Jobs in emissions-intensive sectors, such as mining and quarrying, metals manufacturing, and oil and gas extraction, made up 5% of total EU employment in December 2022. These industries face a higher likelihood of experiencing a reduction in workforce demand or undergoing structural transformations associated with decarbonization, significantly impacting the local economies dependent on these sectors. A recent example highlights this: in January 2024, Tata Steel, an Indian multinational steel manufacturing firm, announced plans to close two blast furnaces at its Port Talbot plant in South Wales as part of a four-year transition to a greener form of steelmaking. Previously one of the largest private employers in Port Talbot, Tata Steel is now expected to make approximately 2,800 redundancies as part of this operations transformation.
The Tata Steel example highlights the importance of integrating social impact considerations into decarbonization strategies to ensure a just transition — defined by the International Labour Organization (ILO) as “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”.
Governments, regulators, advocacy groups and trade unions are all important agents of change in ensuring a just transition, however businesses also play a vital role through:
- Stakeholder engagement.
Meaningful engagement with employees, local communities, NGOs, academics and investors is vital to ensure that the voices and perspectives of stakeholders are reflected in corporate just transition plans. For example, multinational energy firm SSE created a just transition documentary in March 2023 that featured employees sharing their experiences of transitioning from high to low carbon work; this documentary was distributed to NGOs and other organizations to raise awareness. - Investing in workforce training and development.
Organizations can develop education and training programmes to help employees acquire new skills for a low-carbon economy. For example, integrated energy firm TotalEnergies provides employees with the opportunity to upskill in new areas of energy, meaning that employees experienced in managing oil and gas projects can transition to solar farm installation. - Ensuring fair labour practices.
If firms need to shut down plants, they should look to provide a range of measures and support packages for impacted employees and communities. For example, when converting a refinery into an import terminal, ExxonMobil offered employees affected by the shutdown additional training and certifications, careers coaching and a virtual career fair showcasing industries looking to hire people with similar skillsets. - Participating in industry networks focused on enabling a just transition.
Ensuring a just transition requires inter- and intra-industry collaboration. Industry networks can provide a means for organizations to promote a just transition and share best practices. For example, Anglo American joined the Council for Inclusive Capitalism in 2021 to help develop a framework for addressing the just transition.
More jobs are at risk, but the transition may also generate an estimated 135,000 to 725,000 net new jobs by 2030 in areas such as building retrofits, renewable energy generation and electric vehicle manufacturing, according to research by the Climate Change Committee.
Helping workers to reskill and transition to new jobs is not just the responsibility of governments. Firms can start to take action now by integrating just transition principles into long-term business planning and strategy.
