Will the energy transition be a just transition?

More and more companies are reporting on their non-financial performance in their annual reports and separate publications, accounting for their impact on society. I’m proud to say that ABN AMRO has been at the forefront of non-financial reporting for many years.

Measurable progress

The wider availability of data, models, methodologies and standards is facilitating reporting on the energy transition. Progress is becoming easier to measure and more transparent for stakeholders, who are then better able to compare companies.

But as nice as figures and graphs are, they also pose a risk. After all, it’s easy to get lost in a reality of numbers and statistics and lose sight of the physical world they represent. The energy transition focuses far too often on carbon reduction and not enough on those who actually have to make the transition: the people themselves.

Solar panels

The transition all of us want to make has an impact on people and their lives. Just think: as we move towards more sustainable forms of energy and phase out fossil fuels, jobs will inevitably be lost. The raw materials used to make solar panels are often extracted in appalling working conditions. Wind farms may ease our dependence on fossil fuels, but they also require a great deal of land, sometimes leading to conflicts with local residents.

Also, people with less to spend don’t always have the funds to make their homes more sustainable, which means they’re left behind in the transition, often facing high energy bills.

The physical impacts of climate change also affect people, especially vulnerable groups, both close to home and further afield. Poorer countries are disproportionately affected by climate change. Whole regions are made uninhabitable, and that can lead to mass migration.

Learning from mistakes

Obviously, there’s no quick fix, but vigilance is key. At last year’s ABN AMRO Human Rights Conference, environmentalist and former politician Diederik Samsom showed how in previous economic transitions, the rich have always come out on top – at the expense of those who couldn’t keep up with change.

We in the business world and those in government thus have a responsibility to learn from the mistakes and injustices of the past. It’s up to us to see the energy transition through a human rights lens or people lens. And that means being aware of the impact our decisions can have on people and their lives.

Inextricably linked

ABN AMRO, for its part, is raising awareness by hosting conferences and stakeholder dialogues, but also by engaging in discussions with clients and through our day-to-day work. We always talk with business clients looking for financing about conditions involving sustainability and carbon emissions. By also looking through the human rights lens, it becomes clear that all the sustainability topics are inextricably linked.

It’s often stressed that the energy transition should be a “just transition” – a transition that leaves no one behind. While all the reports on the just transition published these days are needed and relevant, it’s even more important that we take action at the practical level. That we see all our products, analyses and processes through a human rights lens. And that we work together to ensure a transition that’s good for both planet and people.

Solange Rouschop - Chief Sustainability Officer ABN AMRO