5 ways to go green: How countries can prioritize both equity and climate action

Climate change exacerbates inequalities – but without adequate policies so too will the green transition, executives fear.

Lack of capital to make change, increased costs of living and job displacement are all possible as a result of efforts to decarbonize economies, with a disproportionate impact on already marginalized communities.

Unequal access to financing to enable the transition was cited as a key concern by around 80% of respondents in a World Economic Forum survey of over 11,000 executives. Those in growth economies were particularly concerned.

About half of those surveyed felt changes would drive up the cost of living, and a third that there would be some form of job displacement.

Policymakers must be aware of this risk and factor it into the development and rollout of policies, a new World Economic Forum report says: it is possible to balance equity with climate action.

Accelerating an Equitable Transition: Policy Guidelines for Impact finds that the business community generally expects the green transition to have a positive impact on economies, although there are some significant differences between countries.

Nations already well on the way in developing green technologies tend to have the most optimistic expectations for the economy – notably here, the US. Similarly, high-income countries with a service-based economy and strong welfare support, such as the Nordics, UK and Singapore, also tend to have a positive outlook. Meanwhile, high-growth emerging economies, which are well-placed to benefit from the green transition, such as Indonesia and Costa Rica, are broadly upbeat too.

Key fossil fuel exporters are more divided – those already diversifying see opportunities, including around critical minerals linked to the transition, while others yet to invest remain more circumspect.

Countries earlier in their green transition journeys tend to be fairly neutral about the impact on the economy, concerned about the scale of the challenge and the ambitious targets it will require. Central and Eastern European countries are notably pessimistic

So, given that climate change effects are already disproportionately impacting the communities least equipped to cope – and least responsible for causing them – how can we ensure our mitigation efforts don’t deepen these inequalities?

The report outlines five key guiding principles for policy development.

A country’s context – including factors like economic development, key sectors contributing to the economy, fiscal strength, level of technology adoption and productivity, and developmental priorities – has a significant influence over the design and success of policies. Developing a deeper understanding of the relationship between climate change mitigation and inequality, as well as inclusion strategies that reflect the needs and situations of individual communities, will help countries ensure context-specific policies.

Mitigation policies can lead to temporary shocks to labour markets or the availability and cost of goods and services. Therefore, targeted engagement and support programmes are crucial for minimizing the impact and ensuring equitable access to opportunities, the report says. Providing fair, transparent and adequate support to vulnerable groups can foster public backing for climate policies and enhance policy stability.

Implementing ambitious policies is a trade-off between cost-effectiveness, mitigation potential and political feasibility. This means that a staged introduction of policies that successively deal with specific barriers is crucial. Synchronization of policies with infrastructure development can also lower barriers to adoption – for example, developing charging infrastructure alongside mandates to increase electric vehicles.

It’s essential to consider the viewpoints of and implications for all stakeholders. Experience suggests that the social impacts of climate change policies are more likely to be appropriately addressed when stakeholders are thoroughly consulted throughout the policy cycle, from design and implementation to monitoring and evaluation.

The green transition will require changes to how people live their lives – shifting their economic, behavioural and livelihood patterns. The extent of support will be influenced by the broader narrative around climate change and the impact that these changes are having. Effective communication about policy benefits and access to key information will be crucial in driving engagement and ensuring successful implementation.

The Forum's Equitable Transition Initiative explores avenues to advancing a green and fair transition, ensuring equity in the costs and benefits of mitigation actions for workers, consumers, and small businesses.