Introduction

The concept of a “just transition” extends beyond reaching net-zero emissions to encompass broader human rights impacts. Originally rooted in US trade union efforts, the term now refers to ensuring that workers, communities, and lower-income countries are not left behind as economies shift towards environmental sustainability. The United Nations Guiding Principles on Business and Human Rights (UNGPs) urge companies to take a proactive approach to prevent and mitigate negative impacts across all operations. Furthermore, regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) now require companies to report on these efforts, reinforcing the expectation that businesses must reduce emissions while accounting for human rights risks.

The business case for a rights-respecting transition

The private sector’s stake in a just transition is significant, with the sector accounting for 84% of the approximately 51 billion tonnes of worldwide emissions in 2021. This responsibility brings exposure to regulatory requirements, litigation risks, and investor scrutiny. Under the CSRD, large EU-based companies and those with significant EU turnover must disclose how their governance manages the social dimensions of the transition, including impacts on workers and communities. “Just transition litigation” is also a growing risk, with local groups bringing lawsuits against renewable energy and mining companies for project delays and stop orders. Market mechanisms, such as the London Stock Exchange (LSE) Climate Governance Score, are increasingly aligning with investor expectations, directing capital towards companies that manage climate and social risks together.

International guidance frames board responsibility

Although no international legal framework explicitly requires companies to address the just transition, guidance from the OECD, ILO, UNEP, and UN Global Compact (UNGC) establishes that corporate boards are directly responsible for oversight. These guidelines specify that boards are accountable for just transition strategy as a matter of core governance and must ensure the appropriate allocation of resources to meet emissions goals. Stakeholder engagement, particularly dialogue with workers and unions, is deemed essential. Collectively, this guidance suggests that human rights due diligence must be integrated within climate-related decision-making rather than being treated as a separate compliance stream.

Collaborative frameworks translate expectations into practice

Two key frameworks offer boards granular direction: The B Team’s “Just Transition: A Business Guide” and the Business Commission to Tackle Inequality (BCTI) Flagship Report. The BCTI report serves as a “stress test” tool for measuring the resilience of a company’s transition plan, while the Business Guide acts as an implementation manual. Benchmarking initiatives, such as the World Benchmarking Alliance (WBA) and Climate Action 100+, translate these frameworks into measurable criteria. These benchmarks allow boards to gauge how external stakeholders view their corporate planning and compare their progress against global peers.

What good practice looks like – case studies

Several companies demonstrate progress in integrating human rights into transition planning. One global automotive manufacturer embedded human rights oversight directly into board reporting lines, appointing its top compliance officer as the human rights officer. A global technology company formalised accountability at both senior leadership and board committee levels, operating a dedicated internal human rights and technology centre. In the energy sector, companies have used layered governance structures to connect board oversight to regional strategies, prioritised net-zero skills development, and aligned green finance frameworks with human rights criteria. One multinational energy company reported that by 2019, all workers affected by power station closures had either found new jobs or retired through a board-led just transition agreement. Additionally, over two-thirds of employees at another energy company had been trained on green jobs by 2025.

Room for improvement: where boards are falling short

Despite these examples, a significant governance gap remains. Between 2021 and 2024, the WBA assessed 450 companies and found that only 26% of workers were covered by a commitment to meaningful dialogue with unions, and only seven per cent had any assurance of access to green jobs. In 2025, Climate Action 100+ found that only one per cent of 164 assessed companies satisfied their just transition indicator in full, while 47% met none of the criteria. Boards often treat human rights as a compliance exercise rather than a strategic priority, and climate transition initiatives frequently marginalise the communities and Indigenous Peoples they affect most directly. Lack of transparency in design and implementation has also led to greenwashing risks.

Conclusion

A rights-respecting just transition is a core governance issue. Responsible board action requires more than adopting standalone policies; it involves structuring oversight to hold management accountable for human rights impacts alongside emissions targets. The separation between climate planning and workforce strategy is a choice that boards must address. Case studies show that stronger board engagement is possible and effective across industries. Where boards exercise active and accountable oversight, transition strategies are more likely to be credible and avoid governance failures that undermine public trust.