WBA: Companies unwilling to draw up net-zero transition plans are 'being willfully obtuse'

The World Benchmarking Alliance (WBA) has told edie that, despite the growing global movement towards net-zero - and the implementation of just transition mandates for businesses in nations including the UK - some firms are still arguing that they don't need to change their strategies.

There has been much talk about the need for a just transition this year, but few companies are walking the talk at this stage, the Alliance's research has shown

There has been much talk about the need for a just transition this year, but few companies are walking the talk at this stage, the Alliance's research has shown

For several years, the WBA has been tracking how corporates in high-emitting sectors like energy and automotive have been planning (and failing to plan) for the low-carbon transition. It has also been assessing what companies in sectors with a high risk of human rights risks are doing to prevent them.

This year, for the first time, it has combined the two, publishing an assessment of how corporates in the automotive, oil and gas and electric utility sectors are approaching the need for a just transition to net-zero. Worryingly, just nine of the 180 businesses assessed scored 50% or more across the Alliance’s full set of metrics on worker protection and climate action.

The WBA’s social transformation lead, Dan Neale, spoke exclusively to edie ahead of his appearance at the Sustainability Leaders Forum 2022 (scroll down for more details), about the process of putting this work together – as well as his views on how the just transition narrative will evolve in the coming years.

Neale explained that the Alliance had expected, last year, that 2021 would be “a good time to discuss the just transition piece in more detail”. Factors that have pushed the conversation up the agenda and prompted action in more detail, beyond top-level pledges, include the need to evolve Covid-19 recovery plans, the momentum around COP26 and a movement for legislation and regulation on the just transition.

The UK Government this month confirmed that large businesses in some high-emitting sectors will need to produce net-zero transition plans from 2023, and that it has drawn up a new standard with the intent of weeding out greenwashing. It also joined the US, Germany and the EU in pledging to support a new just energy transition framework for South Africa.

Neale notes that, without legislation, some companies were already publishing or preparing to publish plans – be that as a standalone, like Centrica and SSE, or through a forum like the Vatican-backed Council for Inclusive Capitalism. However, he says that “something more binding” is likely needed to bring change at scale and pace, and that legislation proves that the UK is improving in acknowledging climate as “a systemic risk to the financial system as a whole”

Neale is joined by the WBA’s research lead for climate and energy, Charlotte Hugman, who adds: “I think it’s fair to say that, by regulating, you’re going to get more companies doing this as well as more standardisation and scrutiny, and we’re all about transparency.”

“On timelines, going as quickly as possible is advisable – appreciating the need to get companies up to speed and to actually find that standardization, the timeline [used by the UK Government domestically] makes sense. We will continually encourage high-quality plans, so that there is not too low a bar for their content.”

Mindset shift needed

Of course, it will take time before we see net-zero transition plans in the UK at scale, and it remains to be seen whether other nations will follow the UK’s lead on the mandate – as the G7 did with the UK’s approach to climate risk reporting.

Neale says this is more likely than not: “Whenever a Government steps forward and it has a similar outlook and a financialized economy, to say it will stipulate these reporting requirements, it does help. Especially given that so many companies are cross-border.”

In the meantime, while some businesses are leading, this is the exception rather than the rule, the assessment has shown. The assessment notably reveals that the electric utility sector is performing far better than oil and gas, and automotive.

Some low scorers, Neale reveals, are truly burying their heads in the sand, despite pressures from changing legislation, investors, workers and consumers. He says: “We had some companies, including oil and gas companies, saying they wanted to be taken out of our assessment because they’re simply not going to transition….This is, in my opinion, a bit willfully obtuse…. We think there will definitely be these changes, and that they will potentially come more quickly than companies are prepared for.”

For years, many companies have ignored or underestimated the low-carbon transition. Before net-zero became a global movement covering the majority of GDP, some high-emitting firms have argued that they will have a major role to play without changing track, as they could fall within the percentage of emissions that could remain under national and international targets. This same issue persists, to a smaller extent, though, with many planning to rely more on the “net” than the “zero”.

But the WBA’s assessment also reveals a similar approach to transitioning skills and protecting communities. More than three-quarters (77%) of the firms assessed do not have a public commitment to reskilling and/or upskilling. Only three of the 180 disclose a process for identifying skills gaps for the net-zero transition. Just 18 of them have engaged workers, from the outset, in the development of strategic plans.

Unless progress is made quickly, millions of workers will be “left in the lurch”, Neale says. The assessment estimates that as many as 11 million roles will be at risk by 2030 without further action.

Of course, if you’re underestimating or ignoring decarbonisation, it will not be a strategic priority that is properly embedded and backed with investment. But Neale and Hugman think there are other factors at play, too, including culture, union history and regulation.

Hugman says many businesses are struggling to accept that they will need to take a “more nuanced approach” – delivering the major undertaking that is delivering context-specific plans for each location and community. This is often hampered, she argues, by the short-term nature of business cycles.

Neale agrees and also adds that a “watering-down of union power”, plus changes to business structures in recent years (many large conglomerates are only getting larger), have left social dialogue and stakeholder engagement as “quite alien concepts to the lot of the business world”.

There is no single silver-bullet solution to this issue, but the WBA has pointed, time and again, to a number of factors that could push progress. These include legislation, regulation, worker power, public awareness, business collaboration and, of course, the work of organisations like the Alliance in building accountability frameworks.

Going forward, the just transition assessment will become an integrated benchmark, published annually.


Register now for edie’s Sustainability Leaders Forum 2022

edie’s biggest event of the year is returning as a live, in-person event on 1 and 2 February 2022, and will unite hundreds of professionals for inspiring keynotes, dynamic panel discussions, interactive workshops and facilitated networking. There will also be digital tickets.

Taking place at London’s Business Design Centre, the event will feature more than 60 speakers, including experts from Natural England, the Green Finance Institute, the World Economic Forum and the Centre for Climate Repair. We’re planning our most diverse and inspirational programme yet.

Click here for full information and to book your pass.

Dan Neale from the WBA will be appearing at 1.30pm on 2 November, for a workshop on driving social equality and achieving a just transition.


Sarah George

 



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