Proper representation crucial for a just energy transition: KPMG

WHEN John McCalla-Leacy was in Sharm El-Sheikh, Egypt, in November last year for the United Nations Climate Change Conference, or more widely known as COP27, he attended a top-level meeting to discuss how blended finance could be used to scale up the level of capital flows into climate projects in the global south, particularly the African continent.

Among the several finance leaders attending the meeting, one of them remarked how no one at the table was from the continent of Africa, recalled McCalla-Leacy, head of global ESG (environmental, social and governance) at KPMG, in an interview with The Business Times.

That incident served as a stark example of the need for proper representation for developing countries in climate change discussions for McCalla-Leacy. Engaging multiple stakeholders in a meaningful way and being inclusive is critical to ensure a just energy transition, he noted.

“And it’s that mindset, it’s not about ‘You and I will decide’, or we’ll strategise, or we’ll build a framework in isolation. And then afterwards, we’ll go and find the people we need to engage with. It’s not about that. It is, when we’re discussing upfront, let’s just stop, let’s pause for a minute and say, ‘Do we have the right people engaged from day one?’” said McCalla-Leacy.

In a region like South-east Asia where there is still a heavy reliance on the coal industry to generate electricity, an energy transition plan that does not take into account the economic impact of those employed by the coal sector or whether energy prices will remain affordable will not work, he said.

The Asean region, therefore, has an opportunity to show leadership in these areas through the Just Energy Transition Partnerships (JETPs) that Indonesia and Vietnam have inked with the G7 and other developed countries, as well as with private sector banks.

“There’s an opportunity to lean into this. And, you know, if Asean is successful in making this work, this will be a huge, and I cannot stress this enough, it will be a huge signal, not only to the region, but to the whole world, in terms of, ‘Hey, we can really make this transition work,’” said McCalla-Leacy.

Both JETPs aim to set out a framework to finance the decarbonisation of Indonesia and Vietnam – a process that will require shutting down their coal-fired power plants.

But to ensure the economic fallout is mitigated, McCalla-Leacy said that national-level strategies have to be co-designed and co-implemented at the local level.

“So we specifically focused on things like labour rights, social protection, gender equality policies, ensuring equitable access to benefits. So it’s about supporting jobs, local communities, improving human wellbeing, and having common approach here,” he added.

When asked if this would mean having to slow down the pace of the transition, he said that any energy transition plans will not be sustainable over the long-term if there are no measures to mitigate the economic and social impact.

“So I often like to say, it’s not either-or. It’s not about, ‘Do we do it fast, or do it just?’ It’s both. And. It’s about getting it done, but getting it done in the right way, in a way which is sustainable, over the medium and long term for all society and all generations to come,” he said.

Proper representation and inclusivity in energy transition plans would not only make it sustainable but also increase the chances of innovation.

“Because then you will have people saying, ‘I live at the local level. This is what I’m seeing and this is what I’m hearing. Have you thought about this?’ So I think it’s got a real ability to drive innovation,” he added.