New research from the World Economic Forum (WEF) reveals a significant link between limited access to green financing and technologies and the equitable transition to a greener economy. The report emphasizes the need for institutional responses to ensure fairness and introduces metrics to enhance transparency regarding equity implications.
The “Accelerating an Equitable Transition: A Data-Driven Approach” report shows that global executives are concerned about unequal access to green financing and technologies. Without proactive measures to ensure economic equity, the shift to a carbon-neutral economy could worsen both international and domestic inequalities.
ASYMMETRIC ACCESS TO FINANCING
Asymmetric access to financing is identified as the top economic equity risk in the green transition across sectors, including energy, infrastructure, transportation, agriculture, heavy industry, and the circular economy. Disparities in technology and expertise are expected to create significant gaps, particularly in developing the circular economy and greening energy sources, infrastructure, and heavy industry.
“The transition to a green economy must be inclusive to be sustainable,” said Saadia Zahidi, Managing Director, World Economic Forum. “Supporting workers and addressing gaps in financing and access to technology is crucial for meeting both environmental and socio-economic goals. This report provides new data and tools to guide global leaders in making the green transition equitable for all.”
RISING CONSEQUENCES AND THE NEED FOR JUSTICE
Extreme weather events such as floods and heatwaves highlight the urgency of the green transition. However, justice and equity considerations are emerging, and current policies are insufficient to ensure an equitable transition, eroding public acceptance and policy stability.
KEY FINDINGS AND RECOMMENDATIONS
Green Transition Dimensions
The report, in collaboration with Boston Consulting Group, explores seven high-emitting and major economic sectors that need transformation to achieve carbon neutrality. It also examines five equity dimensions reflecting key economic participation components.
Economic Equity Risks
Economic equity risks in the green transition can significantly impact workers. The new data identifies sectors where the risk of worker displacement is highest, including fossil fuel and heavy industries, circular economy development, and greening agriculture and food production.
Affordability Challenges
Affordability challenges are likely in transitioning the energy, transportation, agriculture, and food production sectors, potentially raising the prices of essential goods.
COUNTRY ARCHETYPES FOR EQUITABLE TRANSITION
The report emphasizes the importance of recognizing country-specific equity risks based on economic, institutional, demographic, and geographical factors. Countries are categorized into six archetypes:
1. Inclusive Green Adopters
High-income, service-driven economies making significant strides in reducing emissions through green technologies while ensuring economic equity. Examples include France, Netherlands, and Spain.
2. Emerging Green Adopters
Upper-middle and high-income economies with significant industrial employment transitioning to innovation-driven models. Examples include Poland, Ireland, and Italy.
3. Fossil Fuel Exporters
Economies heavily reliant on fossil fuel rents and subsidized energy consumption, leading to high emission intensity. Examples include Kuwait, Saudi Arabia, and the UAE.
4. Growth Economies
Rapidly industrializing emerging economies balancing climate mitigation with socio-economic development. Examples include Brazil, South Africa, and India.
5. Frontier Economies
Low-income countries with large youth populations and low per capita emissions needing sustainable growth foundations. Examples include Nigeria, Bangladesh, and Pakistan.
6. Green Developers
Highly industrialized and technologically advanced countries leading in green technologies and business models. Examples include China, Germany, Japan, and the USA.
ENSURING EQUITABLE CLIMATE ACTION
Understanding how climate action creates inequities, identifying vulnerable groups, and increasing transparency through consistent and timely evidence can drive equitable climate action. Ensuring the affordability and accessibility of goods and services is crucial in the green transition.
EQUITABLE TRANSITION INITIATIVE
This report is part of the World Economic Forum’s Equitable Transition Initiative, supported by the Laudes Foundation. It aims to develop a vision and principles for an equitable green transition, involving a global, cross-sector coalition of leaders to ensure policies, business strategies, and investments are inclusive and just.
