require us to understand, explore and address these interconnections. To many, this is not a new or profound realisation, but it should be at the centre of how government and the private sector respond to the challenges before us.

This is the promise of a “just transition”, and it is time for us all to focus our efforts on accelerating it.

Just transition has emerged as the strongest model for global, national, and local economies to move towards long-term equitable and climate-positive outcomes.

In 2015, the International Labor Organization (ILO) issued a set of “Guidelines for a just transition towards environmentally sustainable economies and societies for all”. They included considerations to assist governments in setting macro-economic, industrial, sectoral, and labour policies to address environmental, social and economic issues together through a ‘whole of economy’ approach. The aim is to reduce the impacts of job losses on workers and communities while producing new, green, and decent employment and healthy communities.

How are governments acting on a just transition?

At the COP26 climate summit in Glasgow, major governments endorsed a set of principles that built on previous commitments made to address a just transition: supporting communities and regions that are particularly vulnerable to the economic, employment and social effects of a global transition; and promoting social dialogue between governments and the representative organisations of workers and employers, amongst other things.

As part of this, they have also agreed to increase transparency by reporting on the progress of their just transition efforts in their biennial transparency reports.

This was an important development, as it ensures that just transition framing and approaches guide action on climate change and create public accountability. While the list of governments remains relatively sparse, with 16 countries and the EU endorsing the statement, it does provide a strong model for others to join.

Some governments and institutions are already moving towards support for just transition approaches. The European Union, for example, has created a Just Transition Mechanism (JTM) including a fund of nearly 20 billion EUR, with hopes of unlocking much more to support investments in innovation, reskilling, and transformation of carbon-intensive installations.

The Scottish government has created a new Just Transition Commission to support the production and monitoring of just transition plans co-designed and co-delivered by communities, business, unions and workers. Canada has launched a Just Transition Engagement, creating a public process to provide feedback on potential elements of just transition legislation.

How is the private sector supporting a just transition?

Focusing on a just transition can provide a useful approach for companies that are seeking to ensure a positive contribution to the Paris climate agreement goals and to meeting social and legal expectations that have emerged in recent years.

From the Sustainable Development Goals (SDGs) to the United Nations Guiding Principles on Business and Human Rights (UNGPs), companies are being urged to align their operations and relationships with environmental and human rights standards.  Recent regulatory advancements on mandatory human rights and environmental due diligence will push them to assess and address potential impacts across their supply chains and business relationships.

Still, action is lagging, as confirmed by findings from the World Benchmarking Alliance (WBA) which provide a useful Just Transition Assessment pilot covering some 180 companies across three sectors: oil and gas, electric utilities and automotive manufactures. The findings indicated minimal action by companies in these sectors, with only two of the companies assessed meeting the requirement for social dialogue and stakeholder engagement seen as fundamental for a just transition planning: British energy firm SSE and multinational oil and gas company BP.  The significant momentum and financing needed to support a just transition across economies will require all actors – including in the financial sector – to mobilise support.  A recent study by Clifford Chance and the Institute for Human Rights and Business noted the numerous challenges in  accelerating action from the banking sector, including the need for new principles and practical tools.

Where to from here?

Workers and unions are taking the lead in making a just transition reality, as seen by the efforts of the Just Transition Center which  is supporting workers and their allies in building capacity while providing input into national and global policy discussions.

Philanthropy must also step up, by delivering more resources  to develop the advocacy, capacity-building and accountability strategies needed for action by governments, business and finance. At the same time, adopting the language and framing of just transition can help build public momentum.

A just transition is the key pathway towards creating opportunities for both decent work and addressing the complexities of climate change. As such, the fledgling efforts underway to work out how it should be done deserve more attention, engagement, and support.

  • Amol Mehra

    By Amol Mehra

    Director of Industry Programmes