The World Economic Forum (WEF) and Boston Consulting Group (BCG) recently released an insightful report on the need for an equitable transition to a greener economy. As the world moves toward a low-carbon future, it's critical to ensure that this transition is inclusive and promotes shared prosperity, leaving no one behind.
What is an Equitable Transition?
An equitable transition refers to the transformation of the global economy to a low-carbon model that not only respects planetary boundaries but also ensures that the path forward is inclusive. It focuses on the fair distribution of benefits and costs, ensuring that no group, particularly the most vulnerable, is left behind. This means creating opportunities for human development, improving living standards, and driving prosperity for all.
Where Can Inequity Arise?
The green transition has the potential to create inequity in various ways. Whether it's the loss of jobs in traditional industries, rising energy prices, or the impacts on low-income households due to carbon taxes, it is essential to manage these challenges thoughtfully. Addressing these inequities early on will be crucial to garner the social and political support required to maintain momentum in fighting climate change.
Where Are the Opportunities for Human Development?
The transition also presents significant opportunities for human development. Greening industries, such as agriculture and energy, can generate new jobs and foster sustainable economic growth. By implementing policies that ensure equitable access to green technologies, finance, and knowledge, we can create a greener economy that lifts people out of poverty and reduces inequality.
Balancing Decarbonization with Human Needs
One of the greatest challenges in this transition is harmonizing the drive toward decarbonization with the need to address human needs. This requires balancing policies that limit emissions with strategies that promote economic equity. The report provides a comprehensive matrix that overlays the green transition with dimensions of economic equity, laying out a clear picture of how we can navigate this challenge.
Key Takeaways from the Report
Wealth Inequality: In no region of the world do the bottom 50% of the population own more than 5% of wealth. Since 1990, the top 1% of emitters have been responsible for 23% of global growth in carbon emissions, while the bottom 50% have contributed only 16%.
Job Creation and Loss: The green economy is expected to add a net 25 million jobs by 2030. While 103 million new jobs will be created, 78 million workers will lose their current positions. Approximately 13 million energy-related jobs are likely to be lost globally due to the phase-out of fossil fuels, and stranded asset write-offs are expected to hit $1-4 trillion.
Agriculture: The greening of agriculture and food production is another area of focus. This sector employs more than 850 million people worldwide, and 5% of these jobs will be lost by 2030. However, regenerative agriculture is expected to create up to 5 million new jobs by 2040, with a potential return on investment (ROI) of 15-25% for farmers.
Conclusion
The equitable transition to a greener economy is not just about reducing carbon emissions; it's about ensuring that the benefits of the transition are shared fairly. By putting people at the center of this transformation, we can address historical inequalities, improve livelihoods, and ensure a more prosperous and sustainable future for everyone. For businesses, policymakers, and global leaders, now is the time to act, building frameworks that foster both climate and social progress.