As delegates gather for the 2023 United Nations Climate Change Conference (COP28), there is no better time to consider some of the ethical questions linked to decarbonization and the climate transition.
These questions include: How do we amplify the voices of lower-income countries and communities and enhance their climate resilience? How can business and industry react to a shifting global work force? And, how can we build climate resilience plans that empower stakeholders and scale green technologies to benefit all people?
Considerations for Policy Design
Addressing all ethical complexities surrounding the transition to a low-carbon economy will be difficult. Here are three themes we are focusing on from a policy perspective.
Global Equity - Low and middle-income countries often face more significant challenges in accessing new sustainable and low-carbon technologies to mitigate the impacts of climate change. Proposals such as The Bridgetown Initiative, overhauling development finance and giving low and middle-income countries a louder voice in the conversation are worthy of consideration.
Energy Cost Burden - Lower-income households bear a disproportionate burden of the transition, facing higher energy costs than higher-income households. An NYU study found the average energy cost burden in the US for low-income households to be 3.5 times greater than for higher-income households.[1] Accounting for this inequity is important to ensure increasing energy costs are not passed directly onto the most vulnerable consumers.
Climate Resilience – As policies are developed to maximize climate resilience, approaching their design with objectivity is imperative to ensure resources and initiatives are distributed and developed in an ethical and equitable manner. One way objectivity can be achieved is through employing the most current climate data and socioeconomic conditions through tools such as the FEMA National Risk Index.
Considerations for the Private Sector
The business community plays a pivotal role in shaping this transition, and their decisions today will have lasting consequences for future generations. For example:
Global Workforce Shifts - As companies prioritize climate transition, global employment dynamics will shift. A 2022 study by the McKinsey Global Institute shows that by 2050, the demand for jobs in the fossil fuel extraction and production and fossil-based power sectors could be reduced by about 9 million and 4 million direct jobs, respectively.[2] Meanwhile, approximately 8 million direct jobs could be created in renewable power, hydrogen, and biofuels by 2050.[3] Ensuring a just transition for workers through re-training programs and community support is an ethical imperative. Companies should be prepared to allocate resources for community engagement programs and plan for long-term sustainability in collaboration with local municipalities whose workers are adversely affected by this workforce shift.
Accessibility to Green Technologies – As companies research, develop, and scale new climate technologies and business models targeted to address decarbonization and the climate transition, they should consider accessibility to low-income and underserved customers and ensure their technology benefits users from all backgrounds and status. This increases the impact the technology can have, but also the markets and geographies companies can access. Almost half of the world’s population lives on less than US$6.85 per person per day.[4] Innovations that reach the bottom of the economic pyramid is both an opportunity for meaningful, scalable impact and a moral imperative.
Accountability and Transparency - Climate transition plans that account for all communities will require companies and sustainability professionals to commit to measurable targets, regular progress reporting, and openness to scrutiny from stakeholders. Adhering to best practice climate reporting frameworks such as the TCFD, IFRS, and GRI can enhance trust and reputation. Such reports ensure that stakeholders have the tools necessary to have their voices heard and hold corporations accountable to their climate commitments.
About the authors:
Nadav Avihay and Nick Dolce are both part of Summit Strategy Group’s ESG practice.
Avihay is a former member of Carnegie Council for Ethics in International Affairs’ New Leaders Program – A global professional community dedicated to promoting ethical global leadership across business, academia, government, and the non-profit sector.
Dolce has extensive academic background in the intersection between environmental and climate policies, human rights, and societal issues.
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[1] Constantine E. Kontokosta, Vincent J. Reina & Bartosz Bonczak (2020) Energy Cost Burdens for Low-Income and Minority Households, Journal of the American Planning Association, 86:1, 89-105, DOI: 10.1080/01944363.2019.1647446 [2] McKinsey Global Institute: The net-zero transition - What it would cost, what it could bring. [3] Global Green Skills Report 2023. LinkedIn. [4]World Bank