Just value chains: how corporate decarbonisation activities can impact communities

Many companies are beginning to act on climate change by cutting their greenhouse gas emissions. However, the activities and new infrastructure this requires can have both positive and negative impacts on local communities. A central aspect of planning for a just low-carbon transition involves managing the social impacts of new infrastructure related to decarbonisation, such as renewable energy projects and transition mineral mines. If companies are to maintain their social licence to operate and mitigate the risk of public resistance to their operations, they will need to cultivate trust with local communities. The loss of a company’s social licence to operate can translate into material financial risk through project delays and cancellations. We focus on the negative social impacts of activities linked to the low-carbon transition, setting out an exploratory, evidence-based framework that can help investors and companies anticipate such risks. Combining insights from the academic literature with empirical data on corporate disclosure, the framework can support investors with identifying sector-specific priorities for shareholder engagement with companies.