Nordic Toolbox for a Just Green Transition

Assess and mitigate social and regional impacts

The green transition brings many benefits for people in the Nordic Region: better air quality, less environmental damage and new green jobs. However, it will also likely lead to disruptions and costs, with some groups or regions being harder hit than others. To ensure a fair transition and maintain public support, policymakers should identify and address possible adverse impacts early on.

Key messages:

Identify possible social and regional consequences of green transition policies before they are adopted.

Develop measures to avoid or mitigate challenging impacts.

Counteract potential increases in economic, social and spatial inequality due to the green transition.

What are the challenges?

1. Lack of knowledge about labour market impacts

The green transition will likely affect all sectors of the economy, directly or indirectly. Nonetheless, we know too little about either the long-term or short-term impacts, i.e. how the green transition will affect economic activity and employment in different sectors and regions, and which knowledge and skills will be required in a greener economy. Due to that lack of knowledge, it is difficult to anticipate the impacts and address potential negative outcomes in industrial sectors and regions.

Bjerkesjö, P., Isaksson Lantto, F., Malmaeus, M., Sanne, J.M. & Wennerholm, M. (2021). Grön omställning och arbetsliv – Kunskapsläge och fortsatta forskningsbehov. Stockholm: Formas and Forte. Available at: https://forte.se/publikation/gron-omstallning-och-arbetsliv-kunskapslage-och-fortsatta-forskningsbehov/.

2. Insufficient consideration of social impacts

Different social groups are impacted by green transition policies in different ways. For example, discouraging car use in city centres can limit the mobility of people who have difficulty walking or cycling. Climate policies that increase the cost of fuel, energy or food can disproportionally affect people in rural areas and low-income households. Additionally, the increased use of digital tools risks excluding people who lack digital skills or equipment. Such social impacts of green transition policies are not always sufficiently identified and addressed in advance.

Strambo, C., Maltais, A., Gong, J., Xylia, M., Nykvist, B., Dawkins, E., Axelsson, K., Grah, R. & Kartha, S. (2024). Strategies for governing fair low-carbon transport transitions in Sweden and beyond. Stockholm Environment Institute. Available at: https://www.sei.org/publications/fair-transport-transitions-sweden/.

Furthermore, different social groups, such as older adults or people with disabilities, are often seen as homogenous groups. However, they are very diverse in terms of their attitudes, abilities and socio-economic status, affecting their capability to cope with changes brought about by the green transition. If that diversity is not considered, policy impacts might not be adequately identified and addressed.

Dawkins, E., Strambo, C., Xylia, M., Grah, R., Gong, J., Axelsson, K. & Maltais, A. (2023): Who is most at risk of losing out from low-carbon transition in transport sectors in Sweden? Equity considerations from a consumption perspective. Energy Research & Social Science, 95, 102881.

3. Difficulty of raising concerns

Civil society representatives state that it can be challenging to reach policymakers to point out possible negative impacts of planned green transition policies. When opportunities to provide input do arise, it is often too late in the policymaking process to influence the relevant decisions. Additionally, civil society representatives have the impression that policymakers are sometimes reluctant to change existing plans and policies to accommodate new insights or feedback, limiting the effectiveness of civil society input.

4. Lack of trust in the Nordic welfare systems

For the green transition to be successful, people need to trust that social measures will be in place to support them if they lose their job during the transition or are negatively affected in other ways. Labour union representatives, however, state that trust in the Nordic welfare states has eroded among their members in recent years.

If we tell people 'we are going to have this big transition, you might lose your job, but the welfare system will take care of you' – I don’t think most people trust that the welfare system will do that.
- Labour union representative

What can policymakers do?

1: Conduct impact assessments

Analyse the labour market impacts, as well as the social and regional impacts, of green transition policies before they are adopted. Both the costs and benefits of measures should be mapped, as well as the consequences of inaction, i.e. maintaining the status quo, which may in itself impact social groups and regions in various ways. The current use of distributional impact assessments varies widely in terms of ambition and scope, with clear room for improvement.

Gravers Skygebjerg, J., Nybro Hansen, T., Madsen, P. & von Bahr, E. (2020). Distributional impacts of environmental and energy taxes. TemaNord 2020:533. Copenhagen: Nordic Council of Ministers. Available at: FULLTEXT01.pdf (diva-portal.org).

First, the groups, communities, regions and/or sectors that are expected to be affected by planned green transition policies should be identified. Depending on the policy, impact assessments may need to focus on different aspects – from territorial, gender and generational aspects through to equality and employment. Impact assessments may be based on various quantitative and qualitative approaches, including computable general equilibrium modelling or econometric estimations, scenario modelling, analyses of household consumption data and descriptive statistics, surveys or focus group discussions.

Ideally, impact assessments should be based on consultations with civil society organisations, labour unions and other stakeholders that can contribute place-based or group-specific knowledge (see the “Engage people” priority area). Some countries have established independent green transition advisory bodies or commissions to provide evidence-based advice on social impacts of the green transition (see the “Adopt a place-based approach” priority area).

