Socio-economic transitions have the potential to exacerbate existing inequalities. Without deliberate efforts to ensure inclusivity, marginalised groups and vulnerable communities may bear a disproportionate burden, facing economic hardships and social disadvantages. A just transition approach aims to mitigate this risk by prioritising equity, fairness, and the protection of livelihoods. This was the subject of a panel discussion held during the 2023 Trialogue Business in Society Conference.
Panellists included Charlotte Mokoena from Sasol, Steve Nicholls from the Presidential Climate Commission, and Wendy Poulton from Strategic Mindsets.
Steve Nicholls began by providing an overview of the Presidential Climate Commission (PCC). The PCC is a group of commissioners appointed by the Presidency. These commissioners represent various social partners such as business, labour, civil society, government, youth and faith movements. “The role of the PCC is to inform cabinet on issues of socio-economic transformation in relation to climate change and, in particular, on achieving the just transition,” said Nicholls. He went on to explain that the PCC has released guidance known as the “just transition framework,” which outlines its perspective on what a just transition for South Africa entails. This framework has been adopted by cabinet and is intended to inform planning systems within the government. Additionally, the framework aims to influence the actions of other social partners as they work towards addressing climate change and ensuring fairness in the transition process.
Investing in skills development and workforce transition
The panel discussion emphasised the importance of a skilled workforce in driving a just socio-economic transition. Poulton touched on the need to retrain and upskill workers to meet the demands of a low-carbon economy. “As we start ramping up with renewables and other just transition technologies, we need to focus on what they call vertical learning as well. So not just horizontal skills and competencies, but development of people to be critical thinkers to be problem solvers, to be able to be agile in this very “VUCA” (Volatility, Uncertainty, Complexity and Ambiguity) world that we find ourselves in. Business has a huge role to play in that,” she explained.
Additionally, Poulton called for collaborative partnerships between educational institutions, industry, and government bodies to bridge the skills gap and ensure a smooth workforce transition, thereby maximising the potential for inclusive growth. This was echoed by Mokoena, who highlighted the importance of clear and consistent policies and regulations to facilitate a smooth transition to a low-carbon economy. Mokoena also spoke about the need for government to provide a stable framework that encourages long-term planning and investment, thereby enabling businesses and investors to actively participate in the just transition.
Understanding the social impact of climate change
Nicholls argued that there are two significant aspects to consider when framing the changes related to climate change and the just transition. Firstly, addressing climate change impacts is crucial as it poses a significant exogenous risk. South Africa’s economy heavily relies on industries such as platinum group metals, gold, iron, steel, and the internal combustion engine. However, the global shift in demand and changing trade dynamics in response to climate change will have a substantial impact on the country’s economy, including trade balance, debt management, and the cost of capital. This situation highlights the need for opportunities in transitioning to a competitive and climate-neutral economy.
Secondly, addressing social ownership impacts is essential to tackle inequality in South Africa. Access to capital and ownership of capital play a vital role in driving inequality. Wealth transfer to the poor is a necessary step in solving this problem. The just transition provides an opportunity to not only address climate change but also reduce inequality by ensuring that the private sector stimulates various sectors of the economy.
“The private sector has to be able to create new sectors new companies that are not owned by that particular private sector investment. That transition of ownership has to be to people who work in those areas so that they have capital, and they can address these inequality issues,” he concluded.
Barriers to just transition
As they wrapped up their discussion, the three panellists drew attention to the barriers hindering the just socio-economic transition. Nicholls stressed the urgency of addressing limited access to affordable capital and high upfront costs, particularly for small and medium-sized enterprises. He called for innovative financing mechanisms, such as public-private partnerships and risk-sharing initiatives, to mobilise the necessary investments and accelerate the widespread adoption of clean technologies.
Similarly, Poulton acknowledged the technological barriers that need to be overcome to achieve a successful energy transition. She highlighted the importance of research and development, innovation, and collaborative efforts to address reliability and stability concerns associated with integrating intermittent renewable energy into existing grids.
Panellists concluded by emphasising the importance of effective action and meaningful impact. They noted the crucial role of organisations like the National Business Initiative and similar entities driving collaboration and practical investment strategies.
The key insights shared by the panellists were:
Policy and regulatory challenges: Clear and consistent policies and regulations are crucial for a smooth transition to a low-carbon economy, enabling long-term planning and investment.
Skills and workforce transition: Retraining and upskilling workers are vital to meet the demands of a just socio-economic transitions. Collaborative partnerships between educational institutions, industry, and government bodies can bridge the skills gap and ensure a smooth workforce transition.
Social and equity considerations: Protecting workers, supporting impacted communities, and promoting inclusive growth are crucial. Proactive engagement with affected communities and prioritising their voices in decision-making processes are necessary for social equity and justice.
Financial barriers: Limited access to affordable capital and high upfront costs hinder the adoption of just socio-economic transition energy projects. Innovative financing mechanisms, like public-private partnerships and risk-sharing initiatives, are needed to mobi