Introduction

Inequality is increasingly recognised as a primary source of risk for global economies and societies. The G20 Extraordinary Committee of Independent Experts on Global Inequality (2025) described it as an urgent concern with significant ramifications for the collective ability to address climate change. Expert surveys rank inequality as the most interconnected of all global risks. The report highlights that major transformations, including climate change and the emergence of artificial intelligence (AI), are likely to supercharge existing inequality dynamics. For instance, approximately 60 percent of jobs in advanced economies and 40 percent in emerging economies are considered exposed to AI, which risks further concentrating wealth and displacing workers.

How inequalities emerge: the broad determinants of people-related outcomes and inequalities

The research observes that nearly two-thirds of the global population lives in countries where inequality is rising. In several economies, top income shares have returned to levels not seen for a century. Between 2000 and 2024, the top 1 percent of the population captured 41 percent of new global wealth, while the bottom half captured less than 1 percent. In the United States, the labour share of output reached a record low of 53 percent in the second quarter of 2026. While the global Gini coefficient fell from 0.69 in 1990 to 0.60 in 2022—largely due to economic growth in China and other parts of Asia—convergence remains uneven, and poverty reduction has stalled since 2020.

Understanding people, inequalities and system dynamics

TISFD distinguishes between vertical inequalities, which refer to disparities between those experiencing the best and worst outcomes (such as income inequality), and horizontal inequalities, which represent disparities between groups defined by characteristics such as gender, race, or ethnicity. The framework emphasises that when negative impacts on people accumulate across an economy, they contribute to system-level risks. These systemic risks are characterised by tipping-point dynamics and feedback loops, where a change in one part of a system becomes self-perpetuating, leading to substantial and often irreversible impacts.

Inequalities, system-level health and stability, and financial effects

Inequality erodes societal stability by undermining the social contract. A 25-country survey in 2025 found that 68 percent of respondents agreed that their economy is rigged to favour the rich and powerful. In the twelve months prior to the report, over 113 significant anti-government protests erupted worldwide. AI adoption is projected to exacerbate these risks, with some economists expecting the share of wealth held by the top 10 percent of US households to increase to 80 percent by 2050 in rapid adoption scenarios.

In terms of macroeconomic health, inequality acts as a drag on growth. Rising inequality knocked 4.7 percentage points off cumulative growth across 19 OECD countries between 1990 and 2010. It constrains the accumulation of human capital; for example, the richest 1 percent of men in the US live 14.6 years longer than the poorest 1 percent. On the demand side, a concentration of wealth at the top reduces aggregate consumption because lower-income households have a higher marginal propensity to consume. Furthermore, inequality threatens financial stability through household debt, wealth concentration, and public debt. Public debt has climbed from roughly 60-65 percent of global GDP before 2008 to almost 94 percent in 2025, with projections reaching 100 percent by 2029.

How businesses and financial institutions shape inequalities and system health and stability

The TISFD identifies twenty-seven key private sector drivers of inequality, examined through the lenses of scope, interaction with other drivers, and cascading effects. Illustrative examples demonstrate how these drivers contribute to system fragility. Non-standard working arrangements, such as temporary contracts and gig work, shift risks from employers to workers. Around one in ten OECD employees is on a temporary contract, and online gig workers were estimated at between 154 million and 435 million in 2023. These arrangements often lead to job insecurity, reduced human capital formation, and volatile incomes, which can increase credit risk for lenders.

Corporate tax practices also influence inequality. In 2022, close to $1 trillion in profit was shifted into tax havens. This profit shifting reduces the fiscal capacity of governments to provide essential public services like health care and education, falling hardest on lower-income countries. Additionally, investment performance benchmarks that prioritise short-term financial returns can incentivise practices that undermine the well-being of workers and communities, ultimately weakening long-term economic dynamism and causing investors to miss sustainable opportunities.

Areas for future work

The report identifies three primary areas for future research. First, it intends to examine how the relationships between inequality and system health vary across different geographical contexts, particularly in emerging and developing economies. Second, it will continue to monitor the rapidly evolving impacts of AI and climate change on inequality dynamics. Finally, TISFD aims to address gaps in the evidence base regarding financial materiality and the relative contribution of different drivers to system-level risks.