OECD. (2022). Equitable framework and finance for extractive-based countries in transition (EFFECT). OECD Development Policy Tools. Paris: OECD Publishing. Available at: https://www.oecd-ilibrary.org/development/equitable-framework-and-finance-for-extractive-based-countries-in-transition-effect_7871c0ad-en.

Questions in impact assessments could include:

Which households, workers, social groups or communities will benefit from planned policies and initiatives, and which ones are at risk of losing out?

How will future generations be affected?

Which industries or regions benefit from investments, and which are at risk of falling behind?

Who is being taxed? Who is being subsidised? When you are implementing taxes regarding climate issues, distribution policy should be in focus, which it is not at the moment.
- Labour union representative

2: Mitigate adverse impacts

Once impacts of green transition policies have been identified, steps can be taken to address negative and unequal impacts. To ensure a just green transition, mitigation measures should target vulnerable groups who stand to be most affected and have the least resources to adjust. Place-based solutions may be required to ensure fairness. To mitigate negative impacts of climate policies, different strategies are available, depending on the context and policy objectives:

Macquarie, R., Green, F., Kenward, T., Müllerová, H., Feigerlová, M. & Balounová, E. (2023). Just and robust transitions to net zero: A framework to guide national policy. London and Graz: University College London and ClimLaw. Available at: https://www.lse.ac.uk/granthaminstitute/wp-content/uploads/2023/10/Just-and-robust-transitions-to-net-zero_A-framework-to-guide-national-policy.pdf; Gravers Skygebjerg, J., Nybro Hansen, T., Madsen, P. & von Bahr, E. (2020). Distributional impacts of environmental and energy taxes. TemaNord 2020:533. Copenhagen: Nordic Council of Ministers. Available at: FULLTEXT01.pdf (diva-portal.org).

temporary support for specific groups, for example through partial or full exemptions or temporary delays to application of the given policy,

adjustment support for specific groups or communities, for example through social security, training, reskilling or financial subsidies or grants,

financial support through redistribution of revenues from carbon pricing or climate taxes,

support through investments in local and regional development and capacity building in impacted communities.

3: Promote a universal design perspective

The green transition is characterised by technological advancements and innovation. To ensure a just green transition, policymakers should ensure that a universal design perspective is adopted for innovation and development processes that receive government funding. Universal design implies that new products, places and services are developed such that they can be used by as many people as possible, irrespective of their age, gender and abilities etc.

Centre for Excellence in Universal Design. (n.d.). About universal design. Available at: About Universal Design - Centre for Excellence in Universal Design.

That can increase the opportunities for people with disabilities, alongside other groups, to fully participate in the green transition and benefit from its opportunities. Norway can be considered a frontrunner in promoting universal design, since various plans for universal design have been adopted and the term has been included in legislation.

Lindberg, L. & Amilon, A. (2023). Universell utformning och samhällsekonomiska analyser. En kartläggning av analyser och litteratur. Stockholm: Nordic Welfare Centre. Available at: https://nordicwelfare.org/publikationer/universell-utformning-och-samhallsekonomiska-analyser-en-kartlaggning-av-analyser-och-litteratur/.

I believe that universal design is the answer to sustainability. If you know 'design for all', you know sustainability.
- Civil society representative

4: Monitor impacts

Monitor and evaluate the impacts of green transition policies to show if policies are having the intended consequences and progress is being made towards pre-defined targets or if unintended impacts have arisen that need to be addressed. Regular monitoring of impacts can also help to communicate achievements to the public and improve transparency.

Choose quantitative and qualitative indicators and metrics based on the policy in question. Indicators should go beyond measuring economic growth and employment and also capture different dimensions of wellbeing.

OECD. (2019). Regions in industrial transition: Policies for people and places. OECD Regional Development Studies. Paris: OECD Publishing. Available at: https://doi.org/10.1787/c76ec2a1-en.

Possible options include survey data to track public views of green transition policies, indicators measuring health, living standards or labour market trends and qualitative information from stakeholder discussions.

Heyen, D.A. (2021). Measuring a just transition in the EU in the context of the 8th Environment Action Programme. An assessment of existing indicators and gaps at the socio-environment nexus, with suggestions for the way forward. Freiburg: Oeko-Institut e.V. Available at: JustTransition-Indicator-Paper.pdf (oeko.de).

The section on examples and tools includes some publications that can offer ideas and inspiration.

Ensure that indicators monitoring impacts and trends are made available to the public and, ideally, collaborate during the monitoring process with the stakeholders who were involved in designing the policy. Questions to address in the monitoring phase could include:

Cahill, B. & Allen, M.M. (2021). Pathways for just transitions. Gender responsive policies & place based investment. CSIS and CIF. Available at: https://www.cif.org/knowledge-documents/pathways-just-transitions-gender-responsive-policies-place-based-investment.

Did the policy or initiative reach the targets and goals?

Did the ex-ante impact assessments capture the impact of the policy? Did unexpected impacts or unintended consequences arise?

Are additional measures necessary to mitigate social or regional consequences?

What can be learned for future policymaking?