Distributive Justice and the Role of Business: Operationalising Fairness in the Energy Transition

• The energy transition is reshaping how costs and benefits are being distributed across societies, sectors, places, and generations. This means the concept of 'distributive justice' is not peripheral to the transition - it is a central concern. Nor is it a new concept, with deep roots in political philosophy and clear relevance to contemporary human rights, development, and environmental debates.
• Why does distributive justice matter for businesses? Distributional choices influence whether projects are seen as legitimate, whether communities and workers regard transition processes as credible, and whether a business builds trust and value, or contestation and resistance.
• For business practitioners involved in transition decision making, distributive justice can offer a practical lens with which to approach complex choices. It strengthens the ability of companies to identify where benefits and burdens are being unevenly allocated, where social licence may be weakened, and where a more intentional approach could reduce harm, expand opportunity, and improve the long-term durability of transition projects.
• This report delves into the specifics of distributive justice in the context of corporate actions within the energy transition. It draws on engagements with stakeholders and practitioners in South Africa, where distributive justice has emerged as a critical but insufficiently operationalised dimension of the energy transition, and generates lessons applicable to other contexts.
• The report provides a set of novel 'legitimacy criteria' to help business practitioners make decisions with a distributive justice lens, supported by a four-step framework for operationalising fairness in practice. These tools can be integrated with existing company approaches to derisking projects and driving value in the energy transition.

The idea of a just transition has no single, universally agreed definition1, but most policy frameworks converge on the principle that the shift to low-carbon energy systems should be fair and inclusive, leaving no affected workers or communities “behind”. At its core, a just transition asks how the costs and benefits of moving away from fossil fuels are broadly shared by public and private actors at multiple levels - from the individual project to the regional, national, and international scale. This raises fundamental questions of distributive justice, which addresses who gains, who loses, and how past and future burdens of such decisions might be allocated more fairly. Yet, despite being central to the concept of a just transition, distributive justice is rarely applied in a deliberate or systematic way by governments or businesses, largely because its operationalisation is complex, resource-intensive, and often beyond existing institutional capacities.

Distributive justice matters for business practitioners, because decisions that overlook distributional effects are more likely to be contested and less likely to be seen as legitimate, exposing firms to reputational and operational risks while deepening existing injustices for affected people. The consequences of this gap become clearer when viewed through a local scenario.

This report was written by Judy Hofmeyr, with overall direction and editorial support from Haley St. Dennis, and review improvements from IHRB colleagues Scott Jerbi, Sam Simmons, and Tomás Aboim.

IHRB is grateful to each of the individuals who gave their time and expertise to this process. The analysis draws substantially on expert consultations conducted with practitioners, legal specialists, community equity advocates, economists, and business leaders working at the interface of energy transition and justice in South Africa. Their frank and often divergent perspectives on distributive justice shaped the thinking throughout this report in ways that desk research alone could not. South Africa’s particular history, its existing frameworks for addressing racial maldistribution, and the scale of its energy transition make it a uniquely instructive context through which to examine issues that carry global relevance.

IHRB thanks the Ford Foundation for its strategic partnership, which enables action research and engagement on horizon issues at the heart of fair and equitable energy transitions.