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ResponsibleBusinessConductforaJustTransition
ProtectingWorkers,CommunitiesandConsumersintheLow-CarbonTransition
ResponsibleBusiness
ConductforaJustTransition
PROTECTINGWORKERS,COMMUNITIES
ANDCONSUMERSINTHELOW-CARBONTRANSITION
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Pleasecitethispublicationas:
OECD(2026),ResponsibleBusinessConductforaJustTransition:ProtectingWorkers,CommunitiesandConsumersintheLow-
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/10.1787/ea041d32-en
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Foreword
Theglobalshifttoalow-carboneconomycreatesopportunitiesforinnovation,competitivenessanddecentwork,butifnotmanagedwell,itcangeneraterisksforworkers,communitiesandconsumers—ultimatelyunderminingthepaceoftransition.ImplementingOECDstandardsonresponsiblebusinessconduct(RBC)canhelpcompaniesintegratesocialconsiderationsintotransitionactivities,contributingtowardsajusttransition.
TheOECDGuidelinesforMultinationalEnterprisesonResponsibleBusinessConduct(theOECDGuidelines)arerecommendationsjointlyaddressedbygovernmentstomultinationalenterprises.Theyencourageenterprisestomakepositivecontributionstoeconomic,environmentalandsocialprogress,andtominimiseadverseimpactsonmatterscoveredbytheGuidelinesthatmaybeassociatedwithanenterprise’soperations,productsandservices,oritsbusinessrelationships.In2023,55MinistersfromtheOECDandpartnergovernmentsrecognisedthat“theGuidelinesareparticularlywell-placedtopromoteaholisticandcomprehensiveapproachtoenvironmentalmanagementandclimateactionthatalsotakesintoaccountsocialimpacts”(OECD,2023[1]).
Thisreportoutlineshowcompaniescantakeanintegratedapproachtotransitionplanningandimplementation,takeaplace-basedapproachtoidentificationandprioritisationofimpactsandaccountforcumulativeeffects,practicemeaningfulstakeholderengagement,promotecontinuousimprovementandbenefitsharing,andapproachdisengagementresponsiblyinthecontexttheirlow-carbontransition.Theanalysisdrawsoninterviewswith22companiesandfinancialinstitutionsand11civilsocietyandstakeholderorganisationsacrossenergy,transport,manufacturing,agriculture,andfinance,aswellasinputsfromamultistakeholderadvisorygroupandtheOECDWorkingPartyonResponsibleBusinessConduct.Italsodrawsonabroadbodyofexistingguidance,benchmarkingdata,andcompanypractice.
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Tableofcontents
Foreword3
Executivesummary5
1Introduction7
1.1.Background8
1.2.Scopeandaim9
1.3.Methodology10
2Managingsocialimpactsofthetransition:Challenges,opportunitiesandkey
actionsforbusiness11
2.1.Takinganintegratedapproachtotransitionplanningandimplementation12
2.2.Applyingaplace-baseddimensionandconsideringcumulativeimpactsinidentifyingand
prioritisingimpacts17
2.3.Engagingmeaningfullywithimpactedstakeholders19
2.4.Usingindividualandcollectiveactiontoaddressimpacts23
2.5.Designingandimplementingbenefitsharingmodels29
2.6.Promotingcontinuousimprovementandresponsibledisengagement31
References39
Notes47
TABLES
Table2.1.Varyingterminologiesacrosshumanrightsandclimatepractitioners16
Table2.2.Contextualelementsandrelatedillustrativeriskfactors18
Table2.3.Illustrativeexamplesofindividualandcollaborativeapproachestorespondingtosocialimpacts
relatedtothetransition25
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Executivesummary
Thelow-carbontransitionisnowunderwayandisreshapinglabourmarkets,investmentpatterns,supplychainsandaccesstoessentialgoodsinalmostalleconomies.Whilethetransitionoffersclearopportunitiesforinnovation,productivityandnewemployment,itcanalsobeassociatedwithrisksifitispoorlymanaged.Theserisksincludejoblosses,deterioratingjobquality,pressuresonconsumersthroughhighercostsorreducedaccesstoenergyandbasicgoods,anddisruptiontocommunitiesdependentoncarbon-intensiveactivitiesornewlyexposedtobusinessactivitieswhichimpacttheirland,livelihoodsandculturalheritage.Governmentsincreasinglyexpectbusinessestomanagethesesocialdimensionsaspartoftheirclimatestrategies;responsiblebusinessconductisapracticalframeworkfordoingso.
