Climate and inequality and the need to tackle both

If anyone is concerned about climate change – and let’s face it we all should be – then they should also be concerned about inequality, because the two are so closely linked. Similarly, if your main concern is poverty and inequality, you should also be concerned with climate change. Yet the link between the two is still not as well understood as you might think, despite an increasing and significant body of evidence about their convergence.

Climate change impacts people unequally. It is already doing so, not just internationally between rich and poor nations, but domestically between rich and poor. Unabated climate change will have increasingly dramatic effects on inequality, poverty and economic opportunity, exacerbating existing gaps, and forcing more people into poverty. At the same time, poverty and inequality contribute to climate change. For example, social polarisation and income inequality within countries directly affect support for policy action and undermine efforts to drive down emissions by further concentrating wealth and power in the hands of high emitters.

Over time, unless measures to tackle inequality are built into our response to climate, these divisions will simply increase. There is already sufficient evidence to show that this is already happening. As Jonathan Colmer states in ‘Energy & Climate’: “Climate change and economic inequality are often considered independently of one another. But it is not possible to address either of these challenges without engaging with the other: they are inextricably linked.”

Recent reports from the World Bank and the CIRED make similar points. They both remind us that in recent decades, global economic growth has lifted millions out of extreme poverty and reduced inequalities between countries, but they also make it clear that unmanaged climate change threatens to set back that progress by damaging poverty eradication efforts worldwide, and disproportionately affecting the poorest regions and people. One 2020 World Bank report on poverty and shared prosperity estimated that an additional 68 to 135 million people could be pushed into poverty by 2030 because of climate change.

Another 2017 report, Climate Change and Social Inequality by the US Department of Economic & Social Affairs, outlines the very real danger of creating a vicious cycle, whereby initial inequality causes the disadvantaged groups to suffer disproportionately from the adverse effects of climate change, resulting in greater subsequent inequality. Socially and economically disadvantaged groups already bear the brunt of climate change and other environmental risks. Whether making comparisons between or within countries, the poorest and most vulnerable tend to be more exposed to the risks in the first place, they lose a greater share of their wealth when disaster strikes (in one study costs equivalent to 5% of GDP in poorer nations versus 0.2% GDP in wealthier ones), and have fewer resources to cope with the consequences.

This fundamental inequality impacts in several ways. In a study by researchers at UCL and Salem State University, they report that the choices of the wealthy drive up emissions, not only through their own consumption – with the world’s richest 10% accounting for between 36% and 49% of global emissions – but also through their investment decisions. At the same time, the political power of wealthy shareholders and corporations in carbon-intensive industries enables them to obstruct climate policies that undermine their interests.

At the other end of the spectrum of income distribution, poor and financially insecure citizens are understandably fearful of the effects that climate policies might have on prices and jobs, which

makes politicians reluctant to enact such policies. In addition , the economic consequences are often geographically clustered and layered onto existing spatial inequalities. Often poorer households and nations are more likely to lie in harm’s way, but can’t invest or are inhibited, often lacking sufficient insurance or access to finance, or perhaps for some individuals, lacking the ownership rights to make changes.

There is also a growing understanding that social and economic inequalities undermine the social bonds of trust necessary for transformative collective climate action.

To tackle climate change, the researchers say, people need to work together and to authorise their governments to make far-reaching changes. Lead author Dr Fergus Green of UCL said: “Politicians around the world are reluctant to pursue the big reforms necessary to tackle climate change. Our study finds that part of the problem is that they are swimming against a tide of inequality.”

In another study by the Federal Reserve Bank of New York titled : Understanding the Linkages between Climate Change and Inequality there is a clear statement about existing climate risks which are shown to pose uneven effects on mortality, housing, consumer finance, social and labour markets, crime and conflict. These disparate effects were found to aggravate economic inequality by income and race and disadvantage and manifest themselves in a number of more subtle ways.

Diffenbaugh and Burke in a report for the Economics Observatory found that the ratio between the top and bottom income deciles is already 25% worse today because of global warming. There are well reported negative impacts on agriculture (a 2C rise in temperature is expected to reduce yields of major staple crops by 20% globally), but also on more general productivity and workplace injuries (Graff Zivin and Neidell, 2014; Colmer, 2021; Somanathan, 2021) and even in overall mortality, crime-rates, mental health and educational attainment, which have all been shown to already be affected by higher temperatures (Park, 2020; Goodman et al, 2020).

In Dr R. Jisung Park’s book ‘Slow Burn’ he states : “Bigger data creates a granularity in detailed understanding allowing us to now identify how subtly pervasive the negative effects of hotter temperatures can be in real world whether in the form of impeded learning, elevated workplace injury risk, higher rates of violent crime, lower firm-level output, or lower worker productivity”. He goes on to state that “It is not implausible that climate could lead to an increase in mortality similar to heart disease today.”

His finding is that there are already more than sufficient economic impacts from increased temperatures to merit society acting on climate change, but this is not widely recognised, in part because as Dr Park makes clear, “many if not most of the damages from climate change may come in the form of nonmarket assets like health, human capital and conflict which tend to be harder to measure.”

One obvious way to ensure we acknowledge this damage is to agree a ‘cost of carbon’. Most Governments and many companies understand this. Global corporate consultants Mckinsey reported that in 2021 over 40% of energy companies already used an internal social cost of carbon to guide investment decisions. In addition nearly 30% of world’s top financial services companies and over 15% of travel, logistics and infrastructure companies have already adopted an internal social cost of carbon to guide decision making. Many use a cost of $40/ton of carbon, which was a figure introduced by the Obama administration in the US, however a more recent interagency working group put the social cost of carbon closer to $190/ton. The problem of emissions has been known for decades, and as the evidence grows for current and future impacts it seems critical that an agreed and universal cost of carbon is finally committed to and implemented. It would also go a long way towards funding some of the necessary protections and innovations we so clearly need.

Climate change is a very big deal even if it isn’t the end of the world, and even if what one mostly cares about is the economic cost to humans. According to Park, the present value of damages associated with carbon pollution could be as much as 6% of global gdp. As he states in ‘Slow Burn’ : “The quantification of climate damages … gives us a clearer representation of not only the dire risks of not reducing greenhouse gas emission more aggressively, but also the very tangible benefits of every increment of mitigation achieved.”

Unabated climate change will have dramatic effects on inequality, poverty and economic opportunity, and, to a degree, already is. At the same time, poverty and inequality contribute to climate change. For example, every day fears of job security and fears of further inflationary costs can make people more wary of the adoption of new measures. And a lack of social cohesion, and a sense of unfairness in economic and political influence directly affect the level of support for policy action and undermine the social cohesion necessary to tackle such an insidious concern.

In contrast, there are a wide range of measures which can both tackle poverty and address climate change – helping protect countries and people from the worst impacts whilst improving living standards. As SCCS co-ordinator Becky Kenton-Lake wrote in July 2025 in a blog for the Poverty Alliance: “People are missing out on the warmer homes, secure jobs and better health that climate action should bring.”

If we are going to build more resilient societies, and protect most people, then it needs a society wide vision for climate action, which is steeped in tackling these existing and future inequalities. It needs a national shared ‘purpose’ or vision which we are all challenged to help deliver, and a consistent cost of carbon. But this is impossible if people don’t trust each other’s motives, lack empathy, or feel excluded from the benefits of change or from having a voice in that change. Above all it needs leadership. But if inequality and climate change are not addressed together, it is unclear whether either can be addressed at all.