The social inclusion-climate change nexus

CEB actions in 2022 continued to reflect its strong commitment to helping its member states make progress on transitioning to a socially inclusive, climate-resilient economy.

No government or international financial institution can afford to ignore the triangular paradigm of sustainability: people, planet and prosperity. Yet global actions continue to fall short of achieving the globally agreed target of limiting average temperature increases over the long term to 1.5˚C above preindustrial levels. Once again the urgency of this task was underlined in 2022, one of the warmest years on record and one that was marked in Europe by several serious climate-related events, including unprecedented forest fires in several countries.

The CEB strongly supports the UN Sustainable Development Goals (SDGs) and the Paris Agreement on climate change, both agreed in 2015 and whose implementation relies on action on social fronts. Indeed, these landmark agreements highlight the strong interlinkages between social and climate-related challenges: just as the worsening climate emergency exacerbates inequalities, addressing inequality and other social challenges can strengthen climate action, and should always be integrated in its design.

In line with its social mandate, the CEB recognises the disproportionate adverse effects that climate change has on lower income and other vulnerable groups. Responding to the climate crisis while assuring social inclusiveness within transition policies and investments can provide broad gains. For example, creating climate-resilient jobs, fostering economic diversification to reduce dependence on climateaffected sectors, as well as investing in low carbon activities, all lead to mutually reinforcing outcomes.

This social inclusion-climate change nexus is a central consideration in the CEB’s approach to a just and socially inclusive transition. Considering the nexus can help identify projects with social and climate benefits, reduce the environmental footprint of social investments and address any negative social impacts of climate action. This approach is now embedded in the CEB’s assessment of new projects, as witness several of the projects approved for loans in 2022, from   new energy-efficient housing for vulnerable people in Germany and Lithuania, to action to strengthen Türkiye’s preparedness against forest fires, such as the tragic ones brought on by the heatwaves of 2021 (see page 25).

In this context, the CEB’s Paris alignment framework, launched in 2021, and the implementation of the alignment roadmap from 2022, further enhance its contribution to better connecting social inclusion with the climate agenda. The Bank’s commitment to have its new project finance operations aligned with the Paris Agreement objectives will be operational in 2023 for projects with pre-defined use of proceeds and known geographical location, and in 2024 for the remaining projects.

©CEB 2023