It’s Just; not Fair. Companies, Reparations, Loss & Damage

Mirror House by Doug Aitken

Is the corporate world about to have its reparations moment? The conventional view would be a resounding ‘what are you talking about?’. Aside from a few isolated and voluntary cases, most commentary suggests that there is little legal basis to make companies pay for historic actions.

At least that was the view a few years ago. The debate then was largely about forced labour and slavery – relatively easy to understand and argue. Yet a few developments recently suggest that the discourse is now gaining increasing attention. A growing number of families, universities and governments are taking tentative steps to come to terms with their past, and providing remedy, however imperfectly. The discourse is now also moving more into the corporate space.

Climate Loss and Damage

The agreement at the COP27 to develop a loss and damage fund is perhaps the thin end of a wedge. ‘Loss and Damage’ is, in essence, a transfer of funds from countries that have historically emitted GHG, to those countries that are most impacted by climate change. It is however not discussed in these terms in order to avoid notions of liability associated with reparations. Despite the linguistic gymnastics the results are the same – new money will be transferred from richer countries (built on the back of GHG emissions) to poorer ones (suffering the consequences of GHG emissions). As yet there are no details of the funding sources for this, but various mechanisms to bring in funds from the private sector are in play.

Just Climate Transition

One important aspect of the Loss and Damage discourse is the closely related concept of Just Transition. This was included in the 2015 Paris Agreement, though it was only in the COP26 in Glasgow that it finally gained momentum.Companies are starting to pay attention and develop corporate just transition strategies. The Fast-Moving Consumer Goods sector, through AIM-Progress, is even considering taking a sector wide approach. So are other sectors such as marine, energy and banking.

Taken together, this suggests that reparations/loss and damage and the principle of Just Transition will increasingly be important for companies. There is already a wealth of guidance available for companies, and forthcoming meetings will help shed light on what this means in practice. Two emerging aspects will determine the direction of travel: the interpretation of ‘just’, and the role to which just transition is linked to human rights due diligence processes.

It’s Just; not Fair

The challenge of mainstreaming Just Transition has been discussed in a recent thoughtful speech by John Morrison. He notes that the most fundamental key component of just transition is ‘that the transition is also transformative in terms of economic justice and does not blindly replicate the power relationships of extractive economies’.

Climate Justice has highlighted the broader sweep of the concept beyond climate:

“Just Transition is a vision-led, unifying and place-based set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy. This means approaching production and consumption cycles holistically and waste-free. The transition itself must be just and equitable; redressing past harms and creating new relationships of power for the future through reparations. If the process of transition is not just, the outcome will never be. Just Transition describes both where we are going and how we get there.”

This is difficult territory for companies. So it is no surprise that some companies are attempting to redefine ‘just transition’ as ‘fair transition’.

There is however a danger here – ‘just’ and ‘fair’ are quite different. Fairness is more objective, and allows companies to be more in the driving seat of defining the what and the how. The process gets lost, and the corresponding action plan gets more narrowly defined, potentially in a way beneficial for the companies.

Past, Present, Future

The AIM-Progress exercise, seeks to understand how human rights due diligence (HRDD) can guide how to address Just Transition.

It can. Though not without a tweak to how HRDD is applied. Typically, HRDD exercises view the situation today and look at the current impacts of current operations upon rights holders. There has been less focus upon the context of historical practices that how they contribute to the situation today. Discussions on climate loss and damage, clearly bring in the historical responsibilities. Indeed the Ruggie Framework itself, whilst not being explicit about the timeframe of actual impacts, does imply a backward-looking scope. Which is where another development in 2022 was so important.

Tackling Deforestation

In late 2022 the Forest Stewardship Council (FSC) changed an infamously arcane rule. This prevented some companies from becoming certified to their standard if there was forest conversion in their estate after 1994. Originally this ‘cut off date’ was completely logical, but two decades later had become a serious barrier to progress. Companies that previously deforested in the past, but then stopped deforesting, were unable to become certified and receive recognition for doing the right thing.

The new FSC approach allows those companies to become certified if they “restore deforested and degraded lands in their concessions as well as to offer social restoration to communities affected by the deforestation”.

The FSC has a unique democratic construct that gives a balanced approach to northern and southern hemisphere stakeholders. The FSC comprises NGOs, and a wide range of stakeholders including companies. What the rule change has achieved is a framework and marker for reparations – both of nature and to society in a way that is acceptable for companies.

What Next?

Where families, Universities and Governments are taking tentative steps to come to terms with their past, and provide remedy, the Corporate world is just starting to wake up to its past. This leaves us with several questions and ways forward :

  1. We need to start looking backwards. Current expectations increasingly extend to past practices, that become adjudicated in law. And whilst there is the principle of non-retroactivity in law, some issues seem different. What happens when past profits were made on the basis of something that today is viewed as unacceptable/ illegal? Where are the models that can guide us? The IFC and OECD may provide some guidance.
  2. How will this be reflected in corporate accounts? As a liability on the balance sheet? As a profit and loss item? What does it mean for assurance of corporate reporting? We may not have long to find out. Guidance from professional service firms, taking into account Just Transition are starting to reflect the need to address historic social inequities. Accounting for the financial consequences can’t be far behind.
  3. How this plays out provides a transition risk for investors. The scope of the discourse on loss and damage is more than climate; and reparations is more than slavery & forced labour. It already extends to nature. It’s a short step towards inequality/living income, and crops such as cocoa, coffee and a whole load more where farmers are living in poverty.
  4. Is there a role for cut-off dates? The FSC 1994 cut-off date ultimately became a barrier to progress. Yet for well over a decade it was an instrumental part of the creation and early success of FSC. It sent a strong message that continued conversion was unacceptable. Pressure built up in the system and helped create a critical mass of adherents to FSC. Those who didn’t act immediately, eventually did. And came knocking on the door wanting to be let in as responsible actors.

