The Forgotten "S": Why ESG's Net-Zero Rush Risks Leaving Communities Behind

Every quarter, companies publish glossy sustainability reports celebrating their progress towards net-zero. They announce ambitious carbon reduction goals, renewable energy investments, and detailed climate strategies.

But behind these achievements lies an uncomfortable truth: the very communities that powered our carbon-intensive economy for generations are being left behind.

We're witnessing the rise of what some call "carbon tunnel vision"—an ESG approach so focused on environmental metrics that it neglects the social consequences of transition. While boardrooms celebrate hitting Scope 1 and 2 targets, entire regions built around fossil fuel industries face economic collapse.

This isn't just a moral failing—it's a strategic blind spot that could undermine the legitimacy of net-zero itself.

The Scale of Social Disruption

The numbers are stark. According to the Global Coal Mine Tracker, about 1 million coal mining jobs will disappear globally by 2035—roughly 100 every day.

And the impacts go far beyond miners:

In Boone County, West Virginia, local government revenue halved in five years after coal closures, gutting schools and public services.
In India and South Africa, coal-dependent districts are seeing distorted labour markets, with little economic diversification.
In Shanxi Province, China, transition costs are so vast that even state capacity is struggling to manage distributive justice.

This is the human cost of decarbonisation—a reality rarely reflected in glossy ESG reports.

The ESG Paradox: Green Goals, Social Blindness

Companies that pride themselves on climate leadership are often those neglecting social dimensions. A BNP Paribas survey found that while investors recognise the importance of equity, most sustainability frameworks still prioritise carbon over people.

Yet true sustainability requires balance. The G7-backed Impact Taskforce defines a just transition as advancing climate goals while also ensuring fair socio-economic outcomes and community voice.

Most corporate net-zero strategies nail the first, while failing catastrophically on the second and third.

What Just Transition Looks Like

A just transition isn't charity—it's strategic risk management. It means addressing the human implications of transition before they spiral into backlash.

Leading approaches include:

Community Investment: Funding local economic diversification years before closures.
Workforce Transition Support: Retraining, redeployment, and guaranteed employment in green industries.
Infrastructure Development: Building digital, transport, and educational systems to attract new industries.
Community Voice: Ensuring local people shape transition plans, rather than having solutions imposed from above.

The Business Case

Neglecting the "S" isn't just unfair—it's risky. Companies that fail on just transition face:

Regulatory risk: New rules like the EU's Corporate Sustainability Due Diligence Directive demand social impact assessments.
Social licence risk: Abandoned communities push back against future projects.
Talent risk: Displaced workers often hold skills vital for renewable industries.
Financial risk: Poorly managed transitions destabilise markets and supply chains.
Innovation risk: Thriving communities support innovation; struggling ones resist it.

Global Examples: What Works

Germany is phasing out coal with €4.35bn for regional redevelopment, retraining, and infrastructure.
Spain negotiated coal closures with unions, ensuring alternative jobs and social protections.
South Africa launched an $8.5bn Just Energy Transition Partnership combining international finance with local reform.

These examples show that just transition is possible—but it requires foresight and coordination.

The Technology Enabler

Digital tools are transforming how companies plan for just transition:

AI-powered modelling to forecast social and economic disruption.
Online reskilling platforms that create pathways into green jobs.
Digital engagement tools giving dispersed communities a voice.
Data dashboards that track worker outcomes and community resilience.

Technology can't replace political will, but it can make implementation smarter and more transparent.

Measuring Success: Beyond Carbon Metrics

If success is measured only in CO₂ reduced, failure on the social front is inevitable. New metrics are needed:

Local unemployment and income levels.
Worker reskilling and career progression rates.
Infrastructure upgrades in affected areas.
Community trust and satisfaction levels.

Net-zero without social justice is fragile. A resilient transition must measure people as well as carbon.

The Path Forward

For business leaders, the question is clear: will your company pursue net-zero at any cost, or will you embed equity at the heart of transition?

The companies that thrive will be those that:

See reskilling budgets as investments, not costs.
Involve communities as partners, not passive stakeholders.
Recognise that long-term value depends on carbon reduction and social inclusion.

The "S" in ESG can no longer be forgotten. Because without a just transition, there may be no transition at all.

How is your organisation addressing the social side of transition? What lessons have you seen from successful (or failed) just transition programmes?