Making the Green Transition Work for People and the Economy 2025

Making the Green Transition Work for People and the Economy10To ensure the long-term viability of climate action, it must be designed to work for both people and the economy. Mounting concerns over the socioeconomic viability of the transition partly result from the risk of deindustrialization and erosion of industrial employment, especially in developed countries. At the same time, climate solutions can pose disproportionate economic burden on low-income households, in the absence of targeted support mechanisms. Technologies, capital, and infrastructure enabling the transition should be accessible to small businesses and remote communities to maintain economic vitality. This means social inclusion and economic opportunity must be at the core of transition strategies. Without addressing the diverse realities of workers, communities, and consumers, continued support for climate action may be challenged, stalling progress at a critical juncture. 2.1 Growth and jobs impacts of the green transition The green transition is likely to require significant technical and economic transformation. As some industries and business models are disrupted and others emerge, workers, consumers and entrepreneurs are facing both challenges and opportunities. Some workers face the possibility of job losses or wage stagnation in declining industries and may need to transition to new employment opportunities created by green investments. Goods and services may become less affordable or accessible for some segments of the population, as the cost of carbon increases and some carbon-intensive solutions are banned altogether. Further, if access to green financing and technologies are unevenly distributed, businesses and countries may have to review or adapt their strategies and investment decisions to remain competitive and grow, adopting greener solutions and business models (Table 1). Socioeconomic and competitiveness dimensions linked to the green transition FIGURE 2 Socioeconomic dimensions Employment and job transitions Ability to navigate job loss with adequate social protection, support for reskilling, and to have access to good work in new and existing value chainsAffordability of goods and services Ability to purchase relevant products and services (e.g. impact of short-term price hikes) and green alternativesAccessibility of goods and services Availability and ability to use relevant products and services as well as green alternativesAccess to financing and investments Ability to access finance and investments to transition into and out of industries/sectorsAccess to capacity Ability to access knowledge, technology and other resources to create and use relevant products and services Growth and competitiveness Ability to secure access and affordability of energy and other raw and intermediate goods, make necessary green investments, find green talent and develop and/or adopt key green technologies