Making the Green Transition Work for People and the Economy 2025

Assess risks and opportunities Assess risks and opportunities: conduct a comprehensive risk assessment of climate transition plans and identify impacted stakeholder groups and socioeconomic risks By conducting a comprehensive risk assessment of climate transition plans, businesses can move from aspirational target setting to practical, stakeholder-specific strategic and operational action. An effective risk and opportunity assessment will define which workers and external stakeholders are likely to face socioeconomic impacts due to corporate climate action, as well as which socioeconomic dimensions will be affected. This enables leadership to develop targeted strategies and processes to mitigate socioeconomic risks. Questions to ask may include: How likely is each group to be impacted across each socioeconomic dimension as you begin to carry out climate transition plans? How might these impacts differ based on place? –Each affected group may face risks across multiple dimensions of socioeconomic impact. For example, decommissioning high-emission assets in a region may lead to direct job losses, but also to affordability and access challenges if costs are passed down to consumers. Considering socioeconomic effects across a framework of impact dimensions can help ensure a comprehensive understanding of risks and opportunities. Are there natural opportunities to support positive socioeconomic outcomes through climate plans? –While some business climate strategies may reinforce existing socioeconomic challenges, others may present opportunities to drive positive change. Identifying such opportunities early is important to ensure they can be maximized. In some cases, supporting positive socioeconomic outcomes may require cross-industry collaboration. Engaging with peers in adjacent industries can be a value mechanism to address socioeconomic priorities. What could the intergenerational impact of your climate plans be for different stakeholder groups? –Climate strategies may have different effects on stakeholders in the near, medium and long term. It is essential to understand how the impact of plans may vary over time to effectively develop targets and mitigation strategies.How do socioeconomic impacts vary between different transition scenarios? –For effective risk mitigation, it is necessary to understand the potential variation in socioeconomic impacts under a range of plausible future scenarios. For example, socioeconomic impacts may be significantly different under a scenario in which countries undergo an orderly transition to net zero than under one in which the pace of change varies around the world, or under one in which national or global macroeconomic outlooks are starkly different. Which community stakeholders (including vulnerable and low-income groups) could help co-design strategies to support socioeconomic outcomes? How and where can these groups be involved in decision-making? –Incorporating the knowledge, expertise and experience of affected stakeholder groups, particularly those most vulnerable, into risk and opportunity assessments ensures that the nuances of socioeconomic impacts are effectively understood. This allows for more targeted and effective risk mitigation measures to be developed. Are you considering relevant place-based differences and regional disparities, where risks and opportunities may be felt differently in different areas? –The socioeconomic impacts of business activities may be felt differently in various regions, particularly if existing challenges are greater in a specific area. Understanding the spatial dimension of socioeconomic impact is important to thoroughly guard against risks and maximizing opportunities. The impact of a given strategy in one location may yield materially different impacts on a stakeholder group than in another location, depending on, for example, regional economics, demographic composition or local context regarding access to finances, goods or services. Does your organization’s external positioning and communication around sustainability align with its core business activities to ensure positive socioeconomic outcomes for workers and vulnerable stakeholders? –External positioning on sustainability and socioeconomic impact can be helpful in generating opportunities available to businesses perceived as leaders in these spaces, while also helping to minimize reputational risks. When messaging is misaligned with activities, it can generate risks. Making the Green Transition Work for People and the Economy 46