Large-scale sustainability initiatives are desperately needed if there’s any hope of combatting the climate crisis, and you can count the U.S. government out—the divisiveness there prohibits substantial action of any kind. Regardless, most business leaders believe that responsibility for driving the green transition rests with the private sector rather than policymakers, new research from Economist Impact reveals—and the vast majority anticipate more opportunities than challenges. However, rapid progress to a lower carbon economy is crippled by the failure of companies to develop and source sufficient green skills.
The firm’s new Green Skills Outlook, with support from European electricity company Iberdrola, is based on extensive research exploring the impact of the green transition—an economic movement built around the shift towards economically sustainable growth—on global labor markets and is based on a scoping literature review and data audit, a global survey of 1,000 business leaders, sector-specific workshops, and the convening of an advisory board of subject matter experts.
Despite an overwhelming majority (79 percent) of business leaders agreeing that skills will be the most important driver of the green transition, just 55 percent are implementing or planning to implement relevant programs to create these for their workforce—which leaves a large proportion of the workforce without training in the skills necessary for a greener economy, and risks obstructing progress on the green transition, at a time when it is gaining urgency in order to tackle the climate crisis and enhance energy security.
Accordingly, the report finds that 62 percent of global business leaders say shortages in green skills will create bottlenecks that will delay the green transition.
The green transition will have a net-positive impact on job creation
As greener industries gain prominence, the research shows that business leaders are overwhelmingly optimistic about the green transition, with 79 percent saying it presents more opportunities than challenges for their organization.
European business leaders, albeit generally optimistic, show a slightly more cautious stance. Smaller majorities of survey respondents in the UK (68 percent), Germany (72 percent), France (74 percent), and Spain (75 percent) were confident that opportunities will surpass challenges, compared to near unanimity in Brazil (94 percent) and China (94 percent).
The green transition is expected to have a net-positive impact on job creation, with particular benefits seen in clean energy, electrification, energy efficiency and research and development. Almost three quarters (73 percent) of respondents agreed that the green transition will create more jobs than it eliminates, and 81 percent say that it will create higher-quality jobs for workers.
At a global level, the International Labour Organization (ILO) estimates the transition could lead to 25 million net new jobs by 2030, particularly in green sectors and activities. For example, in the energy sector, the expansion and maintenance of electricity grids and storage facilities provides millions of additional jobs around the world, up to 3,500 jobs per 100,000 jobs in Europe.
The growing demand for green skills across the economy
The green transition will require all workers to acquire green skills—not just those working in explicitly green roles. Such skills will range from non-vocational, non-technical soft skills that are needed to excel in green jobs, to more technical, role-specific skills. For example, over a third (38 percent) of respondents in the energy sector identified smart grid implementation as one of the most important green skills to enable their company’s green transition.
More broadly, the most important cross-sectoral green skills are sustainability and disclosure reporting (39 percent), environmental impact assessment (35 percent) and sustainability compliance (32 percent). However, skills in compliance and disclosure, and reporting remain some of the most challenging to source. In addition, soft skills will be important to supporting business leaders’ efforts in transitioning their businesses towards greener ways of working. The top three which businesses are looking for are environmental awareness (45 percent), innovation and creativity (37 percent), and problem solving (31 percent).
Innovative strategies from governments, educational institutions and the private sector are required to bridge emerging green skills gaps
The report shows that there is overwhelming positivity for the green transition from business leaders globally, and two thirds (63 percent) say responsibility for leading it ultimately lies with them, over policymakers.
However, bridging emerging gaps in green skills will be imperative to driving the transition forward, and will require coordination and innovative strategies on the part of governments, educational institutions, and the private sector.
The role of government policy in fostering the green transition cannot be overstated. The top three policies that business leaders think should be prioritized to ensure the supply of green skills in the labor market meets the needs of the green transition are:
- Support for businesses’ investment in up-skilling and re-skilling programmes (e.g. through grants or tax relief) (53 percent)
- Support for the establishment of green skills courses at educational institutions (e.g. through strategic funding) (49 percent)
- Adapting existing work and training programmes for the unemployed to increase the emphasis on and support for green skills (46 percent)
As well as introducing active labor market policies that nurture the supply of green skills, in the longer term, governments will need to create an enabling environment that incentivises the greening of the economy more broadly. Such as through stricter standards, putting a price on emissions, and removing subsidies for polluting industries, such as fossil fuels.
In the US, business leaders see skills as the most important driver of the green transition
- Despite an overwhelming majority (81 percent) of business leaders in the US agreeing that skills will be the most important driver of the green transition, just 58 percent are implementing or planning to implement relevant programmes to create these for their workforce.
- As greener industries gain prominence, the report shows that US business leaders are optimistic about the green transition, with 77 percent saying it presents more opportunities than challenges for them.
- Nearly three-quarters (72 percent) of US business leaders also agree that the green transition will create more jobs than it eliminates, and 79 percent say that it will create higher quality jobs for workers.
- The report shows that there is overwhelming positivity for the green transition from business leaders in the US, and (67 percent) say responsibility for leading it ultimately lies with them, not policymakers.
- The role of government policy in fostering the green transition cannot be overstated. The top three policies that business leaders in the US think should be prioritized to ensure the supply of green skills in the labor market meets the needs of the green transition are:
- Support for the establishment of green skills courses at educational institutions (e.g. through strategic funding) (58 percent)
- Support for businesses’ investment in up-skilling and re-skilling programmes (e.g. through grants or tax relief) (52 percent)
- Adapting existing work and training programmes for the unemployed to increase the emphasis on and support for green skills (44 percent)
“The opportunities presented by the transition are vast, but it is critical that both businesses and policymakers are sharply focused now on ensuring people are equipped with the right skills and training. Without skilled workers, the transition will not be delivered, and the benefits will not be realized,” said Ignacio Galán, executive chairman of Iberdrola, in a news release. “As the world emerges from COP with a clear focus on phasing out fossil fuels, as well as tripling renewables in six years, every company in every sector is fully aware that change is coming fast.”
“Those who plan well will lead and be at the forefront of the transition,” said Galán. “For two decades at Iberdrola, we have been helping workers and industries to refocus and retrain to make the most of the green transition. We have helped aeronautics companies to take the lead in wind power, shipbuilders to diversify into offshore wind fabrication, and oil and gas workers to retain their offshore expertise, but switching to renewables.” To further facilitate this shift and optimize operations, investing in oil and gas software development can equip these sectors with the necessary tools to efficiently manage their transition and improve sustainability practices.
“All individuals will need to acquire green skills—if a person doesn’t have basic green literacy skills, they won’t be able to effectively carry out their role,” said Kevin Nilsen, president of ECO Canada, in the release.
On the role of different stakeholders in the green transition, Simon Schmid at SkillLab emphasizes, “What is important is having an ecosystem that enables communication and alignment between educational institutions, employers and governments.”
“We see green skills as the key to a just and equitable transition to a more sustainable economy,” said Matus Samel, senior manager and the Green Skills Outlook program lead at Economist Impact, in the release. “The [report] highlights that much more needs to be done across private and public sectors in advanced as well as emerging economies to enable workers and communities to participate in this crucial transition.”
