Transition to a just, net-zero, and nature positive economy

With more than 3,000 businesses and financial institutions now working with the Science Based Targets initiative (SBTi) to reduce emissions in line with climate science, more than one-third of the world’s largest publicly traded companies setting net-zero targets, and over 1,000 companies around the world urging their governments to adopt policies that accelerate the clean energy transition, business action aimed at addressing climate change is now in the mainstream. Despite this progress, there is much work to be done to achieve the 1.5°C pathway set out in the Paris Agreement and ensure a just transition to a net-zero world that also advances decent work, promotes social inclusion, and addresses poverty. 

Business must extend the accountability it has developed for its impact on climate and nature to include people by developing plans and delivering actions that address people and planet simultaneously. This requires companies across all sectors working together with peers and stakeholders to identify how they can put people at the center of the critical transitions ahead.  

The climate crisis worsens public health and poses disproportionate negative impacts for the world’s most vulnerable. For example, the World Bank estimates that climate change could push up to 132 million people into poverty by 2030. Moreover, the number of people at risk from malnutrition is also projected to increase by 20% by 2050 due to climate change, with the majority affected living in sub-Saharan Africa. Currently, climate change and nature loss represent the biggest long-term threats to the global economy, and already cost more than USD $300B annually. However, factors like health impacts, increased food prices, diminished livelihoods, and displacement caused by climate change could push upwards of 132 million people into extreme poverty by 2030. 

Business has an important role to play in supporting a just transition that includes plans of action for new job creation, employee upskilling, and leveraging investment opportunities to drive more inclusive and equitable outcomes. Doing so can encourage economic and workforce stability, enhance capacity for innovation and productivity, and build supply chain resilience, all within the context of a net-zero and nature positive global economy. Despite this potential to drive inclusive and equitable outcomes, the World Benchmarking Alliance estimates that fewer than 2% of companies are currently engaged in just transition planning, which represents a significant gap that requires filling.  

Realizing a just transition to a net-zero, nature positive economy means following  the science and taking the action that is needed to address the climate emergency  and restore nature – while also leveraging these transformations to advance decent  work, promote social inclusion, and eradicate poverty. The following business actions help realize a just transition to a net-zero, nature positive economy:  

1. Committing to reaching net-zero GHG emissions no later than 2050 while also investing in adaptation 

All companies must set an ambition to reach net-zero GHG emissions no later than 2050 and have a science-informed plan to achieve it. This commitment must span Scope 1 and  2 emissions, as well as the most relevant and influenceable elements of Scope 3. Companies will also need to assess and evaluate climate-related physical risks throughout their operations, supply chains, and the communities in which they operate, and establish a  set of adaptation policies to ensure both business continuity and the health and safety of workers and communities.  

2. Embedding nature considerations and aiming for nature positive outcomes across spheres of control and influence 

This involves measuring, valuing, and prioritizing impacts and dependencies on nature so that the business is well-positioned to act, and then setting transparent, time-bound, specific, science-based targets to put the company on the right track toward operating within the earth’s limits. Companies should aim to avoid and reduce negative impacts while also restoring and regenerating nature.  

3. Ensuring a just transition 

To ensure a just transition that puts people at the heart of the shift toward Net Zero, the Council for Inclusive Capitalism suggests four pillars of action – Universal Net-Zero Energy, Workforce Evolution, Community Resilience, Collaboration & Transparency – that build upon core practices with actions specific to just transition. See Table 1 below:  

Table 1: Just transition pillars of action (taken from the Council for Inclusive Capitalism’s Just Energy Transition Framework) 

Some of the ways business can support a just transition that addresses both people and planet are: equipping workforces with new skills required to compete in a net-zero world, building capacity within traditional industries to operate with sustainability in mind, training skilled workers in clean energy, investing in projects that restore ecosystems and improve the resilience of communities, ensuring local economies can survive and thrive after transitioning away from carbon-intensive industries, and making net-zero and nature positive products and services both accessible and affordable to all. 

The initiatives and collaborations to support a just transition being undertaken by companies across the globe have the power to connect local, regional, and global stakeholders, facilitate universal access to essential products and services, and build workforces of the future. Below are some examples drawn from the Business Commission to Tackle Inequality’s Agenda for Business Action.   