Thisreportisprimarilyintendedforbusinesspractitioners,asaresourcetoinformthedevelopmentofbusinesspoliciesandpracticestomanagesocialimpactsassociatedwiththelow-carbontransition.ItprovidesanoverviewofcurrentopportunitiesandchallengesandsetsoutkeyactionsbasedonOECDstandardsforresponsiblebusinessconduct,incontributiontowardsajusttransition.
Keyfindings
Integratedtransitionplanningremainslimitedinpractice
Manycompaniesstilltreatclimatetransitionplanningasapredominantlyenvironmentalorfinancialexercise,withsocialissuesaddressedlateorinparallelratherthanembeddedfromtheoutset.Interviewspointtostructuralbarriers,includingsiloedinternalteams,misalignedincentivesandinconsistentterminologybetweenclimate,financialandsocialfunctions.Despiteincreasedreferencestotheconceptofajusttransitionincorporatereporting,onlyasmallminorityofcompaniesdemonstratepartialplanningforsocialimpactsandnonefullyimplementcomprehensivemeasures.Whereprogressismoreevident,itisassociatedwithsenior-levelownership,clearerinternalaccountabilityandexplicitintegrationofsocialobjectivesintotransitionpolicies,targetsandperformanceindicators.Thisreportoutlineshowcompaniescanpracticallyaligncommercial,environmentalandsocialprioritiessothatworkforceimpacts,suppliereffectsandconsumerimplicationsareconsideredalongsidede-carbonisationpathwaysfromthestart,ratherthaninisolation.
Place-basedandcumulativeimpactsrequireexplicitattention
Socialimpactsofthetransitionarehighlycontext-specificandcanbeamplifiedwhenmultiplechangesoccursimultaneouslyinthesameregionorsector.Regionsdependentonasingleindustry,withlimitedsocialprotectionorweakgovernance,aremoreexposedtojoblosses,incomeshocksandattendantimpactsonqualityoflife.Similarly,newlow-carboninvestmentsandactivitiesmaybeconcentratedinparticularlocations,includingonornearIndigenouslands.Inthisrespectcompany-levelimpactassessmentsareofteninsufficienttocapturethesedynamicsontheirown.Moreeffectiveapproachescombineenterprise-levelassessmentswithbroaderconsiderationofregionaldependencies,nationaldevelopmentprioritiesandcumulativeeffectsacrossprojectsandvaluechains.Toolssuchascumulative
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impactassessments,workforcemappingandconsumerimpactassessmentsarewaystoidentifyrisksandprioritiseaction.
Meaningfulstakeholderengagementunderpinscredibletransitionstrategies
Thereportconsistentlyidentifiesstakeholderengagementasadecisivefactorinensuringtherightsofworkers,communitiesandconsumersaffectedbythetransitionarerespected.However,researchshowsthatveryfewcompaniescommittoconsultingaffectedstakeholdersinthedesignofdecarbonisationactivities.Inordertobemeaningful,engagementshouldbetimely,two-wayandadaptedtodifferentgroups,includingworkers,tradeunions,consumers,localcommunitiesandIndigenousPeoples.Inthecontextofthelow-carbontransitionstakeholderinterestscandivergeandnotalldemandscanalwaysbemetsimultaneously.Insuchcases,companiesareencouragedtousetransparent,risk-basedapproachestoprioritisethemostsevereimpactsandexplaintrade-offs.Effectiveengagement,includingsocialdialogueandcollectivebargaininginthecaseofworkforceimpacts,canenhancetrust,reducedelaysandimprovethequalityoftransitionactivities.
Collectiveaction,benefitsharingandresponsibledisengagementplayanimportantrole
Giventhescaleoftransformationinvolved,individualcompanyactionsareofteninsufficienttoaddresssystemicimpacts.Collaborationacrossindustry,governmentsandotherstakeholdersarenecessarycomplementstocompany-levelmeasures,particularlyforworkforcereskilling,regionaleconomicdiversificationandsafeguardingconsumeraccessandaffordability.Thereisagrowinguseofbenefit-sharingandco-ownershipmodels,especiallyinrenewableenergyandresourceextraction,whichallowcommunitiestoshareupsidevalueandreduceconflict.
Atthesametime,thereisrisingimportancewithrespecttohowcompaniesexitactivities,whetherthroughdivestment,supply-chaindisengagementorassettransfers.Evidenceshowsthatabruptorpoorlyplannedexitscanshiftassetstooperatorswithweakerstandardsorgeneratenegativeimpactsforworkersandcommunities.Inthisregard,effortstosupportimprovement,engagestakeholdersaswelladdressimpactswhenexitisunavoidablearecritical.
