The transition must be just
After a summer of heatwaves, it looks like we’re in for a hot autumn too. On the climate front we face the prospect of a winter without Russian gas, while social discontent is growing amid high inflation and its impact on households. These two issues may seem unrelated but, as the second part of the IPCC report underlines, social justice has a key role to play in the adaptation to climate change. What we’re talking about is a just transition.
Not all in the same boat
One of the privileges of the great is to witness catastrophes from a terrace, wrote Giraudoux. Faced with the impacts of climate change, we are not all in the same boat. While the wealthiest 10% of the global population have generated 52% of total CO2 emissions in recent years¹, it is the world’s most vulnerable people who are paying the heaviest price of the climate crisis and loss of biodiversity. The IPCC estimates that 3.3-3.6 billion people live in areas that are highly vulnerable to climate change. Why? Poor populations are twice as likely to live in precarious, less well-insulated housing, work in more exposed sectors, such as agriculture, and to not have the same access to family and public support as wealthier people. After the 1980s drought in Ethiopia, for example, it took poor farmers a decade to recover, which affected an entire generation of children². Climate migration is a stark illustration of the vulnerability of poor populations – and not just the poor – to climate change.
We need a just transition
Climate inequalities put the success of governments’ transition policies at risk. Unless in-depth work is undertaken on the social acceptability of environmental transition measures, the issues we are trying to tackle will only get worse. For us to break out of this vicious circle, factoring both environmental and social issues into political decisions will be vital for the emergence of ambitious climate measures that seek to benefit everyone, everywhere. This will mean measuring the wider impact of climate catastrophes to take account of the vulnerability of the poorest and bring about more effective action. In this respect, the average cost of climate-induced disasters could rise to $500 billion a year, 60% higher than previous estimates of $300 billion. A just transition is not just about supporting people: it will require a strategy for the transition of society in all its aspects.
Business and a just transition
This is because the transition process will also impact companies. In particular, it raises concerns over jobs and the changes it implies for many sectors. For example, it is estimated that EV manufacturing will require 40% fewer workers than are needed to make petrol or diesel cars3. What can be done about the jobs that will be lost? How can we manage the transition to new jobs to ensure that these workers remain employable? The electric vehicles produced will be sold at a higher price than the equivalent petrol or diesel cars, so it should also be the responsibility of companies to play a role in reducing inequalities of access to green goods and services. Workers and consumers are on the front line of the just transition, and to address the complex issues involved, companies will need to quickly and proactively incorporate solutions in their business models.
For some time now, both the transition to a climate-neutral economy and social justice have been a focus for our management teams. As a result, when we were launching our impact fund, Echiquier Climate & Biodiversity Impact Europe4, we incorporated a strand dedicated to the just transition into our proprietary methodology. To help us reflect collectively on these issues and the solutions required, the just transition will be the subject of our forthcoming Climate and Biodiversity Meetings.
¹ Stockholm Environment Institute
² World Bank
4 Investors should note that their investment in the fund does not generate a direct impact on the our proprietary methodology. To help us reflect collectively on these issues and the solutions required, the fair transition will be the subject of our forthcoming Climate and Biodiversity Meetings.
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