Greening the economy to safeguard growth and employment

As the world convenes during COP30, a pressing warning echoes through the halls of global economic planning: delaying climate action isn’t just an environmental risk — it is a macro-economic gamble with potentially grave consequences for growth, employment and social stability.

According to modeling by Network of Central Banks and Supervisors for Greening the Financial System (NGFS), postponing the “green transition” until after 2030 could shrink global GDP by around 1.2 percent compared with a scenario of timely climate policy implementation. Simultaneously, unemployment could rise by 1.3 percentage points — putting an additional 50 million people at risk of losing their jobs.

These are not abstract numbers. They represent real families, communities, and public finances under strain: livelihoods lost, economic fragility, and widening inequalities — particularly in developing economies already struggling with job creation and limited fiscal capacity.

Thus, climate action should no longer be siloed as an environmental agenda. For central banks, finance ministries and labour policymakers, it must become a central pillar of macroeconomic strategy — essential to preserving growth, price stability, and employment.

A rapid shift to a green economy will inevitably disrupt labour markets. Industries built on high-carbon models may decline. But if managed thoughtfully, the transition can also become a major engine for growth, innovation and inclusion.

To seize this opportunity, several policy measures are critical:

• Investing in new sectors and industries that align with environmental goals.
• Reskilling and upskilling workers, facilitating transitions into emerging green sectors.
• Supporting workers and households during the shift, to cushion against any negative fallout.
• Ensuring that environmental laws, labour rights, and decent work standards move in tandem.

If these are in place with proper financing, the green transition can deliver more than emissions reductions. It can promote sustainable growth, job creation, and drive economic inclusion.

Delaying climate policies doesn’t merely postpone environmental harm, it deepens economic fragility. According to the NGFS projections referenced by the International Labour Organization (ILO), lost output and rising unemployment risk becoming long-term impediments to global economic health.

Moreover, the negative effects would disproportionately hit developing economies, which often lack the fiscal space, labour-market flexibility, and social protection systems needed to absorb shocks. This increases the risk of widening global inequalities, decreased social cohesion, and destabilization of vulnerable labour markets.

In economies where central banks have full-employment mandates, the stakes are especially high: as unemployment surges, the mandate to maintain jobs would clash with economic headwinds from climate-related risks.

The choice before policymakers is not simply whether to go green, but how and when to do it. Waiting too long risks not only environmental catastrophe, but serious macroeconomic damage: shrinking growth, rising joblessness, and greater inequality. But a well-designed green transition, with investment in new industries, reskilling, social protection, and strong labour-environment policy integration, can turn climate action into a powerful engine for sustainable, inclusive economic growth.

For workers, communities, and governments alike, the message from ILO is clear: climate action is not an optional extra. It is central to safeguarding growth, jobs, and collective prosperity.

For more information, please visit ILO.