Six ways that governments can drive the green transition | EY

Six ways that governments can drive the green transition | EY

Reforming public procurement can have a dramatic impact. By setting strict green criteria for contracts, governments can improve their own carbon footprint through the use of greener products and services while encouraging other actors to improve their own sustainable consumption and production practices. Governments may have to overcome negative perceptions (for example, that green products and services are more expensive), and will certainly need to train public procurers, sustainability officers and project managers in sustainable procurement.

Governments can set the pace for sustainability reporting by highlighting the environmental impact of their spending. Efforts will need to be made to harmonize the multiple existing frameworks for sustainability reporting and tailor them for public sector needs. Through advanced data capture and analysis, governments can enhance their impact monitoring and reporting, at the same time upskilling staff with appropriate data capabilities. Mandatory reporting creates a sense of urgency, and independent third-party organizations, including national audit offices, should audit reports and recommend improvements.

The Nordic countries are emerging as leaders in sustainability reporting. Finland’s State Treasury published new guidance in September 2021, recommending that all ministries, agencies, and institutions produce an annual sustainability report on their societal and global impacts.40  The municipality of Herning in Denmark has voluntarily released “green” accounts since 2012. These cover procurement, recycling and waste, nature and green areas, municipal properties, planning and private construction, transport and energy consumption.41 The initiative has been given added impetus by the DK2020 project, which supports 20 municipalities in developing, upgrading or adjusting climate action efforts, in line with the Paris Agreement goals.42

Promote a whole-of-society and people-centered approach

The huge and complex challenge of climate change inevitably demands collaboration from every individual and organization across society. The initial momentum for the energy transition in the Netherlands, for example, started in 2013 with the Energy Agreement for Sustainable Growth, bringing together government, industry, trade unions and the third sector to shape the country’s plans. Over time this led to the country’s national climate commitments in 2018, again working with labor unions, NGOs, business associations and local authorities to confirm targets.43

Citizens have a crucial role to play in tackling climate and environmental problems by changing their behavior and informing policymakers of their views. Research shows that people are willing to make changes in their own lives if they see this as part of a wider national effort to cut emissions.44 More participatory forms of public engagement, such as online deliberation and citizens assemblies, help involve people in problem-solving and climate action policy. An analysis of climate assemblies in France and the UK suggests citizens generate far more ambitious policies than politicians, having a significant and immediate effect on climate policy.45

Governments can also do more to educate people on the impact of their lifestyle choices, nudging them towards more sustainable consumption and behavior — such as ethical investment, electric vehicles, retrofitting homes or changing diets. Researchers from INSEAD and the University of Southern California surveyed a wide range of behavioral experiments linked to green issues, concluding that nudges don’t just promote eco-friendly behavior; they may also be more effective than government communications.46

But there can be no one-size-fits-all approach for citizens. Meeting climate goals brings costs for all individuals, whether as taxpayers, billpayers, shareholders, workers in carbon-emitting industries or consumers of carbon-intensive products. The poorest households, where energy bills are a higher proportion of household spending, often suffer the most from the transition in terms of higher fuel prices and costly conversions.

A “just” transition can ensure that costs and benefits are fairly distributed. This requires government investment and support, including subsidies and exemptions, and careful targeting of interventions to avoid adverse outcomes. Such policies could generate social and economic benefits that reduce poverty and address gender, health and economic inequalities.47

Finally, governments cannot ignore communities who stand to lose out from the green transition, such as coal miners and oil workers. Support will be needed to diversify the economy in regions where jobs or livelihoods are at risk and to help provide new green employment opportunities. The UK’s Humber region has become a “cluster” for offshore wind, helping revitalize the region after a period of economic decline. The area is now home to six operational offshore wind farms, with a range of new jobs in renewable energy plants, as well as manufacturing and other high-skill positions.

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