Keyactions
DrawingonOECDstandardsonresponsiblebusinessconduct(RBC)aswellasexistingpracticesthereportidentifiessixkeyactionsforcompaniestomanagepotentialimpactsandcontributetowardsajusttransition:
1.Takinganintegratedapproachtotransitionplanningandimplementation
2.Applyingaplace-baseddimensionandconsideringcumulativeimpactsinidentifyingandprioritisingimpacts
3.Engagingmeaningfullywithstakeholders
4.Addressingimpactsthroughindividualandcollaborativeapproaches
5.Designingandimplementingbenefit-sharingmodels
6.Promotingcontinuousimprovementandpracticingresponsibledisengagement.
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1Introduction
Thischaptersetsouttherationale,scopeandmethodologyofthereport.Itsituatesthelow-carbontransitioninitsbroadereconomic,environmental,andgeopoliticalcontext,notingboththeopportunitiesitcreatesfor
innovation,jobcreationandenergysecurity,andtherisksitposesifpoorlymanaged.
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1.1.Background
Economic,securityandenvironmentalfactors,aswellasclimatechangeandrisingenergydemand(OECD/IEA,2021[2];OECD,2024[3])aredrivingatransitiontowardsalternativesourcesofenergyandalow-carboneconomy.Thistransitionoffersopportunitiesforeconomicgrowthandinnovation,whilestrengtheningenergysecuritythroughdiversifiedandresilientsupplysystems(WorldEconomicForum,2023[4];USDepartmentofEnergy,n.d.[5]).Thetransitionalsopresentstheopportunitytocreatehigher-paying,skilledjobsinsectorssuchasmanufacturing,mining,constructionandagriculture(UNFCCC,2020[6]).Atthesametime,anabrupttransitionoronenotmanagedproperlycouldincreaseriskstoworkers,communities,andconsumers,andhavedestabilisingeffectsonthefinancialsystemandeconomicgrowth(Arnoldetal.,2023[7];2023[8];FSB,2023[9];NGFS,2023[10];EuropeanSystemicRiskBoard,2021[11];Finansinspektionen,2022[12]).
Globallytransitionactivitiesareexpectedtoaffectworkersthroughjobcreation,restructuring,redeployment,andjobloss.InthisrespecttheILOestimatesthat78millionworkerswilllosetheirjobsby2030asaresultofthetransitionwhile103millionnewjobswillbecreated(ILO,2022[13]).Whilstthisrepresentsagrowthinjobsglobally,suchjobswillnotnecessarilybeinthesameregions,beofthesamequality,norrequirethesameskills
.1
Transitionactivitiesalsostandtohaveconsiderableimpactontheland,health,security,livelihoodsandculturalheritageofcommunitiesduetoactivitiesrelatedtotheextractionofresourcesandthedevelopmentofnewinfrastructureorclosureofexistingfacilities.IndigenousPeoplesmaybeparticularlyimpacted;inonestudy,acrossasamplesizeofover5000energyandtransitionmineralprojectsitisestimatedthat54%ofprojectsarelocatedonornearbyIndigenouspeoples’lands(Owen,KempandLechner,2023[14]).Furthermore,halfoftheworld’sfuturewindcapacityandtwo-thirdsofitssolarcapacityareexpectedtobedevelopedincountrieswithlimitedcivicfreedomswithattendantrisksforenvironmentalandhumanrightsdefenders(Swedwatch,2025[15]).
Thetransitioncanalsohavenotableimplicationsforconsumersbyimpactingaffordabilityandaccesstoessentialservicesparticularlyconcerningbasicgoodsandenergy.Forexample,inmodellingscenariostheEuropeanCentralBanknotedthattransitionpoliciesmayresultinhighercostsforrawmaterials,metals(cobalt,lithium,nickel),andagriculturalcommoditiesfeedingthroughintoconsumergoodsprices(Tertre,2023[16]).Suchimpactscandisproportionatelyimpactlow-incomegroups.Coalinparticularisrelieduponasanenergysourceforthepopulaceinmanyemergingeconomies,withEmergingMarketandDevelopingEconomies(EMDEs)accountingforover80%ofglobalcoalconsumption(IEA,2022[17]).Thatsaid,therapidlydecliningcostofrenewableenergy(e.g.solarPVpriceshavefallenbyover90%inthepastdecadeandwindbyaround70%)ismakingalternativesourcesofenergyincreasinglycompetitive,oftencheaperthannewcoalplants(IRENA,2024[18]).Thistrendisalsoopeningpathwaysfordistributedsolutionssuchasmini-gridsandpay-as-you-gosolarsystems,whichareexpandingaccessforoff-gridhouseholdsinregionswherecentralisedgridshavestruggledtoreach(IRENA,2024[18]).
