Just Transition: Why Companies Need to Connect Climate Action and Human Rights
The accelerating climate crisis is reshaping economies, disrupting supply chains, and changing the daily lives of workers and communities across the globe. If you work in an energy-intensive industry, you may already be affected by this transition, either directly or indirectly. In this context, a Just Transition is not a theoretical concept or a policy aspiration; it offers a practical framework for changes already underway.
The concept was originally developed by trade unions in the United States to protect workers affected by industrial change. It has since evolved and gained global relevance. Today, the International Labour Organization defines Just Transition as follows: “greening the economy in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind”.
In this short article, we provide a practice-oriented overview and insights to this topic.
WHAT IS THIS ABOUT?
The need for a transition to a climate-neutral future is evident and so too is the challenge businesses are facing. At the same time, it is important to ensure that this transition is fair. A transition that integrates human rights aspects can help improve living standards not just for a few but for many persons along value chains and on a global dimension.
First, the three dimensions of transition:
Transition away from high‑carbon processes (e.g., fossil fuels, energy‑intensive production)
Transition towards sustainable business models, technologies and value chains
Adaptation to climate impacts already affecting workers, communities and supply chains
All three dimensions make it clear that it is not just energy companies that are affected, but – to varying degrees – all companies.
Second, the three priority stakeholder groups who may directly or indirectly be impacted by this transition:
Own operations – own workforce impacted by restructuring, job loss, health and safety under changing climate conditions
Supply chains – climate‑related risks to workers in the value chain, smallholders, mining communities, and upstream producers and consumers
Wider stakeholders –local communities e.g. around mines, trade unions, and civil society to shape fair outcomes
To illustrate this, here are examples of measures already taken by companies to ensure a fair transition:
Reskilling programmes in the automotive sector to avoid job loss
Measures to protect workers in construction from climate‑related health risks such as heat stress
Addressing land rights issues in mineral supply chains critical for the green transition
Engagement with local communities and workers in coal exit regions
These examples illustrate that Just Transition is not a theoretical concept. It is a practical lens that shapes corporate climate strategies and in some companies it is already put into practice.
WHY DOES IT MATTER?
But beyond definitions and examples, why should companies prioritize this now?
For companies, integrating Just Transition principles into climate action may seem like extra work in the short run, but it helps in several ways in the long run and mitigates risks:
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Investors are one main driver for companies considering social aspects in their transition to a greener economy. An increasing number of frameworks link transition finance to social safeguards (e.g. EU taxonomy). Weak attention to human rights can undermine access to capital.
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Rising human rights regulation require companies to address an increasing number of social impacts and workforce implications - a Just Transition strategy is the consequent next step.
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Climate disruption affects labour productivity, health and safety, and business continuity in key sourcing regions. Ignoring people‑related risks creates vulnerabilities that can translate into production bottlenecks or supply chain instability.
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Communities, workers and civil society increasingly question whether corporate climate strategies are fair. If perceived as unjust, resistance, litigation and operational disruption become more likely.
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Companies that proactively manage reskilling, upskilling and new talent needs are better placed to thrive in a net‑zero world.
Ultimately, a Just Transition strengthens the strategic and operational foundations of the low‑carbon future many companies aim to build.
WHAT IS OFTEN OVERLOOKED?
Many companies have already implemented elements of a Just Transition – whether consciously or unconsciously. A more strategic approach to Just Transition offers businesses a significant opportunity, therefore we recommend to consider the following aspects:
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Although transition plans are created by environmental experts, Just Transition is a cross‑functional challenge within companies that requires involvement of procurement, sustainability, legal, operations, and risk management. It offers opportunities for internal collaboration like few other topics do, and can therefore also bring about cultural change.
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Many companies focus on physical risks to assets, not on the implications for workers, smallholders or communities. This leads to risk blind spots such as heat stress, water scarcity, displacement, or changing livelihoods – potentially leading to severe human rights impacts.
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High-emitting supply chains such as coal, gas or steel supply chains face human rights risk - critical minerals for transition, sustainable agriculture, construction or renewable energy supply chains have them too. Changing the business model from conventional to sustainable, means also to anticipate new risks coming up and managing them from the beginning.
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A Just Transition requires dialogue with potentially affected groups from an early stage. Local authorities and employees need to know what the changes mean for them so that they are able to adapt to the changes and do not work against them.
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Companies sometimes withdraw from high-emitting risk regions or suppliers without assessing social impacts or exploring responsible exit options. This contradicts both human rights expectations and the core idea of a Just Transition.
Across industries, the pattern is similar: the intention of creating a more sustainable business world is there, but operational clarity, governance alignment and practical tools are often missing. Implementing a responsible exit strategy demonstrates that companies take their responsibility for human rights seriously.
WHAT IS FOCUSRIGHT’S TAKE?
While most companies have not yet adopted systematic Just Transition strategies (World Benchmarking Alliance), many are already working on transition plans and human rights due diligence separately.
Just Transition becomes manageable when existing human rights and environmental due diligence processes are brought together. It is less about adding a new layer and more about integrating climate and human rights perspectives into a coherent approach.
A robust corporate response should include:
Public commitment to Just Transition including potentially affected stakeholders and identified human rights risks
A risk analysis considering future risks (e.g. climate risks on stakeholders, risks occurring due to a change in the supply chain)
Meaningful stakeholder engagement in all aspects relevant for transition
A responsible exit strategy
When approached in this way, a Just Transition becomes a strategic enabler. It helps companies address social and environmental dilemmas and ensure that climate ambition is matched by social responsibility, reducing risk and building legitimacy for the transformations ahead.
FURTHER RESOURCES
UN Global Compact: Introduction to Just Transition: A Business Brief
Ethical Trade Initiative: 10 actions business can take on just transition now
Institute for Human Rights and Business: Just Transition