22 December 2022
Last year at COP26, the UN Global Compact, the International Labour Organization, and the International Trade Union Confederation launched the Think Lab on Just Transition. This year I had the privilege of working with the Think Lab, its partner organizations, and participating companies as author of the Introduction to Just Transition: A Business Brief.
This post is a chance to share that brief with the Future Nexus audience, alongside some personal reflections sparked in the process.
Executive Director, Future Nexus
Future Nexus was named after the nexus linking the public and private sectors, based on a vision of public-private learning ranging from big sustainability ideas to data standards. But the penchant for systems thinking which inspired that vision has led to several more ‘connective’ specializations. In particular, the connection between environmental and social issues is a central theme in our work with clients.
The interdependencies between people and the planet are increasingly recognized in theory and practice, iconized perhaps by the United Nations Human Rights Council’s 2021 affirmation of the human right to a healthy environment. That climate change and other environmental catastrophes take shape as human crises is no longer a theory or a projection. At the same time, an effective response to climate change is necessarily collective and therefore embedded in social systems. The importance of social systems such as finance and policy has been well-recognized in the climate discourse, and the extent to which these are themselves embedded within slower-moving cultural and economic dynamics is being incrementally revealed.1,2
At the broadest level, a ‘just transition’ is the concept which recognizes the systemic dependencies between environmental and social sustainability, and has some ideas for addressing them in a constructive way. It is relevant for how we address a wide range of environmental issues, including biodiversity, pollution, and climate change. The Paris Agreement itself recognizes the ‘imperative’ of a just transition. The details of what this means and core principles for achieving it are developed in the International Labour Organization’s (ILO) Just Transition Guidelines.3 The ILO Guidelines address specific areas of national policy as well as the equally critical question of building coherence between distinct policy areas and public institutions. Constructing an effective policy environment depends on participation from business and labor, and the ILO Guidelines also address how these stakeholders can most effectively contribute to national policy-making.
An enabling policy environment for a just transition promotes fairness, inclusion, and efficiency in both process and outcome. As the concept of just transition moves ever closer to the center of international climate negotiations, the value of this foundational idea—and of the more specific content in the ILO Guidelines—is also increasingly acknowledged outside the context of public policy. Just transition is emerging as a framework which can help businesses address some of the issues that are underappreciated in more conventional sustainability paradigms—for example, paradigms which separate environmental issues from social ones or which prioritize top-down action over strategies to empower those affected by change.
This year I had the privilege of working with the UN Global Compact Think Lab on Just Transition,4 alongside its partner organizations and participating companies, as the author of two of its Business Briefs. The Think Lab was established in 2021 at COP26 by the UN Global Compact, the International Labour Organization, and the International Trade Union Confederation to drive thought leadership on the role of business in a just transition.
The Think Lab created an opportunity for global leaders on just transition—including from business, finance, civil society, academic, and intergovernmental organizations—to discuss the difficulties that businesses face in the just transition, identify solutions that work, and generalize some of the insights for a broader audience. We borrowed heavily from the wisdom embedded in the instruments and frameworks that exist to guide a just transition, corporate sustainability and responsibility, and sustainable finance, as well as from the wide range of initiatives that support specific dimensions of implementation. The insight of individuals with experience and perspective on the topic was also invaluable.
The Introduction to Just Transition: A Business Brief5 has all the ‘good stuff’: the what’s and why’s and how’s of just transition for business. This post is really just a hook for that Brief. At the same time, a few personal reflections have been stirring in the weeks since we launched the brief, which I thought worth sharing in a less official channel. I call them ‘lessons from the field’. Learned through the diverse interactions with global leaders in the field, these lessons are too unpolished for an official report, but as they continue to mature they will nonetheless shape how I and the organization I lead approach our work to advance a just transition for all.
