December 12th: Two thirds of the jobs from net-zero might go to men
COP26 has come and gone, and whatever the official progress made, the momentum around net zero seems real. Putting government policy to one side, businesses around the world can no longer ignore either the physical hazards of climate change nor the risks that potentially significant regulations or green house gas prices might pose to the value of their assets.
However, as we elaborate in a recent article, it’s not just about risks. There are many opportunities to reduce GHG emissions that are already “in the money” — in other words, have a positive NPV for private sector companies, without any further changes to climate legislation. We estimate that this is the case for around a quarter to a third of the GHG mitigation measures required in the UK and EU between now and 2030.
Many of those opportunities are, however, capital intensive. The IEA estimates that annual capex on the “net zero patheway” will need to be more than $4 trillion to support the energy system over the next 30 years. [Note: not all of this is “additional” — a high-carbon economy also requires quite a bit of capex for its energy needs — but it is a higher figure than the status quo. More importantly, the kind of capex will be quite different in a world that is moving towards zero emissions.]
This could be good news for all kinds of businesses that sell products and services to those organisations — whether governments, energy suppliers, transport companies, agricultural and forestry projects, or companies in the business of carbon removals — that ultimately invest in the required capex. Of course, it’s only good news if those businesses adapt their products to be suitable for this new world.
One concerning feature of this capex revolution is, however, its potential impact on gender balance and whether it might drive a further wedge between women and men in the workplace and their earnings potential. I have been concerned about this for a while in the context of “building back better”. The vast majority of that talk has been about R&D and infrastructure — both sectors dominated by men. Well, now I’ve actually had a go at quantifying this, in the context of net zero.
The chart shows the top 5 sectors that sell capital goods and services globally, and are therefore set to benefit from the green capex revolution , and the gender balance in them in the UK. As suspected, the top two — manufacturing and construction — have significantly more men than women working in them. This is also true for ICT, which is likely to be providing a lot of components and software for all the new green infrastructure and equipment to be operated efficiently.
There is a bit of a counterbalance from two other sectors: professional and administrative services, which are large suppliers of support to capital projects; and finance and insurance, which will be at the core of structuring and channeling the necessary finance to enable all this investment to go ahead. Both of these sectors are nearly at gender-parity (by raw number of employees). Overall, though, it would look on current trends that about two thirds of any jobs created out of the green revolution could go to men.
[Note: Clearly, that conclusion comes with the usual caveats of “all other things equal” etc. Also, it should be noted that it is based on a fairly back-of-the-envelope methodology. Yet, I think the result shown is probably more benign than what might happen in reality, considering the fact that inside each of these broad sectors, there are sub-sectors, and among those, it is likely the more male dominated ones that will be involved in the green transition (e.g., engineering services vs. recruitment services; widget manufacturing vs. food manufacturing; investment banking vs. retail banking).