How heavy industry can form a just and equitable transition to decarbonization

A person work sparks flashing, illustrating the need for a just and equitable transition in heavy industry.

A just and equitable transition to net zero is within reach for heavy industry. Image: Kateryna Babaieva, Pexels

Ginelle Greene-Dewasmes
Community Specialist, Global Shapers Community, World Economic Forum Geneva
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Society and Equity

This article is part of: Centre for Nature and Climate

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  • The heavy industry sector can play a pivotal role in financing a just and equitable transition that combines sustainability and social justice.
  • Examples such as Sweden’s HYBRIT initiative, Ørsted Offshore Wind and CEMEX’s Future in Action programme demonstrate how industries can reduce emissions, engage communities and prioritize innovation.
  • By integrating technology and responsible practices, industries can lead in creating a much-needed investment into a future where economic growth and social progress coexist with environmental preservation.

A just and equitable transition towards net zero in heavy industry essentially refers to the interests of all stakeholders and groups being considered and, as appropriate, fairly taken into account when setting goals and objectives and making and implementing any policy.

While the aims of a just and equitable transition are applicable across domestic and international levels, the method for achieving that aim varies according to context, as explained in the iDERA, 2022 report. According to the United Nations Secretary-General Antonio Gutteres, involvement from all partners, including the private sector, finance institutions and the philanthropic community, will play a significant role towards meaningful climate action.

Shortfalls from the recently concluded June Summit for a New Global Financing Pact serve to further emphasize this point. While the Summit created momentum for unlocking the trillions of dollars needed to tackle climate change, developed countries remained reluctant to engage developing countries on the key issues of debt relief and new financing for climate action. Public sector flows continue to be insufficient to meet developing countries’ climate change adaptation and resilience-building needs.

A just and equitable transition within heavy industry presents a novel avenue for exploring alternative innovative solutions to help finance a just and equitable transition in the countries and regions where it is most needed. By embedding sustainability and social justice principles into ongoing industry transformations, heavy industry transition can attract diverse sources of investment and support from international stakeholders.

Heavy industries are increasingly becoming laboratories for innovative solutions with the potential to be scaled to ensure both environmental and social well-being. Climate action activities showcased by companies in sectors such as steel, energy, automotive and mining, can serve as models for creating jobs, empowering marginalized communities and fostering inclusive growth. Heavy industry's commitment to a balanced, holistic transition can thus contribute fresh perspectives and practical strategies to catalyse the Summit's global financing objectives.


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Steel industry: transforming furnaces, empowering communities

The steel industry, notorious for its significant carbon footprint, is undergoing a remarkable transformation towards a more sustainable future. One striking example is the €143 million EU Innovation Fund supported 'HYBRIT' initiative in Sweden, a collaborative project between steel manufacturer SSAB, iron ore producer LKAB and energy company Vattenfall. HYBRIT aims to replace traditional blast furnace technology with a hydrogen-based process, virtually eliminating carbon emissions from steelmaking. The true innovation, however, lies in the broader impact of this transition.

The communities surrounding these steel plants are being actively engaged in the shift. Industrial investment around HYBRIT is expected to generate 3,500 jobs and contribute to enhanced regional cooperation in Northern Sweden by working closely with the government. Training programmes, skill development initiatives and job opportunities are being provided to ensure a just transition for the workforce. HYBRIT also includes information sharing on infrastructure and skills gaps needs with the government, with the further aim of facilitating the move of 100,000 people into Northern Sweden over the next few decades. By investing in local talent, engaging in multi-stakeholder collaborations and fostering a sense of ownership, the HYBRIT initiative exemplifies how heavy industries can create a positive ripple effect beyond environmental gains.

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Energy sector: empowering low-income communities in the renewable energy transition

As the renewable energy sector gains momentum, the global transition to cleaner sources of power presents both environmental benefits and social challenges. Ørsted, a leading renewable energy company, stands out for its remarkable approach to empowering workers from low-income communities during this transition. Ørsted's commitment is evident in projects such as its Ocean Wind farm off the coast of New Jersey, USA. The company has forged partnerships with local labour unions and invested in workforce development programmes to ensure that job opportunities are accessible to all, including underrepresented and economically disadvantaged groups.

Portfolio-wide, Ørsted has committed $23 million to enhance or establish new programming that will prepare American workers for jobs in offshore wind and it has signed a project labour agreement with North America’s Building Trades Unions. This agreement includes diversity targets, local training programmes and workforce diversity performance monitoring. This approach not only contributes to a more diverse and skilled workforce, it also bolsters local economies. By empowering workers in low-income communities, Ørsted exemplifies how the renewable energy revolution can be a catalyst for positive social change.

Decarbonizing materials manufacturing: investing in supply chains and uplifting communities

CEMEX, a global building materials company, has made notable efforts towards a just transition to a low-carbon economy via its Future in Action programme. The company has invested over $1 billion in strategic projects since 2020. These are aimed at advancing CO₂ reduction goals, increasing production capacity and driving growth in urbanization solutions. In 2022, CEMEX also became an active member of the United Nations Global Compact committing to achieving progress on principles of responsible business practices.

To date, CEMEX has provided entrepreneurship support to 45 Mexican micro, small and medium-sized enterprises from its supply chain, contributing to economic development in their communities. Next, CEMEX plans to expand this support to other geographies. It has also collaborated with local organizations and governments to develop sustainable solutions that benefit the community through its Growing Platform and Centres for Self-Employment. This approach recognizes the importance of involving a wide range of stakeholders and addressing the needs of those affected by the transition.

Worthy of further exploration beyond this article, the above examples illustrate the immense potential of heavy industries to lead the way towards financing a just and equitable future. These transformations go beyond technical innovation; they embody a holistic multi-stakeholder approach that integrates environmental stewardship, social justice and economic progress. As heavy industries continue to evolve, the lessons learned from these initiatives can serve as blueprints that could be potentially replicated in a world where the imperatives of sustainability and equity converge. By embracing these principles, heavy industries can mitigate their negative impacts and have the potential to become powerful agents of positive change on a global scale.

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