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ResponsibleBusinessConductforaJustTransition

ProtectingWorkers,CommunitiesandConsumersintheLow-CarbonTransition

ResponsibleBusiness

ConductforaJustTransition

PROTECTINGWORKERS,COMMUNITIES

ANDCONSUMERSINTHELOW-CARBONTRANSITION

ThisworkisissuedundertheresponsibilityoftheSecretary-GeneraloftheOECD,anddoesnotnecessarilyreflecttheofficialviewsofOECDMembercountries.

Thisdocument,aswellasanydataandmapincludedherein,arewithoutprejudicetothestatusoforsovereigntyoveranyterritory,tothedelimitationofinternationalfrontiersandboundariesandtothenameofanyterritory,cityorarea.

Pleasecitethispublicationas:

OECD(2026),ResponsibleBusinessConductforaJustTransition:ProtectingWorkers,CommunitiesandConsumersintheLow-

CarbonTransition,OECDPublishing,Paris,

/10.1787/ea041d32-en

.

ISBN978-92-64-75228-3(print)

ISBN978-92-64-73924-6(PDF)

ISBN978-92-64-77403-2(HTML)

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.©OECD2026

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ThisworkismadeavailableundertheCreativeCommonsAttribution4.0Internationallicence.Byusingthiswork,youaccepttobeboundbythetermsofthislicence(

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).

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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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