Making the Green Transition Work for People and the Economy 2025

Executive summary Shifting geopolitical and macroeconomic factors may challenge the established patterns of economic growth and development. An evolving geoeconomic order, disrupted supply chains, and prospects of sustained inflation and higher costs of capital are driving a renewed focus on security, resilience and rising inequality. While the global economy has responded to a multitude of historical disruptions and transformations, many of which were of an equal or larger scale of change, these shifts could impact the pace and feasibility of climate action. Risks to sustained momentum on climate action include challenges in multilateral collaboration, restricted flows of global climate finance, and rising fiscal constraints in developed and developing economies. Ultimately, the changing context and its socioeconomic implications may be felt by a range of stakeholders, including businesses, households and individuals. As living standards, economic opportunities and competitiveness are affected, support for climate action may shift. Companies may face key challenges to competitiveness in the green transition, while the distributional impacts within countries may also be significant. From the World Economic Forum’s Executive Opinion Survey of 11,000 executives, 37% report facing higher costs of energy and key commodities, and 51% are concerned about price increases for consumers, which could make key goods and services more expensive. Furthermore, access to capital and financing for the green transition may be unequally distributed both within and between countries, and new technology divides may emerge between advanced and emerging economies, with more than one out of five companies in lower-income economies lacking access to green technologies. Meanwhile, almost 40% of businesses in upper-middle and high-income economies report concerns around increased regulatory uncertainty and compliance burdens. Investing in long-term, socioeconomic foundations could help mitigate concerns around the impact of the green transition on workers and consumers. For example, while the overall economic impact of the green transition is not yet clear, the shift in investment patterns, trade and other economic activities required to deliver on climate plans may precipitate significant labour market disruption. Increased levels of social protection are found to be associated with lower levels of concern around worker displacement as well as higher costs of energy and key commodities, among executives surveyed. This report intends to support decision-makers in aligning climate action with the needs of people and the economy. This work outlines the changing global context and its implications for climate action, presents business sentiment on green transition-driven socioeconomic impacts, and sets out considerations for corporates to identify and address socioeconomic risks and opportunities. The considerations are intended to help decision-makers identify the processes, stakeholders and actions required to embed socioeconomic factors in climate strategy, but do not constitute a comprehensive guide to developing corporate climate plans. At the halfway mark of the decade of delivery, the green transition needs a new narrative. Making the Green Transition Work for People and the Economy 4