Whilegovernmentswillberesponsibleforestablishingthepolicyandregulatoryframeworkandincentivestodeliveronenvironmentalandsocialcommitments,businessesplayakeyroleindevelopingandscalingtechnologies,skillsandbusinessmodelsthatsupportajusttransition,whilemanagingrisksofharmfulimpactsassociatedwiththeirtransitionstrategies.
Managingsocialimpactsassociatedwiththetransitionmaypresentspecificopportunitiesandchallengesforindividualcompaniesoperatinginaffectedsectorsandsupplychains.Thisincludestheenergysectorbutalsofinancialservices,manufacturing,transport,construction,garment,andagriculture.Forexample,itmaynecessitatethatcompaniesbalancede-carbonisationeffortswitheffortstomitigateriskstoworkers,communities,andconsumers.Thisrequiresnavigatingtherelationshipsbetweeneconomic,social,andenvironmentalprioritiesinday-to-dayoperationsandstrategicplanning,inordertoprogressinmultipleareassimultaneously.Forcompanies,thiswillentailtakinganintegratedapproachtotransitionplanning
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drawingonabroadrangeoffactors,expertiseandstakeholders,engagingwithworkers,communitymembers,civilsocietyorganisationsandconsumers,andbalancingpotentiallycompetinginterestsandconsiderations.Asthetransitionhappensovertime,businesswillbeweighingtheseconsiderations,whilepursuingcontinuousadaptationandimprovement,andtransformingtheirbusinessmodelsbymovingintoandawayfromspecificactivities.
Thescaleofthistransformationwillspanentiresectors,supplychains,andregions,meaningthatbusinesses,beyondtheirindividualactions,willneedtoengagewithabroadersetofstakeholderstoachievetheirgoals.Thisincludesunderstandingthecompany’sroleinrelationtothecollectiveimpactsofindustrytransformationandpursuingcollaborativeapproacheswithotherindustryactors,investorsandgovernment.Theentryintonewindustriesalsocreatesspacetoexplorenewoperatingmodels,whichcanmaximisebenefitsforcompanies,communitiesandnaturalecosystems.Forexample,sharedbenefitsystemssuchascommunityenergyco-operatives,wherecompaniespartnerwithlocalcommunitiestoco-ownrenewableenergyinfrastructure,candistributefinancialreturns,reduceemissions,andstrengthensociallicensetooperate.
Navigatingtheseuniqueconsiderationscanresultinwell-designedtransitionstrategiesthatcreatesynergiesbetweenenvironmental,socialandeconomicobjectives,forinstancethroughnature-basedsolutionsoradaptationmeasuresthatprotectworkersandcommunities,enhanceeconomicactivityandstrengthenenvironmentalresilience(ILO/IUCN/UNEP,2024[19]).
1.2.Scopeandaim
Thisreportisprimarilyintendedforbusinesspractitioners,asaresourcetoinformthedevelopmentofbusinesspoliciesandpracticestomanagepotentialsocialimpactsassociatedwiththetransition.Whilstthisframeworkisnotaguidancedocumentonenvironmentalduediligenceormanagement,itrecognisesthatstrongenvironmentalpracticesandimplementationofcredibletransitionplansarekeystartingpointsforcontributingtoajusttransition.
Thereportoutlinescurrentpracticeandchallengesfacingbusinessinthiscontext.ItidentifiesrecommendationsfromtheOECDGuidelinesforMultinationalEnterprisesonResponsibleBusinessConduct(“OECDGuidelines”),DueDiligenceGuidanceforResponsibleBusinessConduct,andotherOECDRBCstandards
2
thatmaybeparticularlyrelevantforaddressingthepotentialsocialimpactsassociatedwiththetransition.Itprovidesexamplesofkeyactionsforhowbusinessescanimplementtheserecommendationsdrawingonexistingpractices
.3
TheOECDGuidelinesrecognisethat“[a]diverseenvironmentalimpactsareoftencloselyinterlinkedwithothermatterscoveredbytheGuidelines[...].Furthermore,carryingoutenvironmentalduediligenceandmanagingadverseenvironmentalimpactswillofteninvolvetakingintoaccountmultipleenvironmental,socialanddevelopmentalpriorities.NotablytheParisAgreementpreambletakesintoaccounttheimperativesofajusttransition,oftheworkforceandthecreationofdecentworkandqualityjobsinaccordancewithnationallydefineddevelopmentpriorities,andacknowledgesthatwhentakingactiontoaddressclimatechange,Partiesshouldrespect,promoteandconsidertheirrespectiveobligations.Inthisrespectitisimportantforenterprisestoassessandaddresssocialimpactsinthecontextoftheirenvironmentalmanagementandduediligenceactivitiesandtotakeactiontopreventandmitigatesuchadverseimpactsbothintheirtransitionawayfromenvironmentallyharmfulpractices,aswellastowardsgreenerindustriesorpractices,suchastheuseofrenewableenergy.Respectinglabourrights,includingengaginginsocialdialogueandcollectivebargaining[…]meaningfullyengagingwithrelevantstakeholdersand,whererelevantpracticingresponsibledisengagement[…],willbeimportantinthisrespect.”(OECD,2023[20]).