In the context of systems challenges and systems solutions, things get complex quickly. There’s no universal formula for the ‘material interdependencies’ between environmental and social issues.6 There’s also no blueprint for climate transition strategies which are fair and inclusive. The climate transition represents a complex patchwork of the plans and strategies of individual organizations, of economic sectors, of regions and nations (principally led by governments), of the financial system, of workers and labor unions, of civil society, and more. A shared set of principles and standards for the design and implementation of these plans is critical for their interoperability and uptake. In particular, the challenge of defining appropriate metrics for just transition—a crucial aspect of operationalization—depends on a shared framework of principles and objectives.
The guiding principles of a just transition, largely represented in the ILO Guidelines, offers that common baseline. In particular, the recognition that workers and communities should be integral to the process and that the climate transition represents an opportunity to build more equitable and sustainable economies more broadly can facilitate constructive interactions across stakeholder groups, across regions, and internationally. Without this alignment—i.e., some consensus around the terms of a fair process and outcome—what cannot be achieved collectively can hinder what can be achieved collectively. We must prevent this.
Where are we—as a people, community, workforce, nation, or family…where are we going? Just transition provides a vision of a future where no one is left behind and where our efforts to combat climate change are not simply passed on as costs to unlucky segments of society. The narrative dimension of just transition is critical.7 People must see that they have a decent place in the future we are working for before they will support it in any way. Extending the ‘climate franchise’—that is, giving people a real stake in the climate transition, while listening to their voices—is a prerequisite for the robust design and smooth implementation of climate strategies.
Just transition depends on—and builds on—a collective ethical stance: respect for human rights, including Fundamental Principles and Rights at Work. Respect for rights helps us define desired outcomes for workers and communities in a just transition, but is also a tool for achieving them. For example, freedom of association and the right to collectively bargain underpin effective social dialogue (between business and labor, sometimes including governments), which is itself a key process for setting the goal posts and practical trajectories of economic transition.
The bulk of the ILO Guidelines is of a fundamentally practical nature, which indicates perhaps where the ‘heart’ of just transition as a concept lies. There are large and numerous opportunities for improving the efficiency of public and private resources through better coordination, coherence, and integration, including that achieved through social dialogue and stakeholder engagement. Many of these opportunities are left ‘unturned’ simply because governments and other complex organizations are not equipped to identify and harness them. The ILO Guidelines, alongside related research and thought leadership, not only describe what some of these opportunities may look like, but also give concrete ideas for institutional arrangements which can help organizations to identify, develop, and realize them on an ongoing basis.8
While a substantial part of a just transition follows from positive-sum efficiency gains, not all of it does. In fact, an important component of just transition is getting more folks to ‘the table’: the table where climate plans and strategies are negotiated, designed, and overseen. On one hand, this is likely to increase the challenges related to competing interests. On the other hand, alignment achieved in the narrative, normative, and practical dimensions puts these difficult negotiations on a more constructive footing. Bringing more enfranchised voices to the table while simultaneously establishing a forum that supports robust and legitimate negotiation outcomes—reducing risk in and increasing the speed of climate transition—is the crowning achievement of the just transition framework.
As the stakes (and temperatures) continue to rise, the materiality of both climate change and the holistic response it demands is felt across the private sector. Financial institutions and real-economy businesses of every type and size are formulating a vision of their place in a more sustainable world and developing strategies, policies, and practices that take them there. This is unquestionably an occasion for ‘pulling out all the stops’, and that includes all the areas of operations where corporate and financial actors can contribute to a just climate transition.
Yet in our quest to identify private sector policies, strategies, and practices that promote a just transition, we were repeatedly led back to the need for collective action. Collective action includes formal partnerships and social dialogue, but it also includes the standards and frameworks which shape business practices. This baseline helps to ensure that sustainable business practices don’t come at the cost of competitiveness. Thus, ‘pulling out all the stops’ does mean reforming business practices, but equally important is business’ constructive influence over the frameworks which guide collective behavior. Public policy plays the central role in shifting business practices, while independent standard-setters also serve an important function. Social dialogue emerges (again) as a crucial factor for improving alignment between business and labor, as well as with the policymakers who devise standards and plans that coordinate and balance the needs of different economic sectors and stakeholder groups.
