Climate change is one of the highest-ranking issues on the political and social agenda. Corporations are one of the main actors that will play a major role in the decarbonization of the economy. They need to put forward a net zero strategy and targets, transitioning to net zero by 2050. Yet, an important but rather overlooked stakeholder group in the sustainability debates can pose a significant stumbling block in this transition: employees. Although climate action has huge benefits by ameliorating adverse environmental events and is expected to have an overall positive impact on employment, net-zero transition in companies, especially in the energy sector in certain regions, will cause substantial adverse employment effects for the workforce. This has the potential to slow down or even derail the necessary climate action in companies. In this regard, just transition is a promising concept, which calls for a swift and decisive climate action in corporations while taking account of and mitigating adverse effects for their workforce. If well implemented, it can accelerate net-zero transition in companies. This potential clash of environmental (E) and social (S) aspects of environmental, social and governance agenda, materialized in the companies’ net-zero transition, and its potential remedy, just transition, have important implications for corporate governance and finance, especially for directors’ duties and executive remuneration, sustainability disclosures, institutional investors’ engagement and green finance.
Journal of World Energy Law & Business, Vol. 15, Issue 1, pp. 1–21, 2022