Development co-operation and climate action are fundamentally linked. They present us with both an urgent need that we cannot ignore and an extraordinary opportunity we cannot miss.

The global economy, fuelled by the pursuit of growth, is hurtling us towards climate collapse. Yet even with the fires, floods and other environmental alarm bells, our approach to poverty eradication remains much the same: grow the economy first, then redistribute the wealth through social policies at home, or official development assistance overseas.

The climate transition fundamentally alters patterns of production and consumption. Its viability and effectiveness depend on navigating disruptions equitably – sharing costs and benefits. This is the essence of calls for a just transition. Drawing on the OECD Horizontal Project on Climate and Economic Resilience (Net Zero+) and other OECD research, this chapter takes stock OECD countries’ experiences with the just transition, how developing countries’ own low-carbon trajectories may resemble or diverge from these approaches and what role development co-operation has to play in supporting a globally just transition that is tailored to each developing country context and a systematic consideration of transnational spillovers of advanced economies’ own climate policies on their developing counterparts.

Reducing the impact of climate change on poor and vulnerable households is essential to hastening poverty reduction. Policy makers can usefully adapt the hazard, exposure and vulnerability framework that is often used to assess the physical impacts of climate change to identify, measure and monitor the welfare benefits and costs of climate action. This chapter starts by discussing how climate change disproportionately affect poor and vulnerable populations and policy priorities that reduce hazards and/or vulnerability while bringing non-climate benefits. It then proposes a framework for assessing the welfare impacts of climate action and examines the three channels through which climate policy affects welfare before putting forth two principles to guide climate policy decisions: prioritise triple and double win policies and identify and minimise costs to poor households.

Inger Ashing, Save the Children

Poor communities that rely on functioning food systems for their livelihoods are highly vulnerable to the devastating effects of climate change while agri-food systems are significant emitters of greenhouse gases. This chapter reviews opportunities to scale up innovative technology and practices to transform food systems and to leverage climate action to reduce poverty, hunger and malnutrition in line with the complementary Sustainable Development Goals. Drawing on country experiences – India, Tajikistan, Lao People’s Democratic Republic and Myanmar – with integrated strategies, it looks at how climate strategies such as nationally determined contributions can be aligned with national agricultural and anti-poverty strategies; the need for multisector and multistakeholder action and participation; challenges to joint financing for climate action, poverty and hunger goals; and adapting government and donor systems to co-ordinate implementation.

Economic transformation can help reduce poverty and inequality in Africa, where strong growth over the last 30 years has failed to significantly increase household incomes, create jobs for its rapidly growing youth population and build resilience to shocks. This chapter discusses how the transition to green energy can accelerate and reinforce economic transformation in African countries, enabling them to diversify production and enhance export competitiveness, leverage their abundant renewable resources to fuel job creation, and use their massive carbon stocks to participate in carbon markets and increase the flow of climate finance. Recognising persistent capacity and other constraints, the paper concludes with recommended priority actions for OECD countries, African governments and the African Union.

The climate crisis is exacerbating negative labour market dynamics, eroding livelihoods and accentuating inequalities. This chapter discusses employment and skills policy responses for a just transition, focusing on how tackling inequalities in the world of work reinforces and amplifies efforts to reduce broader societal inequalities and climate change and green transitions risk deepening labour and workplace inequalities and sharing the example of Iraq’s decent work strategy. It finds that carefully designed and targeted employment and skills policies will be a central plank of whole-of-government policy packages aimed at implementing a just transition promotes inclusive societies and workplaces.

Subsidies and other types of public financial support for fossil fuels are often defended as necessary to ensuring an affordable supply of energy. However, they are a costly and inefficient way to help the poor given that the wealthy who consume the most energy benefit most. This chapter discusses how reforming or eliminating fossil fuel subsidies could free up revenues that could be redirected to poverty reduction and investments in clean energy. It includes examples of successful reforms in countries, including of Argentina, Bangladesh, Sri Lanka and Zambia. Indonesia’s reform compensated households with a cash transfer programme that cost less than the subsidies, and India’s phased reduction of fuel subsidies paralleled a tripling of its public investment in renewable energy. The chapter then examines how to reform fossil fuel subsidies effectively to contribute to a just transition. It concludes with a set of recommendations for development co-operation actors.

We are caught between two pressures. On one side, there is the risk of global economic fragmentation driven by the emergence of regional blocs favouring protectionist policies, shortening value chains, reducing investments and increasing isolationism. A more fragmented world means abandoning co‑operative approaches and lacking consensus on the way forward to achieve common goals such as combating climate change and resolving debt issues.

