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15 J. World Energy L. & Bus. 1 (2022)

handle is hein.journals/jlowdeylw15 and id is 1 raw text is: Journal of World Energy Law and Business, 2022, 15, 1-21 https://doi.org/10.1093/jwelb/jwabO39 Advance Access Publication Date: 18 January 2022 Article The clash of 'E' and 'S' of ESG: just transition on the path to net zero and the implications for sustainable corporate governance and finance Alperen A. Gdzliigdl* ABSTRACT Climate change is one of the highest-ranking issues on the political and social agenda. Corporations are one of the main actors that will play a major role in the decarbonization of the economy. They need to put forward a net zero strategy and targets, transitioning to net zero by 2050. Yet, an im- portant but rather overlooked stakeholder group in the sustainability debates can pose a significant stumbling block in this transition: employees. Although climate action has huge benefits by amelio- rating adverse environmental events and is expected to have an overall positive impact on employ- ment, net-zero transition in companies, especially in the energy sector in certain regions, will cause substantial adverse employment effects for the workforce. This has the potential to slow down or even derail the necessary climate action in companies. In this regard, just transition is a promising concept, which calls for a swift and decisive climate action in corporations while taking account of and mitigating adverse effects for their workforce. If well implemented, it can accelerate net-zero transition in companies. This potential clash of environmental (E) and social (S) aspects of environ- mental, social and governance agenda, materialized in the companies' net-zero transition, and its po- tential remedy, just transition, have important implications for corporate governance and finance, es- pecially for directors' duties and executive remuneration, sustainability disclosures, institutional investors' engagement and green finance. 1. INTRODUCTION While the world community is still recovering from the COVID-19 crisis, a more existential crisis looms large: climate change. Unless decisive and swift actions are taken on various levels by several actors, climate change is on its path to become an existential threat for the humankind-a terminology used by the United Nations Secretary-General.1 While the necessity of climate action is long known and moderate steps in this *Assistant Professor in the Law & Finance Cluster, Leibniz Institute for Financial Research SAFE, Frankfurt am Main, Germany. Tel: +49 69 798 30032; Fax: +49 69 798 30077; Email: gozlugol@safe-frankfurt.de The article has benefited significantly from my fellow visit at the Center for Advanced Studies Foundations of Law and Finance funded by the German Research Foundation (Deutsche Forschungsgemeinschaft, DFG)-project FOR 2774. I also gratefully acknowledge research support from the Leibniz Institute for Financial Research SAFE. For valuable comments, I thank Sebastian Steuer and Daniel Mertens. 1 See <https://news.un.org/en/story/2018/05/1009782> accessed 5 January 2022. © The Author(s) 2022. Published by Oxford University Press on behalf of the AIPN. All rights reserved. . 1