There is global recognition that we need to increase the pace at which we reduce greenhouse gas emissions and move towards a net zero economy, in order to avoid catastrophic outcomes. Aligned with the commitments of the Paris Agreement, government policy, regulatory frameworks, industry guidance, market instruments and financing requirements are establishing the practical foundations for achieving a net zero economy.
While the need is clear, the solution is not simple. It requires an acceleration of renewable energy development, a transition away from fossil fuels, innovation in hard-to-abate sectors and management of assets at risk due to changing climatic conditions.
The response by companies to the challenge ahead has varied. While setting greenhouse gas emission reduction targets has been a first step for many, companies are now turning their attention to developing climate transition plans to secure their future in a net zero and nature-positive economy. As they do so, they are realizing that people are at the heart of the energy transition.
As companies start to plan for a net zero economy, it is clear that they have a direct role to play in ensuring that the transition is “just”. The current discourse in defining the term “just” refers to an ambitious aspiration: that no one is left behind and that sustainable development (as captured in the UN Sustainable Development Goals) is integral to the plan. These are broad goals that apply to states, international organizations and civil society. Achieving a just transition will require public-private coordination at scale never seen before.
To galvanize corporate action in favor of a just energy transition and, at the same time, business resilience, companies need operationalization frameworks that: clarify responsibilities; spell out opportunities connected to reducing social risks associated to climate change and climate action; and speak to key business decision-making processes.
The purpose of this report is to support businesses as they plan for a just transition, with a focus not on “why” but the “how”, which in turn calls for clarity on the “what”. The intention is not to reinvent the work already done by others, but instead highlight the social and human rights dimensions that need to be considered as businesses seek to decarbonize their value chain.
The report represents ERM’s contribution to the goals of the Business Commission for Tackling Inequality (BCTI), an initiative launched by the World Business Council for Sustainable Development (WBCSD) and its partners, which ERM has been a part of since 2022.