Decent work reduces social frictions through its distributive forces, but also through its narrative and normative forces. And that’s true not just for ‘the worker’: decent work is also about the society we all want to live in, where individuals and communities are respected and there exists a baseline for security and wellbeing. Recognizing the full powers of Decent Work as an idea and goal and embedding this understanding within just transition strategies generates a more robust foundation for our efforts.
Climate change mitigation is underpinned by systemic qualities including economic innovation and resilience, social participation and uptake, political stability and support, financial stability and access, and international cooperation.10 Small wins for emissions reductions which erode this broader foundation for mitigation activities work against climate objectives. Moreover, this approach represents a significant loss of opportunity. Climate change mitigation should be adopted as a propellant for collective action, recognizing that it also has the capacity to drive progress on other environmental, social, and economic goals.
Moreover, mitigation is only half of the challenge. Adaptation to climate change is equally underpinned by sustainable systems, and is itself a necessary condition for effective mitigation. Indeed, as the face of climate change matures in real time, these two dimensions of climate action become less distinct. Emblematic of the link, natural disasters are often themselves drivers of GHG emissions. In the realm of natural infrastructure and regenerative agriculture, we also see the fundamental union of adaptation and mitigation potential. And at the broadest level, investments in low-emissions technologies, infrastructure, and products depend on economic resilience and development. Acknowledging these dependencies rightly pushes us off a course of carbon reductionism—even for the purposes of mitigation alone.
Climate action–including both mitigation and adaptation–needs a solid footing. That means a holistic approach to climate change, to planetary health, and to the human-climate nexus. This depends on agreement around foundational principles and clear-headed negotiation of the trade-offs. Just transition ensures affected stakeholders have a place in the process and provides a basis for alignment around how the economic, environmental, and social pieces come together—and what can be achieved.
Just transition is an evolving space. New ideas, new experiments and experiences, new risks and concerns, new pockets of consensus, new tools and techniques, and new players continually appear. As they do, the ecosystem of just transition practice grows and adjusts through iterative planning and experimentation, evaluation and learning, sharing and partnering. Some consolidation of best practices is useful, though it’s also important to protect the space required for adaptation and experimentation in local contexts.
Across these developments, however, a common theme is emerging. For businesses, for financial institutions, and for governments too, sustainability is no longer a side-show. ‘Side-show ESG’ is simply too costly to justify the marginal benefit. That doesn’t mean that every organization must set out to save the world. It does mean, though, that every organization needs a vision of its place in that future world. That vision is a precondition for not acting against it. It also serves as the basis for broader engagement with stakeholders, including businesses, governments, financial institutions, workers, customers, and beyond.
Here comes that hook again. Check out the fruits of our decent labor: Introduction to Just Transition: A Business Brief.
In writing this post, thinking about the systemic response required for a systemic challenge, the phrase ‘pulling out all the stops’ kept coming to mind. As the owner and player of this 1890 Packard reed organ, the metaphor means something special to me, even though for the sake of my neighbors I never do it. Just for kicks, I went over to the organ and pulled out all the stops. As I read the names of all the stop tabs again, I was surprised to remember that right in the middle of this (relatively modest) set of stops was Vox Humana: human voice. The metaphor tripled in meaning for me then, as I reflected on the centrality of (human) voice and representation in a just transition.
This organ was restored in the 1990s, but the Vox Humana stop is usually the first to break, and this one already had (again) when I bought the instrument. Vox Humana has a moving part (the tremulant, undulating the air flow) which makes it more delicate than the others. Strangely, more now than before, I can’t help but to miss that stop and think that the human voice would have made the music I play now a lot more beautiful.