Week of 1 November 2021
WBA finds that the vast majority of high-emitting companies are not demonstrating efforts towards a just transition
Our key takeaway: The World Benchmarking Alliance finds that 180 companies in the oil and gas, electric utilities and automotive manufacturing sectors are not demonstrating efforts towards a just transition. Their methodology sets out a roadmap of the foundational steps companies should take to contribute to a low-carbon transformation that leaves no one behind.
The World Benchmarking Alliance (WBA) has published the results of its just transition assessment: “Just Transition Assessment 2021: Are high-emitting companies putting people at the heart of decarbonisation?” which assesses 100 oil and gas companies, 50 electric utilities and 30 automotive manufacturers (viewed as “globally influential companies from high-emitting sectors to a just transition”) in terms of their contributions to a just transition:
- Just transition roadmap: “A ‘just transition’ envisions resilient and thriving workers and communities carrying out green and decent jobs, while limiting the global temperature increase to 1.5°C above pre-industrial levels in line with the Paris Agreement.” Companies are evaluated based on core social indicators (CSIs), as well as new just transition indicators (JTIs) which “assess companies’ social dialogue and stakeholder engagement, and their planning and execution of fundamental contributions to a just transition.” These indicators are particularly interesting for companies, since they provide “a roadmap of the foundational steps companies should take to contribute to a low-carbon transformation that leaves no one behind.” Although they were developed for the decarbonisation and energy transformation, the WBA notes that they are sector agnostic and can be used by a range of other industries.
- Six measurement areas to evaluate a company’s just transition approach. To evaluate just transition in practice, WBA first looks at the company’s planning, and measures (1) the fundamentals of social dialogue and stakeholder engagement and (2) planning for a just transition. The WBA then looks at measures to take forward this plan through action: (3) green and decent job creation and (4) retaining and re-and/or up-skilling. The WBA then looks at how companies support and influence the shift to a just, societal transformation, together with governments through (5) social protection and social impact management and (6) advocacy for policies and regulation supporting a just transition.
- “Vast majority of high-emitting companies fail to demonstrate efforts towards a just transition”: WBA has five findings. First, the “vast majority of high-emitting companies fail to demonstrate efforts towards a just transition.” Out of a possible score of 16, the vast majority of companies (84%) score 4 points or less, and 32 of those companies score 0. Second, “people most at risk are being left out of decisions that affect their future.” WBA underscores that “[j]ust transition planning is only effective when informed by negotiation through social dialogue, stakeholder engagement and social impact mitigation”, and yet “[c]ompanies’ performance on these actions and processes is shockingly low.” Only two out of 180 companies meet the fundamental requirements. And only 15 companies include the voices of those who will be most impacted in their plans. WBA calls for companies to set “time-bound targets to mitigate the social impacts of the just transition on workers, affected communities and its business relationships.” Third, “[o]nly 23% of the 180 companies assessed have a public commitment to reskill or upskill workers displaced by the low-carbon transition”, which leaves companies at risk of “a stranded workforce which would have momentous impact on supply chains and energy access.” Fourth, businesses are “still not using their influence to protect people, manage social impacts and advocate for a just transition”, with only seven out of 180 companies demonstrating that they advocate for policies and regulations for a just transition. Fifth, “a just transition needs to be underpinned by companies’ respect for human rights”, and yet “only 12 companies demonstrate the basics of identifying and managing human rights risks.” WBA compared progress on just transition indicators, with progress on respect for human rights and “found almost no correlation between a company’s relative performance on human rights and a just transition. This lack of a correlation suggests that many companies still consider and address the social risks and plans for a low-carbon transition independently from human rights issues.”
WBA, World Benchmarking Alliance Just Transition Methodology (July 2021)