6 Steps for Integrating Just Transition into Business Strategies

By Ilse Heine

A just transition recognizes that while transitioning away from carbon-intensive industries is essential, it must be done in a way that protects workers, supports communities, and respects human rights. This means ensuring access to new employment opportunities, reskilling programs, and social protections while engaging with affected stakeholders. 

Businesses can play a crucial role by embedding just transition into their strategies, which is also becoming a growing expectation of policymakers, investors, customers, and other stakeholders. This is still a new topic for most companies, particularly for those outside of the energy sector. As such, this blog summarizes key actionable steps for business, as well as examples of best practices across industries. 

1. Commit to Just Transition at the Leadership Level 

Companies can publicly commit to a just transition, either by developing a public set of principles, or through integration into existing policies or principles (e.g., Human Rights Policy). Several energy companies have adopted just transition commitments (e.g., Equinor, Southern Company, Enel) but by comparison, companies in other industries do not have as mature practices. That said, there are some notable exceptions:

• Salesforce states that a core aspect of its climate action is reducing absolute emissions in a way that “achieves a just and equitable transition.” They are committed to thinking about more than just megawatts, but also the “economic, social, as well as human and ecosystem health benefits of clean energy.
• In their 2022 Sustainability Disclosure report, H&M Group states, “we have identified opportunities to leverage our transition from a linear economy to a circular, net-zero one and are committed to ensuring that this will be a just transition for people across our value chain.”
• As part of the launch of their inaugural climate transition plan, Levi Strauss & Co.  publicly recognized that, “climate change poses a risk to global economic development and will further exacerbate social inequities,” and is committed “to advancing our learning and integrating climate justice into our operations, partnerships, and sustainability strategies.” 

A public commitment or set of principles ensures that just transition is a sustained priority within the business and strengthens accountability and legitimacy. Just transition becomes not just an aspiration, but an actionable framework for change. 

2. Embed Equity in Renewable Energy Strategy  

To reduce their emissions, companies are increasingly looking to renewable energy to power their operations and supply chains, given that the energy sector is one of the largest contributors to global carbon emissions. Some common practices that business is using to adopt renewable energy, include purchase power agreements (PPAs), renewable energy certificates (RECs), and energy storage solutions among others.  

PPAs, which are long-term contracts for the purchase of sustainable energy, can positively impact communities by creating new jobs, improving access to energy, and create shared savings, among others. Microsoft has been a leader in integrating environmental justice and just transition into its PPAs by actively aligning its renewable energy procurement with principles that go beyond just reducing carbon emissions. The company’s strategy includes using PPAs to prioritize economic inclusion in supply chains and to create new opportunities to strengthen and empower frontline populations who are most vulnerable to climate-related risks and effects.  

In collaboration with Volt Energy, the Just Transition PowerForce, and WSP, Microsoft produced two resources: the Environmental Justice in Renewable Energy Procurement paper and the Environmental Justice Measurement and Evaluation Framework. The first resource provides sample equity PPA contract language, avenues to maximize social impact, while the framework includes a list of prerequisite criteria (e.g., community involvement, measures to prevent displacement) to steward a funding or project selection process. 

3. Collaborate with Suppliers 

Companies should work closely with suppliers to address the social impacts of their climate strategies. Specifically, large, multinational companies are increasingly addressing their Scope 3 emissions, given that they contribute significantly to their carbon footprint. In practice, this means that they are increasingly moving away from voluntary carbon reduction targets to more stringent, legally required goals throughout the supply chain. However, without providing the proper support and guidance to suppliers, these requirements may have negative consequences for human rights. For instance, suppliers might face pressure to cut costs to meet carbon targets, which could lead to issues like wage suppression, poor working conditions, or exploitation.  

Companies can prevent these impacts by working with suppliers in several capacities, such as providing financial support. Apple, for instance, created the China Clean Energy Fund, a first-of-its-kind investment fund to connect suppliers in China with renewable energy sources, enabling Apple and its suppliers to jointly invest in over 650 megawatts of renewable electricity. Another example of a financing initiative is the Future Supplier Initiative, which brings together brands to collectively finance decarbonization for shared suppliers by limiting the cost of borrowing for factories and enabling access to technical support. 

