The just energy transition cannot happen without state-owned companies

In climate circles, use of the term "just transition" has become almost a ritual. The word appears often in international agreements, advocacy campaigns, and the speeches of heads of state. It has become the moral centre of gravity for a movement that wants to decarbonise the world without upending the lives of the people and communities who powered it.

Yet the institutions best positioned to anchor work on just transition – the companies with the workforces, the land, and the infrastructure – are barely engaged by the climate community. Those institutions are state-owned energy companies. Their absence from the centre of just transition planning is a fatal flaw.

State-owned enterprises (SOEs) produce more than half of all global coal, oil, and gas. Some of the world's largest fossil fuel companies measured by production are state-owned. Coal India is the world's single largest coal producer, responsible for roughly one in ten tons of coal mined globally. South Africa's Eskom controls virtually every aspect of that country's electricity system, from generation through transmission to distribution, running nearly 50 gigawatts of coal-fired power. Indonesia's PLN does the same for the world's fourth most populous nation.

These state-owned fossil fuel companies employ hundreds of thousands of workers and support a larger number of communities. From miners in Jharkhand and Odisha, to power plant communities in Mpumalanga and Java, these jobs, pensions, and community identities are inseparable from the enterprise that employs them. When these SOEs decarbonise, the ripple effects for workers and communities could have far-reaching impacts.

Just transition discussions often focus on workers and communities, but rarely on the institutions that employ those workers and sustain those communities. That omission has become one of the largest blind spots in the global just transition agenda.

When climate advocates speak of just transition for workers and communities, they are speaking overwhelmingly about people who work directly for government companies or communities around projects run by these companies. A just transition plan must, therefore, engage with SOEs as key institutions for any meaningful just transition.

Why SOEs are different, and why that matters

The climate movement has developed a sophisticated playbook for pressuring private fossil fuel companies through shareholder activism, divestment, litigation, and carbon pricing. These tools have had real effects on companies like Shell, BP, and ExxonMobil. But they were designed for institutions exposed to capital markets, accountable to investors, and sensitive to reputational risk in Western financial centres. When the pressure works, these companies can sell assets, fire workers, and redeploy capital elsewhere. The just transition burden falls on governments to clean up what they leave behind.

SOEs cannot do that. They operate under an entirely different logic, which cuts both ways. On one side, SOEs are harder to move with the tools the climate world has built. Their capital is ultimately sovereign, insulated from investor pressure. Their leadership answers to ministers and parliaments, not to shareholders filing resolutions, so tools like divestment and carbon pricing can only go so far.

But on the other hand, SOEs cannot simply exit. They cannot fire their workforce or ignore community needs. When a coal SOE closes a mine, it cannot walk away from the community built around it. It remains financially and institutionally responsible for what comes next. For the just transition, this is the most important structural feature these companies possess. Unlike private firms, governments can align ownership, regulation, industrial policy, workforce planning, and public finance through SOEs. This gives them a unique ability to pursue emissions reduction and social protection simultaneously. In countries where governments own the energy system, the question is not simply how to regulate the transition, but how to govern it through institutions they already control. This makes SOEs one of the few instruments capable of delivering both climate and development objectives at scale.

The question is not whether SOEs will be central to what comes next for their workers and communities. The question is whether they will manage that role deliberately or by default.

SOEs can engage with just transition planning using existing tools

SOEs can be more deliberate on just transition even in their heyday. SOEs have the tools to be explicit on just transition. The real question is the willingness to deploy these tools. A genuine just transition requires SOEs to act on at least three fronts simultaneously.

First, many large SOEs are already planning to diversify their business portfolios into renewable energy, critical minerals, and other emerging industries. That is good news. But diversification only serves the just transition if it happens where the jobs are being lost, not in distant cities or favourable investment climates. It must happen in specific regions where mines are closing and plants are going dark. Coal India, for instance, has announced ambitious plans to expand into solar energy and critical minerals, backed by billions in capital. If Coal India's clean energy investments are concentrated where the economics are easiest (Western and Southern states) rather than where the need is greatest, the company will have diversified its balance sheet without transforming a single affected community. The aspiration must be geographic as well as sectoral: invest in renewables and critical minerals in the places where coal once was.

The second tool is deliberate asset repurposing. When Eskom began converting its 1 GW Komati coal plant into a solar and agricultural site, it demonstrated something important: a decommissioned fossil fuel asset is not simply a liability to be written off. It is land, infrastructure, grid connection, and institutional presence that can anchor a new economic chapter for the surrounding community. Repurposing should be able to create local jobs and economic continuity.

Third, most large SOEs operate substantial corporate social responsibility funds or community development budgets, often mandated by government. These funds are chronically underutilised or misdirected toward low-impact philanthropy. They represent a ready-made financing mechanism for the one investment that bridges every aspect of the just transition. These should not be spent on generic vocational courses, but targeted programmes aligned with the specific industries into which the SOE is diversifying. Solar installation and maintenance, critical mineral processing, grid modernisation, agricultural technology are some examples. A coal miner who completes a credentialed training programme in lithium extraction or solar engineering before their mine closes is not a casualty of the transition. They become a beneficiary of the transition. SOEs have the funds, the facilities, the workforce relationships, and the local knowledge to make that happen at scale. Redirecting even a fraction of existing CSR budgets toward forward-looking skills pipelines would cost governments nothing and could change everything for the communities most exposed to transition risk.

What the climate community must do differently

The importance of SOEs extends beyond economics. In many countries, they are deeply embedded in political settlements, labour relations, and regional development strategies. A poorly managed transition risks creating political backlash that can slow or reverse climate progress. A well-managed transition, by contrast, can build constituencies for change. Engaging SOEs is therefore not only a question of fairness but also of political feasibility.

The just transition will not be delivered by international agreements alone, or by pressure campaigns aimed at the wrong targets, or by technical assistance programmes that bypass the institutions with the most at stake. It will require climate advocates, researchers, and policymakers to build deep, sustained partnerships with SOEs. It will require sitting across the table from large fossil fuel SOE leadership and co-developing just transition strategies.

Funders, development banks, and multilateral institutions also need to rethink their engagement strategies. Billions of dollars are being mobilised for energy transition initiatives, yet relatively little is directed toward helping SOEs plan diversification, workforce transitions, community redevelopment, and asset repurposing. If SOEs are central actors in the transition, they must become central actors in transition support.

This kind of engagement is slower and less morally satisfying than divestment. It requires tolerating ambiguity, accepting partial progress, and working inside institutions whose baseline is far from where it needs to be. It means treating SOEs as partners in a shared problem rather than obstacles to be overcome.

The just transition will happen through SOEs, or it will not happen at all.

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