Could a similar date help with other issues such as climate, biodiversity (beyond the FSC), inequality/living income? Could the decisions made in 2022 have effectively set that date?

Climate Change: Charades, Taboos and Resets

Another Place. Antony Gormley

I had a liberating experience discussing climate change earlier this year. I am a trustee and volunteer at a charity that for years has been focussed on tackling the climate emergency. It is co-leading the campaign against the construction of a new coal mine in the north of England.

We had a session with our members and supporters to discuss what our next priorities should be to address the climate emergency. They said our priorities  should be on adaptation: making the town and its citizens resilient to climate change. The members also said we should be more honest in communicating what’s actually happening. And we should keep fighting against fossil fuel projects.

So this is the view from the ground. From a town that was the first in the UK to set up a citizens climate jury. It’s a view that is both liberating and realistic. It contrasts with the global discourse which is increasingly becoming an elaborate charade.

I don’t mean that with any disrespect to the many people, and many former colleagues who are tirelessly and optimistically working at the international level. This is not a criticism of what has been done. It’s just that a change in direction, emphasis and narrative on climate change are all sorely needed. The current strategies are not working fast enough. They may even be becoming counter-productive. So what’s to be done? Here are a few ideas for business.

Act on Forecasts not Dreams

It is time for the NGOs, think tanks, consultancies and business platforms to articulate a more honest narrative on climate. In the lead-up to COP26 in Glasgow, the talk was about ‘keeping 1.5° alive’. One year on, respected organisations are still putting out reports appealing for more urgency. And providing ever more unrealistic ‘this is what is needed’ insights, analyses and strategies. No-one I have spoken to this year believes in this anymore.

The taboo needs to be broken. Its time to focus more on the most likely climate outcome: 2.6°-3.2° of heating. Which is not to suggest taking our eye off the ball of preventing every fraction of a degree of future global heating.

Presumably somewhere in air-conditioned rooms, groups of people are now working on a new consensus, ambition and rallying cry. Its already too late to adopt a 2° threshold: that feels like going back to the future. The Race to Resilience is welcome, but feels like a coalition of coalitions. People on the ground want honesty, not cheerleading. Lets find a way to focus on outcomes, impacts, and actions that are commensurate with the scale of the challenge. Such as fossil fuel non-proliferation. 

Focus on Fossil Fuels and NDCs

“Net-zero” needs to be put back into its box. As I have written before, “The original intent of ‘Net Zero’ – to create corporate action to push for government action has been captured by corporate marketing departments. This is diverting attention from what is really needed.”

Which is that businesses should set targets for when they will be free of fossil fuels from their Scopes 1, 2 and 3. We need them to provide quarterly reporting on progress.

The other reason for dialling back on ‘not-zero’ is that it has had an unintended consequence. Governments don’t feel the need to play their part when the impression is that business will do the hard lifting. The spotlight needs to be put back on Governments to do what they have to.

Companies should reinforce not deflect from Government efforts. Corporate reporting on climate activities needs to explicitly demonstrate, country by country, how companies are contributing to individual government NDCs.


Reducing demand urgently needs to be put centre stage. Despite being highlighted by the IPCC, demand reduction does not feature in any of the recent reports and corporate narratives I have seen. Clearly its uncomfortable: it questions the basis of the mainstream economic model. Yet it is also a good time to do this as we struggle through late-stage capitalism. Its not more growth we need; its less, better directed growth.

So its timely that the idea of degrowth is making a return, this time with more academic rigour, and more diverse voices getting behind it. Degrowth is not about less of the same. It is about growing the things that are needed for societal wellbeing, equity and nature; accompanied by a shrinkage of the unnecessary activities in rich nations that are not delivering societal wellbeing.

There is much still to work out, not least the details of what and how. However, we only need to observe the per-capita consumption and emissions of the top 1% of society to get some clues where to start: private jets, SUVs, built-in obsolescence, and the creation of desire for the next new thing.

A Just Transition

At COP26 there was a new found enthusiasm by companies for ‘just transition’. They are now busy interpreting what it means for their own internal audiences and external positioning. Often simplified to mean ‘leave no-one behind’, it actually goes beyond a few add-ons to the content of climate roadmaps.

Embracing ‘just transition’ will be less about adjusting current business practices, and more about intentionally changing them. If companies are serious about a just transition this will involve placing a scrutiny on the economic model we are following. An economic model which is reliant upon extractive approaches to both the environment and labour. Degrowth provides a way to approach this by creating a planned, democratic and therefore, just and equitable approach to tackling climate change.

Avoiding Climate Tunnel Vision

Its surprising how climate change is now the primary lens through which many companies view the broad range of sustainability challenges they face. Its hard to understand if this laser focus on climate is just a question of the attention pendulum swinging too far one way, or is based upon a more sinister ‘intending the unintended consequences’.

Either way it is leading to (some) companies ignoring or conveniently shifting their gaze from potentially more significant issues such as biodiversity, living income and inequality.

I have written before about the ability of us all to address only a few big issues at once, as well as the interconnectedness and complexity of sustainability issues. Approaches to sustainability (and climate) need more nuance, balance and logic.