1. Understanding climate inequality

The report defines climate inequality as the uneven distribution of climate change impacts across individuals, communities and regions, both within and between generations and countries. Climate change and existing social and economic inequalities reinforce each other, with marginalised groups experiencing disproportionate harm. Evidence from IPCC AR6 shows mortality from floods, droughts and storms is around 15 times higher in highly vulnerable countries than in low-vulnerability countries. Key dimensions include gender, geography, intergenerational effects and socioeconomic status. Poorer households, Indigenous communities and outdoor workers face greater exposure, livelihood losses and cultural impacts. Climate mitigation and adaptation can also exacerbate inequality. Poorer communities often lack access to healthcare, education and social safety nets, limiting their capacity to adapt and recover. Examples of maladaptation include desalination projects raising water costs for low-income households. Mitigation measures such as afforestation and transition mineral extraction have, in some cases, displaced communities or heightened risks to Indigenous rights.

2. Wider perspective: Climate justice

Climate justice recognises that those least responsible for emissions often bear the greatest impacts. The report distinguishes inequality, equality, equity and justice, emphasising that justice addresses structural causes of unfair outcomes. Quantitative evidence highlights stark disparities: in 2019, the richest 1% accounted for 16% of global emissions, equal to the poorest 66% combined. Younger generations face tighter carbon budgets yet are projected to experience nearly four times more extreme events than older cohorts. The report outlines principles of climate justice, including responsibility to future generations, fair distribution of a limited carbon budget and differentiated responsibilities between countries. International negotiations, including COP28, show progress but significant gaps remain. Pledges to the Loss and Damage fund exceed USD 700 million, but this represents less than 0.2% of estimated annual losses faced by developing countries.

3. What does the future hold for climate inequality and justice?

Rising income inequality has broad social and economic consequences, including poorer health outcomes, reduced productivity, financial instability and weakened social cohesion. Climate inequality amplifies these risks and can obstruct climate transition efforts. One major impact is climate displacement. The World Bank estimates up to 216 million people could be internally displaced by climate impacts by 2050, creating material geopolitical and economic challenges. Climate injustice also threatens Indigenous rights and local knowledge, which are increasingly recognised as critical to effective adaptation, biodiversity protection and risk reduction. The report notes that perceived or actual unjust transitions heighten the risk of social unrest and transition delays, translating into financial risks for corporate investors and sovereign bondholders.

4. Just transition as the solution

A just transition is presented as essential to addressing climate inequality and achieving climate-resilient development. IPCC AR6 highlights inclusive development choices that prioritise equity, justice and risk reduction. Suggested approaches include universal access to healthcare, weather and health insurance, adaptive social protection systems, early warning mechanisms and land restoration. These measures can reduce vulnerability while delivering co-benefits such as poverty reduction, gender inclusion and food security. The report also references financial sector guidance, including expectations that institutions integrate just transition principles into net zero and biodiversity strategies, channel finance towards companies supporting workers and communities, and engage policymakers to reform incentives and disclosure frameworks.

5. How might actuaries contribute to a just transition?

Climate inequality and justice are relevant to actuaries due to professional obligations under the Actuaries’ Code to consider and communicate climate and sustainability risks. The report highlights roles for actuaries in risk modelling, scenario analysis and integrating climate justice into financial decision-making. Areas of action include designing inclusive financial products, incorporating affordability considerations, applying social discounting, and assessing distributional impacts of climate risks. Actuaries and the Institute and Faculty of Actuaries are positioned to support the public interest by raising awareness, engaging policymakers and highlighting intergenerational and fairness risks, particularly related to tail risks and tipping points.

6. Conclusion: From enlightened attention to purposeful intention

The report concludes that addressing climate inequality aligns moral responsibility with long-term financial interests. Greater awareness of climate justice can reduce systemic risk, support social stability and improve transition outcomes. Actuaries are encouraged to move beyond minimal compliance towards intentional action that integrates fairness and justice into professional practice.