Ensuring a Just Transition: Empowering Your Workers as You Decarbonize
The urgency of climate action is undeniable. Each year, due to shareholder pressures or evolving corporate priorities, we see more companies reporting on their decarbonizing efforts and commitments. And as part of their reports, companies are disclosing “Climate Transition Plans” – which are corporate roadmaps that define how a company will shift from fossil fuels to 100% renewable energy.
Decarbonization is a global effort and like other historic technological and economic transitions, it will result in the elimination of certain types of jobs, which could be destabilizing to families and communities. For example, each year in the U.S., tens of thousands of jobs are lost due to the slow phaseout of coal mining. Unlike previous industrial transitions, thanks to voluntary and mandatory reporting frameworks, companies now have a standardized set of metrics for demonstrating their equitable transition efforts.
Companies Can Ensure a “Just Transition”
Global entities define a Just Transition in the following ways:
“Greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind.” – International Labour Organization
“Ensuring that the transition to net-zero emissions and climate resilience is orderly, inclusive and just, creates decent work opportunities, and leaves no one behind.” – UN Global Compact
In the last few years, state governments have proposed legislation mandating just transitions:
New York State’s S2935, the Just Energy Transition Act: “New York State is committed to the responsible replacement and redevelopment of its fossil fuel power plants…especially in locations where the health benefits to historically disadvantaged communities can be maximized, and where the cost-effective phasing-out of such facilities can be done while helping to ensure a just transition for the existing workforce.”
California’s AB 1453: “The Just Transition Plan that contains recommendations to transition the state’s economy to a climate-resilient and low-carbon economy that maximizes the benefits of climate actions while minimizing burdens to workers, especially workers in the fossil fuel industry, and their communities, especially communities that face disproportionate burdens from pollution.”
EU Directives and GRI Reporting Requirements
Companies operating in the EU will be required to report on the workforce impacts of the decarbonization efforts, and companies reporting in accordance with the Global Reporting Initiative (GRI) will likely have to as well.
EU’s Corporate Sustainability Reporting Directive (CSRD) states: “Disclose any impacts on its workforce that may arise from the transition to a climate-neutral economy.” (ESRS E1 Climate Change Standard)
GRI’s Proposed Standard on Climate Change includes the following disclosure metrics:
“Disclose impacts on workers, local communities, vulnerable groups associated with the transition and adaptation plans, the use of GHG removals and carbon credits”
“The number of jobs created, eliminated, and redeployed due to the transition plan,” and “the number of employees that received training for up-and-reskilling and the locations where the organization’s transition plan has impacts on local communities and Indigenous peoples.”
Actions Your Company Should Take for a Just Transition
Decarbonization strategies should be revisited annually as opportunities expand and stakeholder expectations evolve. Uplift has a few recommendations for initial actions your company should take prior to embedding Just Transition within your decarbonization plans.
Prepare to Update Your Strategy & Partner with HR
For developing or updating decarbonization strategies, transition plans, and adaptation plans, conduct an assessment to determine which action pathways will likely affect employees, local communities, and indigenous populations. For the assessment, make sure to build a cross-functional team with leads from operations, human resources, social impact, and public affairs teams.
Incorporate Just Transition Principles into Your Next Materiality Assessment
Review your company’s approach to materiality assessment and verify that there is a formal incorporation of Just Transition metrics and planned engagement with relevant stakeholder groups. Reference international resources and best practices to ensure an informed approach to stakeholder engagement. One example of a valuable resource is the International Labour Organization’s “Just Transition Policy Brief.”
Engage Stakeholders
Conduct listening sessions or develop surveys for your workers and local communities to better understand which groups are currently affected or will be affected by decarbonization initiatives. It will be important to get clarity on how your stakeholders are affected in order to assess the effectiveness of workforce-related programs and seek out the right partners.
Establish Partnerships to Maximize Efforts and Share Investment Costs
Consider partnerships with other companies in the same geographic area or local and state governments that will want to keep workers and businesses in the region and grow economic prosperity.
Be Ready to Share Your Commitments and Progress
The “We Mean Business Coalition” recommends that companies publicly commit to a Just Transition and inspire action in the corporate landscape by communicating about their efforts, investments, and partnerships in service to a just transition.
The Uplift Agency
Uplift builds strategies, programs, and communication campaigns that advance ESG in workplaces, supply chains and communities.
We know how to navigate the road ahead because we’ve already been down it – 90 percent of our team has led environmental or social programs in corporations or nonprofits. Because ESG is all we do, our services are more comprehensive and integrated than most firms.