4. Engage Workers & their Representatives   

Companies should engage workers and their representatives in the planning and decision-making processes, thereby ensuring that their specific needs, challenges, and aspirations are addressed. Workers and community members often have deep knowledge of local issues, industry-specific challenges, and potential solutions that outside experts may overlook. Engaging impacted workers and their representatives early on can also help companies identify and address potential grievances early on, reducing the risk of social unrest, protests, or legal challenges. 

For instance, contract negotiations between The United Auto Workers (UAW) and GM, Ford and Stellantis in the fall of 2023 all included guidance on worker transitions. Specifically, the GM agreement accounts for worker displacement caused by the transition, allowing GM powertrain and parts workers in at-risk positions to transition to EV-related positions, crucially at the same wage and benefit rates they earned at their existing facility. 

Companies can also join collaborative initiatives to engage with and address the concerns of impacted workers and communities at scale. Examples include:  

• The Just Transition Partnership – an international collaboration between environmental and labor organizations, businesses, and policymakers aimed at ensuring that the global transition to a low-carbon economy is both fair and inclusive. 
• The ILO Just Transition Initiative – a global effort led by the International Labour Organization to ensure that workers and communities benefit from a fair and inclusive transition to a greener economy. The ILO collaborates with governments, employers’ organizations, trade unions, and NGOs to implement just transition policies at national and regional levels. In 2015, the International Labour Organization (ILO) adopted  Guidelines for a Just Transition Towards Environmentally Sustainable Economies and Societies for All, providing valuable international guidance for just transitions. 
• The UN Global Compact – challenges companies to take concrete actions to advance a Just Transition as part of its Forward Faster initiative. The Compact also hosted a Think Lab on Just Transition, committed to exploring the underlying principles of how a company’s business strategy can actively contribute to and participate in a just transition.  

5. Conduct Human Rights Due Diligence 

Businesses can develop a holistic understanding of the impact of their climate strategies on human rights, including vulnerable and marginalized groups, by conducting a human rights impact assessment (HRIA).  

In addition to aligning with international standards, such as the UN Guiding Principles on Business and Human Rights (UNGPs), HRIAs help companies identify salient risks associated with their climate transition strategies, determine their level of responsibility for negative impacts (based on whether they cause, contribute, or are directly linked), and proactively develop targeted mediation and remedy strategies. An HRIA also facilitates meaningful engagement with affected stakeholders.  

The Global Business Initiative on Human Rights offers resources on incorporating human rights considerations into climate action, providing insights on mapping intersections between climate initiatives and human rights, and developing governance structures that integrate human rights into climate-related decision-making processes. A notable recommendation is the call for a “better-connected approach.”   

Specifically, in practice, this means closer collaboration between human rights and climate teams at a company. Traditionally, they have acted in silos, but it is more important than ever for these departments to work in tandem to address the intersections of their work.  

6. Advocate for Policy Alignment 

There are several strategies business can take to support policies that integrate just transition principles, including participating in public consultations and policy dialogues to ensure that the voices of business, workers, and affected communities are heard. The types of policies that business can support, include: 

• Reskilling and Upskilling Programs: push for tax incentives or subsidies for companies that invest in worker reskilling. Canada’s Sustainable Job Plan attaches labor conditions, including wages and training, to certain tax credits.  
• Social Safety Nets: provide income support, severance packages, and pension protection for workers transitioning out of fossil fuel industries. An example of this is Germany’s Coal Phase Out Act (Kohleausstiegsgesetz), which includes provisions for worker compensation and early retirement, and regional economic support. 
• Sustainable Finance: encourage public-private investment models that bring in both government and private sector funding for community transitions. Spain’s Just Transition Agreements (Convenios de Transición Justa) outlines a structured process to protect coal miners. 
• Trade & Investment Policies: support trade agreements that include worker protections and environmental standards. 

Just transition is increasingly becoming a key pillar of companies’ public commitments and policy advocacy.  For instance, Patagonia has long been a champion of just transition and has actively advocated for public policies that promote a fair transition, such as supporting renewable energy policies that prioritize job creation in impacted communities. The company also created a digital tool, called Patagonia Action Works, which elevates grassroots environmental groups, including those with missions around the just transition.   

Through these steps, companies can begin to ensure that their climate strategies do not lead to negative impacts and create positive opportunities for workers impacted by business strategies transitioning away from carbon intensive industries and technologies. 

If you have questions or would like to learn more about how your organization can effectively integrate just transition principles in your business strategy, you can reach us at hello@articleoneadvisors.com.