The World Economic Forum (WEF) published Accelerating an Equitable Transition: Policy Guidelines for Impact (November 2024). The report offers five key guidelines to ensure equity is embedded in climate policy - covering all stages from planning and implementation to tracking and evaluation.
Human Level’s Take:
- The urgency for climate action is acute. In 2023, global average temperature reached 1.45°C above pre-industrial levels, making it the warmest year on record. Extreme heat now kills an estimated half a million people a year. However, the imperative to accelerate climate action is only viable if it tackles the climate-inequality nexus.
- The WEF pinpoints three socioeconomic dimensions of climate change: (1) historic footprints, with those most affected by climate change today having contributed the least to it, (2) exposure to climate hazards and adaptation capacity, with wealthier nations adapting better to climate hazards, and the impacts of climate change exacerbating existing inequalities, and (3) the distributional impacts of mitigation action, with climate policies burdening low-income households without support for sustainable alternatives.
- To address these challenges, the report outlines five policy guidelines to ensure equity is embedded in climate policy at all stages, from planning and implementation to tracking and evaluation.
- A number of these recommendations have relevance for companies. In short, companies need to (1) consider particular contexts as they roll out more equitable climate mitigation, (2) prioritise those in their business and value chain most impacted by the socioeconomic impacts of climate mitigation, (3) ensure robust stakeholder engagement and social dialogue takes place so that there is trust, transparency and a sense of ownership and cooperation among affected groups, and (4) communicate in a way that fosters an opportunity-centred narrative of climate action and ensures affected stakeholders are informed and engaged.
Some key takeaways:
- The challenge: The impacts of climate change are spreading and intensifying. In 2023, global average temperature reached 1.45°C above pre-industrial levels, making it the warmest year on record. Extreme heat now kills an estimated half a million people a year. To stay on a path that limits warming to 1.5°C by 2050, countries must commit to reducing emissions by 42% by 2030 and 57% by 2035 in their next round of Nationally Determined Contributions (NDCs). As climate policies to meet these targets increase, the report emphasises the importance of integrating economic equity into the design of these climate policies to ensure the fair distribution of transition costs and benefits among relevant stakeholders. Furthermore, States are increasingly recognising the social dimensions of climate action, with 72 countries explicitly recognising the concept of a “just transition” in their NDCs as of 2023.
- The climate-inequality nexus: The report delves into the socioeconomic dimensions of climate change, which are: (1) historic footprints; (2) exposure to climate hazards and adaptation capacity; and (3) the distributional impacts of mitigation action. In relation to (1), the countries most affected by climate change today are those that have, historically, contributed least to the problem. And similar inequalities are found across income distribution within countries, with the top 10% of income earners accounting for more than one-half of global emissions. In relation to (2), inequities in exposure to climate hazards and capacity to adapt correlate with national income. For instance, the Global Adaptation Index 2022, which summarises a country’s vulnerability to climate change and its readiness to improve resilience, highlights that 81% of the top 100 best-performing countries are high- or upper-middle income. The impacts of climate change also exacerbate existing inequalities. Marginalised group (for example, women and Indigenous Peoples) often rely heavily on natural resources for their livelihoods and lack access to savings, credit and insurance to cope with and recover from climate hazards. Thus, these communities are disproportionately impacted by the devastating long-term consequences of climate change. In relation to (3), the benefits and costs of climate mitigation action can be unevenly distributed. For example, the imposition of energy-efficiency standards can impose disproportionate costs for low-income households. In the absence of support, they may not have the means to shift consumption to more energy-efficient alternatives and, thus, be exposed to higher costs.
- Five policy guidelines framework: The report outlines five policy guidelines to follow when designing and implementing climate policies in order to address the potential economic equity risks described above. These are: (1) context specificity, which considers factors such as a country’s development level, sectoral makeup, technological capacity and governance structures. These factors can significantly influence the distributional impacts of climate policies and so context-specific policy design ensures that vulnerable groups are not disproportionately burdened by climate action; (2) targeted support, directed at low-income households, workers in carbon-intensive industries and marginalised communities programmes, to address the socioeconomic impacts of climate policies. Support can involve cash transfers, tax incentives and subsidies for clean technologies; (3) policy sequencing, which requires that policies are phased in a way that builds political support and minimises disruption; (4) stakeholder engagement and social dialogue, which requires that a wide range of stakeholders, including local communities, workers, businesses and civil society groups, be consulted throughout the policy process. This builds trust, ensure transparency and fosters a sense of ownership and cooperation among affected groups; and (5) communication and awareness, which involves clear and consistent communication about the benefits of climate action. This can foster an opportunity-centred narrative of climate action. Communication must also consider cultural norms, local conditions and equitable access to information to build broader public support and ensure that all communities are informed and engaged in the green transition. The report concludes with illustrative cases of equitable climate policy design when it comes to coal plant retirements, phasing out fossil fuel subsidies, green building programs and policies for decarbonization of transport.