1. Equinor: Community-driven development of the offshore wind industry in New York 

Equinor has established a strategic partnership with bp to develop New York as an offshore wind industry hub. The project is expected to generate 1,000 short-term jobs, and a further 200 long-term jobs by 2028. The company has also established a workforce development plan to address skills gaps and provide locals with learning opportunities. Moreover, Equinor is working with local unions to promote opportunities among low-income and unemployed individuals and has partnered with community representatives to promote meaningful stakeholder engagement from the early stages of the project, and ultimately ensure the workforce is reflective of the local population. 

 2. ITC: Strengthening livelihoods amid climate challenges 

ITC is working to transform Indian agriculture through the proliferation of climate and water-smart sustainable agricultural practices among small-scale and marginal farmers, helping them maximize earnings in good years and minimize losses in bad ones. These interventions span over 2 million acres, benefiting over 700,000 farmers. 

 3. MSC: Collaborating for a just maritime transition 

MSC is ensuring its maritime workforce is equipped with the ship-specific skills, education, training, and familiarization needed to operate new technology systems and manage new fuels. The company has also been collaborating with peers across the maritime ecosystem to support just and human-centered decarbonization of the shipping industry. 

 4. Olam Group: Promoting climate-smart farming 

Olam Agri has been working through public-private partnerships to introduce climate-smart agriculture practices, such as alternate wetting and drying, laser land leveling, site-specific nutrient management, and better straw and stubble management. These partnerships have already delivered promising results in Thailand, Vietnam, India, and Nigeria. 

 5. SAP: Financing climate action with positive social impacts 

SAP has committed to investing around €10 million to help finance projects that protect the climate, restore ecosystems, promote sustainable agriculture, and improve the livelihoods and resilience of rural communities. 

6. ManpowerGroup: Hiring for a just transition to net-zero 

ManpowerGroup has partnered with a global wind turbine company to attract, train, and hire skilled workers in 52 countries for a variety of roles, with particular focus on hiring 35% of diverse candidates among leadership roles. 

Climate impact

A just transition to Net Zero entails reaching net-zero GHG emissions no later than 2050 while also investing in adaptation. This requires commitments to reduce Scope 1, Scope 2, and the most relevant and influenceable elements of Scope 3 emissions. 

Business impact

Benefits

While the rationale for business action to tackle inequality is about mitigating risk, it is also about building a world of opportunity in which business can thrive in the long term, within at least two dimensions:   

1. Creating a more prosperous operating environment 

Tackling inequality can strengthen the operating environment by building trust, enhancing social and political stability, containing crises, and boosting economic growth. For example, closing the living wage gap globally could boost GDP by USD $4.56 trillion, and widescale upskilling could increase global GDP by USD $6.5 trillion by 2030.   

2. Unlocking company-level benefits 

Tackling inequality is also about unlocking company-level benefits, including attracting and retaining talent, expanding consumers pools, building resilient supply chains, and staying ahead of policy and regulatory change. For example, 86% of job seekers want to work for companies that value diversity, equity, and inclusion.

Impact beyond climate and business

As explained in the solution section above, realizing a just transition to a net-zero and nature positive economy inherently offers co-benefits for people and nature while seeking to minimize negative impacts to the most vulnerable. See the stakeholders section below for more information on how to effectively engage with vulnerable stakeholders to maximize benefits and minimize negative impacts.

Approach

As explained in Table 2 below, the BCTI has identified 10 catalytic actions that individual companies can take – and that stakeholders increasingly expect them to take – to start tackling inequality. Each one is an avenue through which business exerts significant influence over the opportunities people have and the outcomes they experience: 

Table 2: Actions Companies Can Take to Start Tackling Inequality 

Stakeholders involved

Companies are best equipped to respect human rights and address inequality when they understand the perspectives of the people their activities affect – particularly the most vulnerable. Ultimately, any serious private sector endeavor to tackle inequality must be rooted not only in efforts to identify and proactively engage with stakeholder groups that are affected or may potentially be affected by business actions, but also in robust processes that serve to embed insights gained from stakeholder engagement into business decision-making. To do this, companies should follow these three key steps:   

1. Identify their material stakeholders  

2. Understand and engage with those that are impacted by and influence their business model 

3. Evaluate and embed those stakeholder views and opinions in decision-making and other business processes