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Greener Economic Transition Should Promote Equity and Inclusivity – Study

APEC Policy Support Unit Singapore | 16 December 2022

PSU policy brief_green economy

The catastrophic impact of climate change on people and the economy has prompted APEC members to make the transition to the low-carbon economy. However, this shift needs to promote equity and inclusivity, according to a recently published policy brief.

“There is no denying the impact of climate change to our economy and society. For example, without climate change action, the APEC region could absorb losses of up to 18.3 percent of GDP by 2050,” said Rhea C. Hernando, a senior researcher with the APEC Policy Support Unit

“There are also significant health consequences—rising temperatures could worsen respiratory illnesses while frequent rainfall could give rise to outbreaks of malaria and dengue fever.” 

It is estimated that by 2030, the direct costs of climate change to health could reach around USD 2 to 4 billion per year. The APEC region represented about 60 percent of global greenhouse gas (GHG) emissions in 2019.

“To combat climate change, reducing GHG emissions is crucial and decarbonization is necessary,” added Hernando. “Take fossil fuels, for example. They contribute significantly to climate change, accounting for more than 75 percent of GHG.”

The policy brief, Transitioning to a Sustainable Economy while Ensuring Inclusion, warns that the climate crisis will disproportionately impact vulnerable groups like women, the poor, workers, people with disabilities and Indigenous Peoples across the region. It is important to understand that pursuing the low-carbon economy should not be at the expense of equity.

“The transition to low carbon should ensure their inclusion, particularly their capacity to access decent work opportunities,” Hernando said. “One way of ensuring inclusion while doing this is by adopting the just-transition framework.”

“The prime directive of a just-transition is to create ‘decent work’ opportunities, support people whose livelihoods are highly dependent on carbon-intensive sectors and reduce the negative impact of the shift to a low-carbon economy on marginalized groups,” she continued. “Employment policies, social dialogue, structural reforms and investments, should be carried out in parallel.”

The policy brief details seven policy options to be taken by member economies in implementing this transition:  (1) actively encouraging decarbonization; (2) avoiding new sources of carbon lock-in; (3) generating opportunities to preserve economic stability; (4) providing assistance to workers and communities affected by the shift; (5) addressing environmental damage; (6) implementing support measures to mitigate economic and social inequities; and (7) ensuring an inclusive and transparent planning process based on social dialogue.

Supportive labor market policies play an instrumental role in ensuring that communities and affected groups thrive in a low-carbon economy. This means striking a balance between providing financial support and social protection for job losses or workers’ displacements, and expanding opportunities for education, reskilling, upskilling and training.

According to the policy brief, trade and investment policies could also be further adjusted to spur green industries and boost green jobs and innovation. 

Another crucial element to a successful green economy transition are structural reforms. These reforms require macroeconomic policies that encourage sustainable production and consumption and a conducive environment for sustainable enterprises.

Digitalization has the potential to significantly accelerate the shift to low carbon. Digital technologies could be applied across sectors to improve energy efficiency and reduce GHG emissions.

The policy brief points out, however, that digitalization comes with its own challenges, including inadequate infrastructure, risks relating to cybersecurity and data privacy, as well as legal and regulatory challenges that need to be sufficiently addressed to keep up with the dynamic digital changes and prevent risks from materializing.

“Commitment to social dialogue and stakeholder engagement is paramount in ensuring the success of the transition,” said Glacer Vasquez, a consultant to the Policy Support Unit who co-wrote the policy brief. “Since the objective is to ensure inclusion and promote equity, these dialogues and engagements need to include vulnerable and under-represented groups.”

By applying a just transition framework, member economies put the welfare of the society and communities first. This mindset will affect actions taken by governments and steer policies toward building a sustainable and inclusive future for all.

To read more, download the APEC Policy Support Unit’s policy brief “Transitioning to a Sustainable Economy while Ensuring Inclusion.

For further details, please contact:

Masyitha Baziad +65 9751 2146 at [email protected]
Michael Chapnick +65 9647 4847 at [email protected]