Navigating the challenges of a Just Transition May 2024

As we move to a greener and more inclusive society, albeit slowly, we are becoming more aware of the impacts of our actions. Importantly, we are also increasing our understanding of the impacts of the alternative solutions we are looking to develop and roll out to replace the fossil fuel-based economy we’ve been used to for the last century.

Coming from the Union movement in the 1990s, Just Transition was initially all about giving workers suitable employment opportunities when sectors such as mining started to close down or move overseas due to environmental regulations.

That is still the case as the news of the Port Talbot Steel Works and the Grangemouth refineries show. But it has a wider context now, in particular with the growth of the green economy and manufacturing such diverse items as solar panels, electric vehicles and wind turbines. While these products can certainly help us tackle climate change, they can come at a price. A human price.

Just Transition was defined by the International Labor Organization (ILO) in 2015 as “A just transition for all towards an environmentally sustainable economy … needs to be well managed and contribute to the goals of decent work for all, social inclusion and the eradication of poverty.”

The case of precious metals being mined in the DR Congo for hi-tech appliances such as smartphones is fairly well-known, the so-called conflict metals, to the point that there is EU and US legislation to restrict their use. But the rapid growth in demand for battery-powered vehicles is a relatively new frontier. Relying heavily on lithium, as well as other minerals including cobalt, nickel and manganese, there is a race to locate, own and exploit the earth’s reserves.

As this article on lithium mining in Argentina shows, tensions can rise very quickly between businesses from one country exerting their ownership and rights in another. The subsequent allegations are ones of maltreatment, poor working conditions, low wages and more. Likewise, our work on the production of solar panels has highlighted similar risks. It’s been seen in previous decades in other sectors such as textiles. But just because the end product is now “low carbon” and “sustainable”, it doesn’t mean that it can’t be produced under poor conditions.

In response, countries like Chile (the second largest lithium producer) have decided to nationalise their lithium industry to maintain ownership and control. There will be more of this to come.

Bringing it closer to home, it is true that we all procure goods and services, to a greater or lesser extent, that are exposed to these risks. Whether it’s in new EV fleet or plant & equipment, or indirectly through the procurement of low carbon energy, these issues lie at the core. Just as we have managed labour standards and environmental impact issues in the past when procuring timber products, or textiles, we need to do the same here.

However, reconciling these issues still isn’t easy. It takes time to investigate and gather data: due diligence and risk assessment is all part of it. Mapping where you supply comes from and overlaying impact data on that can guide your assessment of where your risks lie. It will likewise steer you on how you address those risks. Choosing standards and labels that have done some of the heavy lifting on this for you is a key aspect too.

We can no longer shy away from this claiming we have no influence or, worse still, no knowledge. Regulations such as the recently passed Corporate Sustainability Due Diligence Directive (CSDDD) stipulate that companies that trade in the EU need to “identify, bring to an end, prevent, mitigate and account for negative human rights and environmental impacts in the company’s own operations, their subsidiaries and their value chains”.

As the OECD document says “At its heart, just transition requires us to leave no one behind”.

Want to learn more about the implications a Just Transition could have on your climate strategy? Get in touch here.