Is It Time for Companies to Focus on a Just Transition?

Will a movement to a just transition become important within the corporate sustainability lexicon in 2023? For many community-focused organizations, such a shift is a must if sustainable development will be fair and equitable for all.

It hasn’t been the most memorable year for the ESG (environmental, social and governance) movement. After several years of outperforming market indices like the S&P 500, many of the largest ESG funds took a huge tumble during 2022. Granted, markets are cyclical. It’s not clear yet whether some of the blowback going on will fade away or only accelerate in the coming months.

To start, over the past several months legislatures in at least 13 U.S. states have passed anti-ESG laws. Some of the arguments against ESG are bizarre: QAnon conspiracy theorists are among the communities that insist ESG is some sort of corporate and elitist plot to push the globe toward a new age of thought police and Marxism, delivered in part by microchips hidden in vaccines. 

Then there’s the other crowd speaking out against ESG — as in critics who say its framework and execution amounts to little more than greenwashing.

The gaslighting and irony aside, the concepts surrounding ESG generate their own set of problems. Just as the very terms “corporate philanthropy” and “corporate social responsibility” have long fallen out of favor, might a focus on a just transition provide companies a path toward addressing social and environmental problems more effectively?

One stubborn challenge with ESG is that it’s a concept that much of the general public still has a difficult time understanding. “Corporate responsibility” and “sustainability” are fairly self-explanatory. But other than to investors, the “G” in ESG, governance, is a challenge to explain, and it's difficult to grasp even for reasonably intelligent, well-informed people.

Analogous to the adage “you can’t manage what you don’t measure,” it’s hard for companies to communicate what many people don’t understand. And therein lies the Trojan horse: If a nebulous concept like ESG isn’t communicated well, there are always other forces that will gladly do the communicating — only they will twist the definition to suit their own agendas. We can see that with what’s been going on in Florida, Texas and, now, Ohio.

Here’s where the case can be made for a framing change for people and planet around a just transition. A just transition, which the global labor movement has pursued for several years, has gained traction as it could meet the needs of all people worldwide by pursuing sustainable development, fighting climate change and securing biodiversity. “Lately, I’ve heard more people in the sustainability space say ‘just transition,’ and I think we’ll hear it even more in 2023,” one of our writers recently predicted in an editorial meeting. 

She’s right. Expect to hear more about a just transition over the next several months. Following a declaration made at COP27 in Glasgow in late 2021, this integration of social and climate justice emerged as one of the leading topics of discussion at last month’s COP27. 

In an interview with TriplePundit last week, Ozawa Bineshi Albert of the Climate Justice Alliance described a just transition as “the process of moving away from our current fossil fuel-based economy to a more regenerative one that is good for all people and Mother Earth."

She continued: "Just transitions are grounded in local communities and may look different depending on the people and place, but these strategies work to transition entire communities to build thriving economies that provide dignified, productive and ecologically sustainable livelihoods, democratic governance and ecological resilience. We often say: We don’t want just a transition, we want a just transition.”

Among the arguments for a just transition framework is that it would push companies to show how they are integrating their climate action with their social impact work; there is no pathway toward silos as one that could emerge in an E, S and G structure. When describing a company’s work around a just transition, it would behoove them to focus less on the “what” and more on the “why” and “how.” Among the hypotheticals, it wouldn’t be enough to talk about switching from coal-based power to renewables. Instead, professionals should look to ask (and answer) questions like: What could be done for job retraining in the communities affected by such a switch, and how will companies prevent waste from such projects ending up in landfill sites near communities of color? 

Further, companies would have to do more than cut a check to nonprofits with a huge brand name. An acknowledgement that marginalized communities — including people of color and Indigenous people — have long been left out of these conversations and action plans could nudge companies toward working more closely with more local and grassroots organizations. Under a just transition, communities wouldn’t just be the recipients or beneficiaries of a sustainability or social impact program; instead, they would be involved with such discussions from the get-go. Instead of charity, communities would gain clarity on how a new program would affect them, and they would have a say in the matter. 

On that point, Bineshi Albert also told 3p: “Over 92 percent of the money held by charitable foundations — over $1.2 trillion dollars — doesn’t go to solving our current interconnected economic, racial and climate crises. The vast majority of it is invested in Wall Street, where business as usual fuels poverty and pollution for the sake of profit.”

As with any framework or concept, a rethink of how to tackle our environmental and social problems under the umbrella of a just transition wouldn’t be immune from criticism. Any elevated talk of local involvement and biodiversity could revive the conspiracy theories akin to Agenda 21, a U.N. declaration from the early 1990s, which for years evoked all kinds of hysteria about a global plot to undermine nations’ sovereignty.

Nevertheless, a just transition, if planned out and implemented transparently and equitably, could help build trust between companies and communities as it would involve more people in these conversations. After all, no one likes being told about a change with the simple conclusion that they’ll benefit. They want to know how — and communities want to be included in the shaping of any such plans, too.

Image credit: PTTI EDU via Unsplash