Just transition in supply chains: a business brief

The concept of just transition has increasingly gained traction among large companies looking to accelerate the adoption of environmentally and socially responsible business conduct throughout their business operations. At the same time, regulatory developments have recently begun to impose requirements on companies to tackle issues relating to climate change and labour and human rights, with implications for the supply chains of businesses.

As industries shift towards a net-zero and climate-resilient economy, a just transition means promoting environmentally sustainable economies in a way that is as fair and inclusive as possible to everyone concerned, creating decent work opportunities and leaving no one behind. 

The purpose of this business brief is to describe how companies can better manage the convergence of different climate risks that they are exposed to through their supply chains by placing just transition at the centre of their transition planning and risk management strategies and making it a key pillar of overall business management. 

The authors offer five recommendations for businesses to improve the sustainability and resilience of their supply chains through a just transition:

1. Improve awareness of risks of social disruption and climate change in supply chains 

2. Improve the transparency of supply chains

3. Integrate risk management through just transition principles

4. Create market demand from the public sector

5. Support capacity building and access to finance for small and midsize enterprises (SMEs)