Climate funds such as the Adaptation Fund, Climate Investment Funds, Green Climate Fund and Global Environment Facility provide crucial climate-related development finance that could help increase resilience and address poverty and inequality in developing countries. This chapter highlights ways for these funds to become more fit for purpose, including by deploying their resources more strategically to serve the interlinked and mutually reinforcing agendas of climate, development, and poverty and inequality reduction. It argues for climate funds to improve the availability, accessibility and delivery of finance; increase the volume of finance directly provided to developing country institutions; strengthen their focus on sectors relevant for climate change adaptation; and ensure that finance is used equitably and in line with developing countries’ expressed priorities.

The annual investment gap across the Sustainable Development Goals has almost doubled since 2015. The green transition and the fight against poverty require a significant additional investment to achieve these goals. This chapter highlights the importance of private investment and foreign direct investment, in particular, to help developing countries raise incomes through quality jobs and increase environmental sustainability by enhancing innovation and access to green technologies. It argues that more coherence between development policy and measures aiming to create an enabling environment for sustainable business and to promote responsible business conduct (RBC) are needed to maximise the positive spillover effects of cross-border business activity and to prevent unintended side effects.

The Asia and Pacific region stands at a critical juncture, positioned both as a significant contributor to global greenhouse gas emissions and a potential leader in transformative climate action. The Asian Development Bank (ADB), alongside our member countries, is steering the region towards a sustainable future through support for a just transition. Our vision aims to reorient economic and social frameworks to foster low-carbon, climate-resilient growth that enhances prosperity and inclusion.

The global energy transition has far-reaching repercussions: countries whose economies rely on fossil fuel extraction face the prospect of lower demand, and countries producing minerals needed for clean technologies risk the negative impacts of an unregulated mining boom. This chapter draws on transition experiences in Colombia, Democratic Republic of the Congo, Ghana, Nigeria, Peru, Senegal and Uganda. It makes the case that only a people-powered and equitable transition can achieve the scale of transformation necessary for a green future. It proposes an operational framework for just transitions that respect universal human rights, address socio-environmental impacts, ensure affected communities and citizens can meaningfully participate in decisions, and put in place strong and accountable governance systems. It shares lessons on context-specific policies for ensuring a fair distribution of both the costs and benefits of planet-saving climate action.

The Paris Agreement calls for gender equality and women’s empowerment to be among the guiding principles of climate action. The process of developing new nationally determined contributions (NDCs) offers an important opportunity to incorporate gender considerations more thoroughly into national climate commitments and long-term plans. Drawing on the experience of the NDC Partnership, including in Burkina Faso and Cambodia, this chapter explores good practices around inclusive design and implementation of the nationally determined contributions and suggests how development partners can best support countries to align their NDCs with development priorities and make them attentive to gender equality, just transitions, intergenerational equity and human rights.

A human rights-based approach that acknowledges past injustices and deliberately engages Indigenous communities in deciding, designing and collaborating in renewable energy projects is key to ensuring that transitions are just. This chapter highlights examples from Australia, Canada, Guatemala and New Zealand of benefit-sharing models; community-owned initiatives; and partnerships between indigenous peoples, governments and the private sector that balance the needs of different stakeholders. It focuses on how development co-operation policy frameworks should integrate a human rights-based approach as an integral component of responsible business conduct, support inclusive mechanisms for financial and technical support to indigenous peoples, and facilitate equitable arrangements to address the climate crisis and contribute to reducing poverty and inequalities.

Indigenous peoples in the Amazon have long fought to protect their lands, forests, waters and their living beings – not just for their own sake but for the benefit of the entire planet. At the frontline of defending the Amazon, indigenous peoples have often risked their lives and been subject to persecution, criminalisation, threats, intimidation and assassinations. They now face the destruction of their cultures and livelihoods due to climate change, leading to cultural, spiritual and economic impoverishment and inequality.

Just energy transition partnerships (JETPs) are significant opportunities to accelerate green transitions in low- and middle-income countries and do so in ways that reduce poverty and inequality. This chapter highlights opportunities to leverage JETP investments for poverty and inequality reduction, through deliberate community participation in the design and implementation phases providing a civil society and local community perspective. It shares lessons on co-production and funding mechanisms for all stakeholders involved in the current and next generation of JETPs – particularly international partners who can help improve impact on emissions reduction and contribution to social goals by promoting more inclusive processes and flexible funding.