• BDO on COP26

'A just transition' to a lower carbon world - the human factor

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Compared to all the positive visions associated with carbon transition opportunities, breakthrough green technologies and climate resilient business models, the human dimension – the S in ESG if you like – often fails to grab the attention it deserves. Nearly everyone agrees that a lower carbon world is critical to the quality life of current and future generations.  Consequently, the notion of a ‘just transition’ has emerged around COP26.  This maintains that the transition to net zero is a morally right and fair course of action.

The concept of a just transition emerged in the United States labour movement during the 1970s, as a response to the increased regulation of polluting industries. Nuclear, chemical and oil industry employees working at contaminated factory sites faced job losses and advocated for worker retraining, financial and reskilling support for affected communities and more environmentally benign production methods. Employees wanted to maintain their employability and protect their communities by ‘transitioning’ to new jobs or by acquiring skills needed in a more regulated industry environment.    

Most just transition principles fall into clear themes emphasising socially and environmentally friendly business and economic practices; community well-being and resilience; democratic, participatory processes in developing solutions; sustainable employment and support for employees transitioning to new industries; equitable distribution of natural resources and respect for the culture and traditional knowledge.

Just transition principles have been included in the language used by various campaigning organisations for developing nations, the UN, the EU Commission, and the World Bank. References are even made in the 2015 Paris climate agreement, which references ‘the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities’ in highlighting the importance of workers in responding to climate change.

In a UN Sustainable Development Goal (SDG) context the just transition concept links to 14 of the 17 SDGs and explicitly links to #7 (affordable and clean energy), #8 (decent work and economic growth), #9 (sustainable cities and communities), #10 (reduced inequalities) and #13 (climate action).

How the global community manages the transition to net zero is critical. While the transition is expected to create millions of new jobs in the renewables and technology sectors, many of the world’s coal, oil and gas workers and their communities will struggle to access them. Moreover, the psychological, cultural and other social impacts facing communities seemingly left behind by the transition may have long-lasting effects, particularly in regions that already experience severe inequality and poverty. We also need to remember that these social impacts are in addition to the predicted (climate change related) migration of millions of people displaced by more frequent droughts, floods, hurricanes, forest fires and desertification of productive agricultural land.

In addition to any significant green measures agreed at COP26 (including investments in renewables and climate resilient infrastructure) it is critical to address the issue of fairer distribution of the social and economic costs and benefits attached to the lower carbon transition. This is especially pertinent in the context of the ongoing Covid-19 pandemic AND recovery, which has exacerbated inequalities and created additional economic risks for industry sectors, people and regions that will also be impacted by this transition.

The World Bank, a major stakeholder committed to a ‘Just transition for all’ is working tirelessly to keep this topic on the political and investor radar - including at the upcoming COP26 in Glasgow. As a founder of the transition initiative for extractive industries including coal, oil and gas, it aims to put people and communities at the centre of the net zero transition. The initiative works with all affected stakeholders to create the plans, policies, reforms and investment needed to mitigate environmental impacts, support impacted people, and build a new, clean energy future across the world.

The global climate emergency is the defining issue of our time. To enable a ‘Just transition for all’ our political, business and community leaders need to work together to create solid foundations for a lower carbon, more equitable and sustainable world. COP26 could be a transition beacon - shining a bright light on the road to a just transition to net zero, so let’s work together to translate that promise into decisive action.

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Trond-Morten is the is the global sponsor of the BDO sustainability programme and responsible for the development of the approach, framework, governance and support around how BDO firms and the BDO Global Office can adopt and integrate sustainability into their business and culture.