Leadership in uncertain times: Just Transition as a strategic advantage

In a politically charged and economically anxious climate, sustainability and human rights have become topics that are increasingly difficult for businesses to discuss publicly. But the data is clear: these issues are not going away, despite sustainability legislative rollbacks within the EU and the US. We are making the case for businesses to lead with incremental, transparent action – grounded in risk, resilience, and long-term value.

The political climate and why Just Transition seems to have gone silent 

Multiple factors are at play when considering why Just Transition seems to have taken a backseat in corporate reporting. The terms are situated within what we perceive as a Western 'moral panic'. A moral panic is defined as 'a widespread feeling of fear, often exaggerated and disproportionate, that some behaviour or group poses a threat to the values, interests or well-being of society'. Over the last few years, we have seen the term' Just Transition' become politicised. Most recently, critics have framed the term as a euphemism for job losses, as climate-focused policies have been seen as a threat to traditional industries in resource-rich areas, such as the USA and Canada. On top of this, the term has been caught up in the broader culture war around climate action and sustainability, being seen as a barrier to good business – it has gained some political baggage.

The most recent Amnesty International Report [1], published in April 2025, describes how climate injustices (amongst other risks) are being exacerbated as states continue to undermine the importance of acting on climate risks that will result in major human rights harms. A political football, the long-term nature of Just Transition extends far beyond election cycles, and we argue that it is good business to be resilient: so, let's start thinking longer term. 

Just Transition as risk management 

While many think of 'Just Transition' as a concept specific to climate action and net zero pathways, Just Transition principles are increasingly applied to AI and digitalisation to ensure equitable upskilling, worker protection, and inclusive innovation. 

A common misconception is that work toward a Just Transition is an expensive and uncertain undertaking, with little financial incentive tied to its implementation. In reality, whether under the guise of 'sustainability,' 'human rights management,' 'social impact,' or the latest trend, this is common-sense risk management. Misinformation and disinformation, as well as extreme weather events, are ranked as the most severe risks within two years in the World Economic Forum's (WEF) 2025 Global Risks Report.

However, when the timeline is extended to 10 years, the top four most severe risks are all linked to the environment and climate. Hand in hand, environment and climate are intrinsically interlinked with social concerns, and inequality is central in the WEF's interconnections map of the Global Risks landscape.

In this context, it becomes starkly evident that smart businesses will apply a risk lens that looks beyond the current political cycle and manages both social and environmental risks ahead. Our call is not for companies to invest heavily in Just Transition all at once, but rather to consider how to effectively incorporate its principles into the incremental, measurable improvements of company processes year after year.

For many, considering how the principles of fairness, inclusion, and equity relate to strategic planning cycles may seem too daunting a task right now. The time horizons of many companies' Enterprise Risk Management systems primarily focus on near-term risks over the next two to five years that need to be managed; however, the challenging task of climate change adaptation is not going away. While some companies roll back on sustainability in response to the external landscape, we are seeing some of our key clients prepare to double down for the long term. These forward-looking companies have weathered past downturns and know to use this time to set their direction of travel and objectives for more extended time horizons. They are asking themselves what skills they need to ensure their sustainability teams have in 10 to 15 years.

What Just Transition really means for your business

When legislation rolls back, voluntary initiatives keep rolling on. The International Sustainability Standards Board (ISSB), focused on investor-relevant reporting, has released reporting guidance on transition plans, recommending that companies "might also consider including metrics and targets related to a just transition".

The Transition Pathway Initiative's latest report [2] shows that investors are demanding deeper, forward-looking assessments of corporate transition plans, detailing credible and measurable actions. Amundi Asset Management and Clifford Chance LLP developed a framework last year [3], highlighting how integrating Just Transition principles into climate strategies helps mitigate social risks and unlocks opportunities for global growth.

Increasingly, investor environmental and social frameworks include social inclusion and gender dimensions and require action plans to demonstrate the anticipated impact of a climate-led investment or interventions in key sectors such as agriculture, on women or disproportionately affected stakeholders, whose vulnerability to climate change may be exacerbated, especially in rural, underserved communities, and in the global south [1]. The 2 X Challenge Framework [2] commits development and multilateral finance institutions to unlock capital for gender-smart and inclusive investment. It has seen rapid voluntary uptake since 2018 by a cohort of more than 100 members, including development finance institutions and corporates. These organisations are focused on directing development capital flows towards gender-first and inclusive finance. SLR’s Sustainable Finance gender experts have extensively supported climate-focused impact funds and investor clients to embed a gender lens into their E&S management systems and investment strategies. For example, they recently supported the 2X Challenge – a flagship initiative for Climate Fund Managers to align on gender strategy.

Additionally, the Global Reporting Initiative (GRI) has updated its 'topic guide' on climate change (GRI 102), including two key expectations tied to Just Transition principles. The first asks organisations to describe "how the transition plan aligns with just transition principles and how engagement with stakeholders informs its development and implementation." The second asks them to report "the impacts on people and the environment from implementing the transition plan and the actions taken to manage them, including: workers, local communities, and Indigenous Peoples". 

In a world of increasing political push-back, it's more important than ever to have businesses looking beyond short-term political (or investment) cycles and understanding what their risk profile will look like in ten years and beyond. Gradual but consistent consideration of how best to meaningfully integrate Just Transition principles into your company's risk management and strategy development processes will strengthen your long-term resilience as our economic and political landscape fluctuates in the years ahead.

Advisory Digest

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References:

[1] https://www.amnesty.org/en/documents/pol10/8515/2025/en/

[2] https://transitionpathwayinitiative.org/publications/uploads/2025-state-of-the-corporate-transition-2025.pdf

[3] https://www.cliffordchance.com/content/dam/cliffordchance/PDF/Feature_topics/just-transition-a-framework-for-investor-engagement.pdf

[4] https://www.reuters.com/sustainability/cop/trump-tells-un-that-climate-change-is-con-job-2025-09-23/