To us, a just transition means creating the right balance amongst, and value for, the stakeholders to deliver a net-zero economy.
By Helena Anderson, Roberto Castiglioni – Ikigai Group
The Romans – who knew a few things about technology advancement – used to say in medio stat virtus: virtue stands in the middle. This principle is something we’ve always applied in life and it infuses all of our work at the net-zero bankability consultancy, Ikigai Capital.
We believe that balancing multiple virtues, finding compromises (or better yet, win-wins) between the four main stakeholders in the energy transition – consumers, technological innovators, financial institutions and governments – is the only way we can achieve our sustainability objectives.
What does this actually mean in practice? For example, notwithstanding huge social (and now legal) pressure, it would be quite naïve to think that large oil and gas companies can divest from billions of investment just because we have to decarbonise.
Besides the fact that shareholders expect to have their investment remunerated, millions of people are employed in the industry and all our economies still depend heavily on fossil fuels for materials, industry and transportation.
Transition implies change, radical change in this case, and radical change cannot happen overnight, nor can it leave economic disparities or insecurity.
We need to move billions of dollars from a fossil fuel-driven economy to the future green economy. To do so, we need to show social value and convenience, deliver industrial competitiveness and productivity, and improve profitability equal to or in excess of the traditional energy sector.
We also need to consider that large fossil fuel producers do not operate on an island; they operate in an ecosystem that depends on them, with large financial interests at stake. If we want to deliver a just transition, we need to consider the ecosystem as a whole and take a systems approach to stakeholders and infrastructure delivery.
The same concept applies to the demand side of emissions reduction, which, in our opinion, has been comparatively neglected.