Recent weeks have seen the UN General Assembly, New York Climate Week, AFR Energy & Climate Summit and a flurry of other events welcome politicians, journalists, NGOs and industry leaders together to discuss climate change.
At these events, a consistently raised issue was that of the “just transition”. The UN Secretary-General reaffirmed its importance in his address to General Assembly, urging economies to leave no person or country behind in addressing climate change.
Similarly, at next month’s 2022 United Nations Climate Change Conference (COP27) in Egypt, declared the “COP of Implementation”, the just transition is expected to take centre stage.
If left unchecked, there is potential for the climate transition to exacerbate existing distributional effects. Lower income or disadvantaged groups, workers in impacted industries, and communities with specialised workforces, especially in regional areas, are likely to be disproportionately impacted.
Indeed, efforts for climate action could result in stakeholder backlash if distributional impacts are not adequately addressed. This could compromise the ability to achieve net-zero targets and perpetuate the disproportionate societal impacts of climate change.
Developed economies as a whole are also facing considerable pressure to provide support to developing countries to help manage those impacts, particularly in light of numerous and more frequent climate catastrophes.
Despite originally being a problem primarily for governments, the just transition has also garnered significant interest from Australian businesses and their boards, in supporting their social licence to operate. Australian businesses will need to implement their emission reductions, sequestration and adaptation in a way that is just, or otherwise risk achieving their climate goals.
With New York Climate Week as their backdrop, the World Economic Forum in collaboration with Deloitte and the Climate Governance Initiative launched “The Chairperson’s Guide to a Just Transition”. This report, part of a series for chairpersons navigating the climate transition, provides a guide for the boardroom to navigate the just transition to support both business and broader social objectives.
A just transition provides an approach to help businesses manage the risks of the climate transition, while harnessing its opportunities. The guide sets a four-step framework.
Chart 1: Four-step framework to a just transition
Source: Deloitte Global.
The four steps above, if implemented effectively, can help to enhance long-term enterprise value, while also helping to address distributional consequences which might arise in addressing climate change. A business will require strong leadership, supported by a sound governance framework to navigate this.
Importantly, without adequate consideration of a just transition, businesses and governments run the risk of public resistance to climate action.