Vanessa Ludden, Christine Lunde Rasmussen
May 23, 2022
Why should businesses care about a just transition?
Is there really a need for a new term – the concept of a just transition – to describe sustainability? Yes, because otherwise we risk being blind to the downsides and hidden opportunities of the green transition, say Ramboll experts.
Companies are increasingly expected to report on their sustainability goals and commitments.
Some use the Sustainable Development Goals (SDG) as their North Star, others are committed to the UN Global Compact, and still others set Science Based Targets for carbon reductions. In many cases, companies align to all three or even more, and progress is published in annual ESG or CSR reports.
In this mix, a new term is entering the mainstream: the concept of a just transition. In a field already crowded with standards and acronyms, we ask two Ramboll experts what sets the just transition apart – and how it matters to your business.
The green transition will also have downsides
"By trying to understand who the winners and losers of the green transition are likely to be, we can come up with policies and practices to counter and mitigate the risk of these inequalities widening"
The just transition is increasingly central to policymakers, after having first been popularised by civil society activists: it was inscribed into the Paris agreement, and the European Union has launched a Just Transition Mechanism (JTM) to mobilise €55 billion “to alleviate the socio-economic impact of the [green] transition”.
Even in Google searches, the increasing interest is evident. Since 2018, Google searches for ‘just transition’ have increased fourfold, peaking during last year’s COP26, where just transition was one of the hottest topics.
In your research, you explain that the green transition can have negative consequences. Can you give an example of that?
“One example is the so-called renovictions. In many places, houses and homes are being made more climate resilient, which is good and necessary. But that also leads to higher property values, which in turn can price existing tenants out of the market, who are then forced to move. In many cases, they move further away from the city to lower quality housing,” Christine Rasmussen explains.
3 ways businesses can contribute to a just transition
Acknowledge the problem: Most of the research into the green transition has so far focused on the technical aspects of the green transition. However, knowledge is more limited with regards to the negative social impacts of the transition. Businesses have a role to play in acknowledging that their greening activities can potentially have negative social consequences.
- Assess your impact: Your first goal should thus be to try to understand what the potential negative social impacts of the ‘greening’ of your service or product might be. You can do this either through conversations with your employees, or by reaching out to experts and other businesses in your sector.
- Take action: Ask yourself: are you ready to change production chains or processes? And to invest in building competences for those employees who may otherwise lose their jobs? Be ready to take action. As the transition accelerates, companies should also consider hiring experts outside the purely technical fields who can help them understand, assess and address the social impact of their products and services and mitigate potential negative impacts.
Isn’t there a risk that we are asking too much of private companies?