Social impacts of climate change mitigation policies and their implications for inequality

The Paris Agreement and the Sustainable Development Goals (SDGs) set ambitious targets for environmental, economic and social progress. Climate change mitigation policies play a central role in this process. To maximize the benefits and minimize the negative effects of climate change mitigation policies, policymakers need to be aware of the indirect and often complex social and inequality impacts that these policies may have and the pathways through which these impacts emerge. Better understanding of the distributional and inequality impacts is important to avoid negative social and distributional outcomes as countries ratchet up their climate policy ambition in the post-Paris context. This paper synthesizes evidence from the existing literature on social co-impacts of climate change mitigation policy and their implications for inequality. The analysis shows that most policies are linked to both co-benefits and adverse side-effects, and can compound or lessen inequalities depending on contextual factors, policy design and policy implementation. The risk of negative outcomes is greater in contexts characterized by high levels of poverty, corruption and economic and social inequalities, and where limited action is taken to identify and mitigate potentially adverse side-effects.

Key policy insights

• The risk of adverse social outcomes associated with climate change mitigation policies, including worsening inequality, increases as countries ratchet up their ambition to meet the Paris Agreement targets. Many policies that have so far only been piloted will need to be up-scaled.

• Negative inequality impacts of climate policies can be mitigated (and possibly even prevented), but this requires conscious effort, careful planning and multi-stakeholder engagement. Best results can be achieved when potential inequality impacts are taken into consideration in all stages of policy making, including policy planning, development and implementation.

• Climate change mitigation policies should take a pro-poor approach that, in best case scenarios, can also lead to a reduction of existing inequalities.