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ThereportwasdevelopedinresponsetotheOECDMinisterialDeclarationonPromotingandEnablingResponsibleBusinessConductintheGlobalEconomywhichstates:“WEUNDERSCOREtheimportanceofbusinesscontributionsandinnovations,includingcrediblenet-zeroplans,forachievingsustainableproductionpatterns,ajusttransitiontoclimateneutralityby2050,reducingthreatstobiodiversityby2030andforsupportingacirculareconomy.WERECOGNISEtheneedtoavoidandminimiseenvironmentalharmassociatedwitheconomicactivities,particularlyinlightofthecrisesofclimatechange,biodiversitylossandpollution,andtheimpactofthesecrisesonoursocieties,aswellastheimportanceoftransferanddiffusionofknow-howandtechnologiestohelpreducegreenhousegasemissionsandpollutionandbuildresilience.WEARECOMMITTEDtoleveragingRBCstandardsasakeycontributiontomeetingthesechallenges.[...]WERECOGNISEthattheGuidelinesareparticularlywell-placedtopromoteaholisticandcomprehensiveapproachtoenvironmentalmanagementandclimateactionthatalsotakesintoaccountsocialimpacts.”(OECD,2023[1]).
Thisreportdrawsonthe2015ILOGuidelinesforajusttransitiontowardsenvironmentallysustainableeconomiesandsocietiesforall,whichwasdevelopedandadoptedbytheILOtripartiteconstituentsasapracticaltoolforgovernments,employersandworkersorganisations.
1.3.Methodology
Thereportisbasedonin-depthinterviewswith22companiesandfinancialinstitutionsand11industryassociations,tradeunions,civilsocietyorganisations,internationalorganisationsandacademia,acrossenergy(includingoilandgas,coalandminerals,andrenewables),transport(automotiveandaviation),manufacturing(garmentsandfootwear)agricultureandthefinancialsectors.Thesectorswereselectedbasedona2024surveyamong133expertsthataskedrespondentstoidentifyresponsiblebusinessconductissuesacrossindustrysectors.Theinterviewsexploredhowsocialimpactsassociatedwithcompanytransitionstrategiesandactivitiesareunderstood,prioritised,andintegratedintocompanyactivities,aswellasthebarriersandenablersthatcompaniesareencountering.
Thereportalsobenefittedfromaniterativeconsultationprocesswith30organisationsparticipatinginaninformalmultistakeholderadvisorygroup.ThegroupincludedrepresentativesfromOECDandpartnergovernments,internationalorganisations,tradeunions,civilsocietyorganisations,IndigenousPeoplesorganisations,andcompaniesandindustryassociationsfrommultiplesectors(energy,finance,agriculture,manufacturing,apparel,constructionande-commerce).Duringthedevelopmentofthispaper,theauthorsorganisedperiodicworkingmeetingswithexpertstoprovideinputandsupportindrafting.Individualcompaniesalsovolunteeredtoprovidedeeperinsightintothepracticalnatureofthereportandhowtheyareimplementingtheactionsdescribedherein.
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2Managingsocialimpactsofthetransition:Challenges,
opportunitiesandkeyactionsfor
business
Thischapterexplainshowbusinessescanmanagesocialimpactsofthe
transitionthroughresponsiblebusinessconduct.Eachsectionprovidesanoverviewofopportunitiesandchallengesfacingpractitioners,identifiesthekeyrelevantprovisionsoftheOECDGuidelinesforMultinational
EnterprisesandDueDiligenceGuidanceforRBC,andsetsoutexamplesofimplementationdrawingoncurrentpractice
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