Making the Green Transition Work for People and the Economy 2025

Understand context Understand context: establish baseline socioeconomic impacts of business activities To ensure corporate climate transition plans manage and amplify the potential socioeconomic risks and opportunities for stakeholders, it is necessary to first understand a business’s baseline impacts. This enables all subsequent steps, including setting relevant and ambitious targets, identifying at-risk stakeholder groups and developing measures to secure positive outcomes. Questions to ask may include: Who is impacted by your business activities, both inside and outside your organization, including heavily dependent organizations and groups? (Affected groups may include the workforce, the value chain, consumers and broader communities) –It is critical to effective strategy design that the full suite of impacted stakeholders is considered in risk and opportunity assessments. This will include all groups within your organization and may potentially include additional stakeholders in the communities and environments in which your business operates. What do you already know about the potential socioeconomic impacts of your business activities on each of these groups? How do impacts differ between groups or across regions? –Understanding the baseline socioeconomic impacts of your business activities on your workforce and stakeholders allows you to build a more accurate picture of the impact of your transition plans and better define what positive change for the future should look like. Are you aware of how peers are addressing socioeconomic impacts? What lessons can be learned? –Peers with organizational or business similarities to your own organization could provide useful insight into how socioeconomic impacts can be managed or where risks may emerge. Learning from the actions and outcomes around peer organizations can enhance efficiency in understanding the context of your own operating environment.Set ambition Set ambition: endorse positive socioeconomic stakeholder outcomes in organizational climate ambition statements and accompanying strategy Clearly and explicitly defining ambition is a core tenet of effective business strategy. As such, it is integral that socioeconomic ambitions are clearly established and communicated alongside business and climate objectives. Setting out desired socioeconomic outcomes from the top down helps provide direction and focus throughout the organization, while helping motivate teams, align internal stakeholders and send clear signals to markets. Clear long-term strategic intent around socioeconomic outcomes can also maintain support and confidence from shareholders, boards and investors, help build reputation among customers and may ultimately help secure a long-term social license to operate. Questions to ask may include: How does addressing socioeconomic impacts align with your organization’s values and wider business strategy? –Your organization’s existing values and strategy may affect the scale of change required to include socioeconomic considerations in transition planning. What would it mean to show leadership in addressing socioeconomic impacts for affected stakeholders, and to what extent is this a priority for your organization? –Embedding socioeconomic factors in transition planning provides an opportunity to demonstrate leadership among peers and other actors in the wider operating environment, if goals are set at the cutting edge of impact. What are the climate ambitions of the country or countries in which you operate? Do they have stated aims or goals that you can align your transition efforts with? –Understanding the contribution your organization could make to wider transitions can help frame ambition alongside broader societal goals. This may also spur early public sector engagement which could help shape an operating environment conducive to an efficient transition and support business objectives in the longer term. Making the Green Transition Work for People and the Economy 42