During the COP26 summit, a coalition of 190 countries and organisations committed to phase out coal energy by 2040 as part of their commitment to transition to a low-carbon economy.  The coalition also stated, in their ‘Global Coal To Clean Power Transition Statement’, that they would provide a framework to support affected workers, sectors and communities to make a “just transition” away from unabated coal power.  The coalition’s concern is that the transition to a low-carbon economy may leave many coal-dependent economies at risk of economic hardship and social unrest.

The ‘Just Transition Assessment‘ (the Assessment) recently published by the World Benchmarking Alliance (WBA) provides important insight into the metrics that NGOs may lobby for in order to achieve what they view as a “just transition” (for information on some of the WBA’s other initiatives, please see our Corporate Human Rights Benchmark publication).  In carrying out the Assessment, the WBA states that it has measured the actions that some of the world’s most influential companies have taken to support workers and communities whilst they transform to low-carbon business models.

The Assessment contends that there is a “systematic lack of action by  companies to identify, prepare for and mitigate the social impacts of their low-carbon strategies”.  The Assessment goes on to state that these purported inadequacies need to be addressed, as transition risks being adversely affected by social unrest among those whose livelihoods are threatened.

What is a “just transition”?

In the view of the WBA, a “just transition” is an economy-wide process that aims to deliver the transition of economies and companies to low carbon, “socially just” and “environmentally sustainable” activities, by promoting social dialogue between employers, unions, governments and communities.

Under the WBA’s metrics, the goal of the “just transition” is for companies to reduce greenhouse gas (GHG) emissions and increase resource productivity in a way that retains and improves employment, maximises positive effects for workers and communities, and allows companies to grasp the commercial opportunities presented by the low carbon transition.  The Just Transition Centre’s ‘Just Transition: A Business Guide’ report advocates that a “just transition” helps ensure that companies, workers, and communities have the skills, investments and capabilities required to minimise the risks and maximise the opportunities presented by the transition to a low carbon economy.

The Assessment’s methodology

The WBA has analysed companies’ publicly available disclosures against its Core Social Indicators and new Just Transition Indicators (JTIs), which have been designed to determine whether companies are meeting, in the WBA’s view, the expectations that stakeholders have as to how they should be contributing to a “just transition”. In the WBA’s view, the JTIs determine the extent to which businesses are:

  1. Engaging in “meaningful social dialogue and stakeholder engagement” on a “just transition”;
  2. Developing and implementing “just transition planning,” which “respects and promotes workers’, communities’ and affected stakeholders’ fundamental rights”;
  3. Minimising the impact of employment dislocation caused by the transition to a low-carbon economy, by creating and providing or supporting access to “green and decent jobs”;
  4. Enabling job creation, retention and redeployment through appropriate skills development and training;
  5. Contributing to “social protection,” paying “fair taxes” and managing the impact of the low-carbon transition on social protection in “just transition” planning and related activities; and
  6. Advocating for policies and regulation that support a “just transition” and avoiding undermining policies that are “just transition-friendly”.

By analysing companies’ publicly available disclosures against these JTIs, the WBA stakes out its claim to provide insight into how companies are managing the challenge of reducing GHG emissions in a way that “leaves no one behind”.

The Assessment’s key thematic findings

The Assessment presents 5 key thematic conclusions that follow from its methodological approach:

  1. The majority of companies are failing to demonstrate efforts towards a just transition;
  2. The people most at risk are being left out of decisions that affect their future;
  3. Companies must commit to reskilling workers, or risk a stranded workforce;
  4. Companies are not using their influence to protect people, manage social impacts and / or advocate for a just transition; and
  5. A just transition needs to be underpinned by companies’ respect for human rights.

From 2022 onwards, the WBA will integrate the Assessment into its Climate and Energy Benchmark, which ranks the world’s most influential companies in terms of their progress under the WBA’s metrics against the Paris Agreement and Sustainable Development Goal 13.

This blog post is only intended to provide  information for the benefit of global businesses and clients who may value knowing about this NGO initiative.

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