Executive summary
The low‑carbon transition is now underway and is reshaping labour markets, investment patterns, supply chains and access to essential goods in almost all economies. While the transition offers clear opportunities for innovation, productivity and new employment, it can also be associated with risks if it is poorly managed. These risks include job losses, deteriorating job quality, pressures on consumers through higher costs or reduced access to energy and basic goods, and disruption to communities dependent on carbon‑intensive activities or newly exposed to business activities which impact their land, livelihoods and cultural heritage. Governments increasingly expect businesses to manage these social dimensions as part of their climate strategies; responsible business conduct is a practical framework for doing so.
This report is primarily intended for business practitioners, as a resource to inform the development of business policies and practices to manage social impacts associated with the low-carbon transition. It provides an overview of current opportunities and challenges and sets out key actions based on OECD standards for responsible business conduct, in contribution towards a just transition.
Integrated transition planning remains limited in practice
Many companies still treat climate transition planning as a predominantly environmental or financial exercise, with social issues addressed late or in parallel rather than embedded from the outset. Interviews point to structural barriers, including siloed internal teams, misaligned incentives and inconsistent terminology between climate, financial and social functions. Despite increased references to the concept of a just transition in corporate reporting, only a small minority of companies demonstrate partial planning for social impacts and none fully implement comprehensive measures. Where progress is more evident, it is associated with senior‑level ownership, clearer internal accountability and explicit integration of social objectives into transition policies, targets and performance indicators. This report outlines how companies can practically align commercial, environmental and social priorities so that workforce impacts, supplier effects and consumer implications are considered alongside de‑carbonisation pathways from the start, rather than in isolation.
Place‑based and cumulative impacts require explicit attention
Social impacts of the transition are highly context‑specific and can be amplified when multiple changes occur simultaneously in the same region or sector. Regions dependent on a single industry, with limited social protection or weak governance, are more exposed to job losses, income shocks and attendant impacts on quality of life. Similarly, new low‑carbon investments and activities may be concentrated in particular locations, including on or near Indigenous lands. In this respect company‑level impact assessments are often insufficient to capture these dynamics on their own. More effective approaches combine enterprise‑level assessments with broader consideration of regional dependencies, national development priorities and cumulative effects across projects and value chains. Tools such as cumulative impact assessments, workforce mapping and consumer impact assessments are ways to identify risks and prioritise action.
Meaningful stakeholder engagement underpins credible transition strategies
The report consistently identifies stakeholder engagement as a decisive factor in ensuring the rights of workers, communities and consumers affected by the transition are respected. However, research shows that very few companies commit to consulting affected stakeholders in the design of decarbonisation activities. In order to be meaningful, engagement should be timely, two‑way and adapted to different groups, including workers, trade unions, consumers, local communities and Indigenous Peoples. In the context of the low-carbon transition stakeholder interests can diverge and not all demands can always be met simultaneously. In such cases, companies are encouraged to use transparent, risk‑based approaches to prioritise the most severe impacts and explain trade‑offs. Effective engagement, including social dialogue and collective bargaining in the case of workforce impacts, can enhance trust, reduce delays and improve the quality of transition activities.
Collective action, benefit sharing and responsible disengagement play an important role
Given the scale of transformation involved, individual company actions are often insufficient to address systemic impacts. Collaboration across industry, governments and other stakeholders are necessary complements to company‑level measures, particularly for workforce reskilling, regional economic diversification and safeguarding consumer access and affordability. There is a growing use of benefit‑sharing and co‑ownership models, especially in renewable energy and resource extraction, which allow communities to share upside value and reduce conflict.
At the same time, there is rising importance with respect to how companies exit activities, whether through divestment, supply-chain disengagement or asset transfers. Evidence shows that abrupt or poorly planned exits can shift assets to operators with weaker standards or generate negative impacts for workers and communities. In this regard, efforts to support improvement, engage stakeholders as well address impacts when exit is unavoidable are critical.
