Just transition

Climate Change Energy Environment & Planning

Aligning your organisation’s strategy, governance and risk managements teams is vital when addressing a ‘Just Transition’ policy

The 'just transition' is frequently used to refer to a framework for a transition to a low-carbon economy that takes into account the associated economic and social costs and opportunities.


It has been defined as:

'An economy-wide process that produces the plans, policies and investments that lead to a future where all jobs are green and decent, emissions are at net zero, poverty is eradicated, and communities are thriving and resilient'.1

A just transition is particularly relevant in  Australia given that much of our economy and workforce is devoted to carbon-intensive activities.

At the same time, the last few years have seen rapid investment and growth in Australia's renewables market (such as in solar, wind, energy efficiency, hydro, bioenergy, energy storage, geothermal and marine energy). In April 2019, the Clean Energy Council reported that there was a 100% increase in investment in large-scale energy projects in 2018, and around 14,000 jobs had been created as a result of the renewable energy construction boom in the same year.2 The discussions around just transition
are pertinent in the context of the post-COVID-19 economic
stimulus and recovery plan.

While not specific to Australia, there is increasing interest within the investment community in whether companies are adequately aligned with the 'just transition' framework. For example:

  • Signatories to the United Nations Principles for Responsible Investment (UNPRI) are committed to integrating environmental, social and governance factors into their decision-making. The 'social' element is likely to include aspects of the just transition framework. Signatories also commit to assessing and disclosing their progress and can be delisted if they do not do so. At the end of 2019, more than 2,500 investors with over US$90 trillion in assets had signed up to the UNPRI.
  • In December 2018, the Grantham Institute, together with the Initiative for Responsible Investment at the Harvard Kennedy School, the UN PRI and the International Trade Union Confederation, published a report entitled 'Climate Change and the Just Transition: A Guide for Investor Action'. The report  recommends investors support a 'just transition' by incorporating just transition factors in investor expectations, requesting disclosure, benchmarking performance and pressing for improvement. The report also encourages investors to promote disclosure by companies, asset owners and asset managers using the framework of the Task Force on Climate-related Financial Disclosures (TCFD). The Investor Group on Climate Change (IGCC), a collaboration of more than 70 institutional investors from Australia and New Zealand with total funds under management of over $2 trillion, is encouraging investors to implement a climate change policy and to report against the TCFD. This includes implementing long-term strategies that would support 'a just transition in communities impacted by shifting global and domestic markets'.3
  • In his 2020 letter to CEOs, BlackRock Chairman Larry Fink announced BlackRock's intention to require the companies it invests in to disclose sustainability information and climate-related risks.4 Writing of his belief that 'we are on the edge of a fundamental reshaping of finance', he described the need to 'be mindful of the economic, scientific, social and political realities of the energy transition', and for the private sector to work with government to ensure a transition that is 'just and fair'. According to Fink, a company's prospects for growth are 'inextricable from its ability to operate sustainably', and operating sustainably requires engagement with the full set of a company's stakeholders. It is by being transparent about this engagement that companies will attract investment most effectively.

Key risks and opportunities

We consider it unlikely that there will be legislative reform in relation to mandate planning regarding a just transition in Australia in the near-to-medium term. Nevertheless, overlooking just transition at an organisational level could result in commercial disadvantage or reputational damage as investor and market expectations on the topic continue to evolve.

The secretariat of the UN Framework Convention on Climate Change has identified 1.5 billion people employed in sectors that are critical to climate stability. Those sectors include energy, agriculture, transport, resource-intensive manufacturing and forestry.6

Where investors have made commitments to act, assess and report on progress towards a just transition, investee companies may experience increased requests by investors for details of their relevant strategy.

In the United States, the Shareholder Association for Research and Education has sought information from utility companies planning the closure of coal-fired plants as to their strategy for ensuring a just transition. Some major Australian companies are already responding to actual or perceived demands for such an approach, incorporating statements of their position on social or community risks associated with the transition to a low-carbon economy in recent AGM notices.5

Key questions

  • Is your organisation aware of the concept of just transition, and aware of the relevance to its business?
  • Does your organisation have a realistic just transition strategy in place? Is it effectively communicating this strategy to stakeholders?
  • Are your organisation's strategy, governance and risk managements teams talking to each other on these issues?
  • How does your organisation engage with investors on issues relating to a just transition, and does it adequately allow for investors to report on these issues?
  • How will your organisation respond to a shareholder resolution requesting detail on your assessment of risks related to the just transition?


  1. International Trade Union Confederation, Just Transition – Where Are We Now and What's Next? A Guide to National Policies and International Climate Governance (19 September 2017)

  2. Clean Energy Council, Clean Energy Australia Report 2019

  3. IGCC Policy Update (November 2019) (

  4. Larry Fink 2019 Letter to CEOs, 'A Fundamental Reshaping of Finance'

  5. For example, ANZ's 2019 Notice of Annual General Meeting at p. 15 (

  6. UNFCCC, Just  transition of the Workforce, and the Creation of Decent Work and Quality Jobs (Technical Paper) (2016)

Climate change guide

This insight is part of our climate change guide for legal and compliance teams in Australia