Making the Green Transition Work for People and the Economy 2025

Economic equity risks linked to the green transition, by income group35FIGURE 5 Global average High Income Upper middle income Lower middle income Low incomePercentage (%) of respondents 0 10 20 30 40 50 60 70 80 9051% 52% 45% 54% 62%Increased cost of living Unequal access to raw materials45% 42% 41% 61%49%80% 80% 81%81% Unequal access to capital 78% 71% 73% 71% 74%Unequal access to technology and know-how 68% 33% 32% 35%Job displacement 29% 47%66%Decreased access to goods and services66% 66% 66%65% Several key takeaways emerge as particularly relevant in the context of the key global contextual changes highlighted in this report: Access to capital and financing for the green transition is likely to be unequally distributed both within and between countries. Against a context of higher interest rates and debt levels, approximately one in three businesses across geographies and income levels identify slow returns on investments as a key challenge to their green competitiveness. Similarly, uncertainty over climate policy direction and rising compliance obligations (e.g. from trade restrictions) can inhibit companies’ appetite to undertake long-term bets on decarbonization. As access to green capital decreases, impacts may be greater for those with weaker financial fundamentals. In total, 32% of businesses globally are concerned with limited investment capacity and the access to finance necessary to stay competitive in the green transition – 49% in low-income countries and 23% in high-income economies (Figure 4). While the impact of investment capacity varies by income level, executives all acknowledge how access to capital impacts the prospect of a fair transition within their countries. Globally, 80% of executives surveyed identified unequal access to green financing among companies as a significant risk in at least one industry in their country, and this percentage is strikingly consistent across income levels (Figure 5). The green transition could contribute to new technology divides between advanced and developing countries. While many governments are scaling up industrial policy efforts in the energy and green sectors, access to technologies and capacity may not accrue evenly between countries. Businesses in lower-middle- and low-income economies are facing significantly higher challenges than those in upper-middle- and high-income countries when it comes to access to green technologies, supply chains for sustainable products and green skills (Figure 4), according to EOS responses. Cost pressures, particularly around energy and agriculture, drive concerns around competitiveness and affordability among surveyed executives. Survey results identify “higher cost of energy and key commodities” as the top constraint to maintaining competitiveness during the green transition, with 37% of respondents identifying this among their key concerns (47% in low-income economies). Globally, 51% of businesses surveyed expect prices to go up because of the green transition in at least one key industry in their country. In low-income economies, this is particularly associated with the greening of the energy sector (30% compared to 22% globally), while in high-income economies concerns are higher in agriculture (26% compared to 23% globally). Concerns over the impact of higher energy costs on competitiveness increase in countries where the population is more dispersed and rural areas have a larger socioeconomic footprint (Figure 6). This may reflect underlying, structural accessibility challenges as well as higher costs of transport. In middle- and low-income countries, these concerns are also inversely correlated with social protection coverage, suggesting that higher levels of social protection might help protect domestic consumption from the impact of higher energy costs and therefore indirectly benefit demand (Figure 7). Source: World Economic Forum Executive Opinion Survey 2024. Making the Green Transition Work for People and the Economy 13