There is a “striking and systemic lack of action by high-emitting companies to identify, prepare for and mitigate the social impacts of their low-carbon strategies”, according to a new assessment by the World Benchmarking Alliance (WBA).
Covering 180 of the world's most influential companies in the electric utilities, oil and gas, and automotive sectors, the Just Transition assessment looks at the social elements of the companies’ transition to a low-carbon future. It is based on the companies’ publicly available disclosures, which are assessed against WBA’s core social indicators (CSIs) and their new just transition indicators (JTIs).
“The vast majority of high-emitting companies are failing to demonstrate efforts towards a just transition,” the report says.
Amongst the general low scorers were Exxon Mobil, Saudi Aramco, Ørsted, Tesla, Mazda Motor Corporation, Suzuki, and Honda Motor. RI has contacted these companies for comment. At the time of publication, only Honda had responded – a spokesperson flagged the Human Resources section of its 2021 Global Sustainability Report.
Launched in 2018 by founding members Aviva, the United Nations Foundation and Index Initiative, the WBA is tasked with developing a series of SDG-related corporate benchmarks.
The findings have been intentionally published as the world kicks off day two of COP26, “so that governments around the world can ensure that political negotiations and future agreements include dedicated action and focus on a fair and just transition for all”, the report states.
While a majority of companies assessed are lagging behind on Just Transition efforts, “some companies are leading the way – especially in the utilities sector”, Charlotte Hugman, Research Lead, Climate and Energy Benchmark, at the WBA told RI.
However, not a single company comprehensively uses its influence to protect people, manage social impacts and advocate for a just transition, says the report.
Criticisms were also raised regarding stranded workforces, with only 23% of the companies having a public commitment to reskill or upskill workers displaced by the low-carbon transition. “The risk of leaving many behind is high and can have momentous impact on supply chains and energy access,” the report warns.
Hugman explained to RI that the WBA invites investors to use the questions in the Just Transition Methodology to engage with companies and ensure they have a comprehensive plan in place. “By holistically addressing the low-carbon and social dimensions of the transition into their policies and decision-making, financial institutions can play a significant role in enabling a just transition,” she added.
Several investor groups have initiated efforts to address topic. Last week RI reported how Legal & General, Aviva Investors, HSBC and Barclays are among the members of a group urging the UK Government to develop ‘Just Transition’ definitions and priorities to support investment into areas that would benefit workers and communities currently dependent on high-carbon sectors.
Looking to Canada, the recently launched Climate Engagement Canada aims to facilitate collaborative engagements with companies “to promote a just transition to a net zero economy”.
Its global counterpart, Climate Action 100+ also announced last month it will begin scrutinising how well companies are managing the issue and how.
And last year, Finance for Tomorrow, the French-government backed organisation, launched a €3.6trn Just Transition engagement coalition.
Moving forward, from 2022 the WBA will integrate the Just Transition assessment into its Climate and Energy Benchmark, which assesses the highest corporate carbon emitters regarding their progress against the Paris Agreement and UN SDG 13 (Climate Action).