The social dimension of the ecological transition

On the topic of the social costs for the green transition, Soft&Green heard the opinion of Angelo Russo, Full Professor of Economics and Business Management and Prorector for Research and Sustainability at LUM Giuseppe Degennaro University in Casamassima, Bari.

Professor Russo, when talking about the green transition, the social dimension is not always given the necessary attention. For example, while almost everyone agrees on the urgency of the energy transition, the social impact of environmental policy is not always examined. What is your opinion on this?

To put it mildly, the social dimension is neglected and too often relegated to the background of the green transition. It is undoubtedly true and undeniable that there is an environmental issue that, on a global level, deserves everyone’s attention. While I am convinced that not enough is yet being done by governments, businesses, and citizens, it is also true that the PNRR (Italian National Recovery and Resilience Plan) represents an excellent opportunity to build momentum for the transition. Therefore, I believe equal priority should be given to the social impact associated with all decisions made regarding the green transition. There is a major misunderstanding which should be clarified. I often hear that the green transition, broadly speaking, will lead to job loss and, to put it in little-used terms, a negative social impact. I don’t think this is the right perspective from which to examine the phenomenon. If we talk about transition, it must be as much an environmental transition as a social transition. ‘Transition’ means moving from one condition to another. The use of green technologies, the shift toward production processes with less environmental impact, the introduction of environmentally-friendly products, the use of alternative and renewable energy sources, and the spread of hydrogen are simple examples of how impactful the transition can be, in a positive sense for the natural environment, if well managed. The spread of the electric car or hydrogen car, to name but one example, must also be examined and managed from the perspective of social transition. Those who work on the assembly line of traditional cars (i.e., with an internal combustion engine) today will work on the assembly line of electric or hydrogen cars tomorrow. The supply chain stakeholders that produce components for traditional cars today will make components for electric or hydrogen cars tomorrow. I am concerned about the short-sightedness of the production and government system that is unable (or unwilling) to prepare for change, for transition, promptly. Investment is needed (the PNRR I mentioned is the most current and appropriate source of funding) in training to adapt the skills of workers involved in the production system: associating a social transition with the green transition. Thinking about the Italian system, we cannot wait for expertise to arrive from abroad. This would generate an outsized social cost, in the negative sense of the word. Social investments related to the green transition are now our best bet and the real way forward.

The green transition is a complex journey that requires a global interdisciplinary approach. When talking about a just transition, what approach should be taken by the various public and private stakeholders?

In my opinion, there are two keywords that should be taken as a starting point for strategically directing the management of the green (and social) transition: integration and collaboration. By integration, I mean technological integration to benefit the transition to systems that are already environmentally efficient today but which should aim toward even greater environmental efficiency. It is not enough, for example, to invest in green technologies if they are thought of as an isolated event, no matter how environmentally efficient. The shift toward environmentally efficient models, capable of moving us toward zero-impact levels of production, requires integration between various technologies. Take, for example, the investments in construction supported by government incentives that have become widespread in recent years. A thermal coat will certainly reduce the heat loss of a building and, as a result, reduce the energy cost (economic and environmental) of the building. However, if it is not integrated with the use of other technologies, such as photovoltaic panels, geothermal plants, all the way to the installation of electric pillar stations to encourage sustainable mobility, it will remain an isolated and unintegrated technology that is unlikely to completely lower environmental emissions. Achieving these goals requires, in my opinion, the second keyword: collaboration. It is imperative that we develop new business models based on collaboration and continuous exchange of resources between supply chain players, all the way down to collaboration with the end customer (often, us citizens). Above all, I have in mind the exchange of intangible resources: knowledge, skills, know-how, and ideas. Only increasingly open business models can truly incentivize transition (the green transition and the social transition).

Many companies are investing a lot of resources in introducing major changes in processes and products. What do you think is the most significant evidence? Which countries in Europe and beyond have adopted innovative strategies?

I am personally highly fascinated, both as a business scholar and as a citizen/consumer, by the experiences that are taking place in so-called bottom-of-the-pyramid contexts (I’m thinking of Bangladesh or the African continent). Enterprising experiences of businesses, typically for-profit, collaborating with local organizations, typically non-profit, to create new industries: new production processes, new products, and new business models, to stimulate change precisely in the direction of the green transition and social transition. Therefore, once again, collaboration is needed for knowledge integration. Creating industry in today’s lagging contexts is the only way to support change and renewal, fostering the creation of culture, prosperity, and, ultimately, wealth. The problem is that these experiences are still limited to a few cases where the role of public and private institutional stakeholders is trying hard to make inroads. I’m also thinking of universities where these issues are still poorly taught. Here, we academics should be, first and foremost, providing more incentive for the dissemination of knowledge better suited to the current transition.