Climate Transition

Impact Framework:
Essential elements
for an equitable and
inclusive transition
This framework seeks to provide an initial approach at
quantifying the socioeconomic impacts of climate action,
enabling decision makers to capture the co-benefits and
manage the burdens of the net-zero transition.
This article is a collaborative effort by Gassan Al-Kibsi,
Alessandro Casoli, Sarah Crowhurst, Kartik Jayaram,
Cindy Levy, Daniel Pacthod, and Matt Stone, representing
views from McKinsey Sustainability.

December 2023
Acknowledgments
We would like to thank the more than 60 organizations and 180 individuals who provided input,
in addition to the many colleagues at McKinsey who contributed to the development of the
Climate Transition Impact Framework, including Abdulaziz Alfalahi, Imogen Bird, Malvina Bondy,
Rishika Daryanani, Jason Eis, Tarek El Sayed, Laurence Fricker, Mekala Krishnan, Dhiraj Kumar,
Vivien Lam, James Newland, Joe Rahi, Ben Santhouse-James, Sara Sethia, Matthew
Sharp, Craig Stock, Rory Sullivan, Carlo Tanghetti, and Tom Witt. We would also like to thank
Claire O’Neill for providing valuable insight and support as a senior adviser.

Foreword
Even though extensive research has been conducted on the net-zero transition, the
socioeconomic impacts have not been considered at sufficient scale and complexity. We are
developing the Climate Transition Impact Framework (C-TIF) to address this gap. We dedicated
six months of work to examining the value and feasibility of harnessing existing climate scenarios
to understand these socioeconomic impacts, resulting in the collection of dimensions and
metrics in the C-TIF and illustrative results.

The C-TIF proposes a structured, forward-looking approach that would enable decision makers
to compare the potential socioeconomic impacts of different climate action pathways. Its intent
is to accelerate the transition by enabling the world to meet the goals of the Paris Agreement in
a human-centric way. The C-TIF aims to support this by providing a more comprehensive view to
help decision makers understand the transition’s potential impacts on societies.

This framework has been developed to date in concert with more than 60 organizations
ranging from intergovernmental organizations, multilateral development banks, and academic
institutions to philanthropies and the private sector.

At COP28, more than 40 climate leaders gathered to discuss the C-TIF. Participants
included representatives from Absa, the Commonwealth Bank of Australia, Earthna, the
Energy Transitions Commission, IFC, Standard Chartered, the UN Conference on Trade and
Development (UNCTAD), the World Bank, and the World Business Council for Sustainable
Development (WBCSD).

This is the first step in a multiyear journey to elevate the socioeconomic impacts of the transition
to guide the trade-offs that decision makers must consider on the path to achieve the Paris
Agreement. It will continue to be refined through the input of a broad set of stakeholders, road
testing with institutions and governments, and the establishment of a multiparty coalition to
operationalize this concept to make it an asset for the global community.

Gassan Al-Kibsi is a senior partner in McKinsey’s Dubai office; Alessandro Casoli is a senior expert and
associate partner in the London office, where Sarah Crowhurst is a consultant, Cindy Levy is a senior partner,
and Matt Stone is an alumnus; Kartik Jayaram is a senior partner in the Nairobi office; and Daniel Pacthod is a
senior partner in the New York office.
Executive summary
The climate transition, which will transform the way people live and work, is one of the most
significant shifts facing the world today. Its large-scale, differentiated effects present an
immense implementation challenge. Therefore, solutions must be comprehensive yet nuanced
and universal yet targeted. The transition to net zero would require $9.2 trillion in annual average
spending on physical assets, a figure that is $3.5 trillion more than today.1 Large structural
shifts in jobs could occur as the world adapts to a low-carbon path. The transition could offer
an opportunity to unlock economic growth from new sources such as decarbonization and
clean-technology solutions, but these shifts could have a more substantial impact on developing
countries and regions rich in fossil fuels. The challenge could be existential for the Global
South as these countries face the greatest climate impacts (such as drought and wildfires) and
must accelerate economic development to empower local communities while facing resource
constraints.

The enormous scale of the challenge requires decision makers to balance significant trade-offs
and adopt new tools to provide a nuanced, multidimensional, socioeconomic, and empirical
perspective. To date, transition planning has focused on assessing marginal abatement cost
curves and optimizing the economic cost of achieving goals in line with the Paris Agreement.
However, the same quantitative focus has yet to be applied to understand the transition’s
socioeconomic impacts. Debates over the transition’s societal implications sometimes lack
empirical foundations, resulting in qualitative outlooks that may hinder climate action. Currently,
tools that measure societal impacts often have specialist mandates—such as biodiversity,
for example—and present a partial view for decision makers. This lens can lead to suboptimal
climate action, because elements such as investment and health benefits are considered in
isolation rather than simultaneously.

1
“The net-zero transition: What it would cost, what it could bring,” McKinsey Global Institute, January 2022.

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 1
 The Climate Transition Impact Framework (C-TIF) proposes a structured, forward-looking
approach that would enable decision makers to compare the potential socioeconomic impacts of
different climate action pathways (exhibit). Its intent is to accelerate the transition by enabling the
world to meet the goals of the Paris Agreement in a human-centric way. The C-TIF has three core
value propositions:

1. A framework that benefits from broad stakeholder input. A validated initial set of selected
socioeconomic dimensions and corresponding metrics was developed with the engagement
of more than 60 organizations and 180 individuals—from intergovernmental organizations,
multilateral development banks, and academic institutions to philanthropies and the private
sector. These entities and individuals are aligned on the need for more robust quantitative
analysis to predict and plan for the net-zero transition’s socioeconomic impacts.

2. A flexible modeling approach. A meta-level modeling approach that aims to translate and
extend climate scenarios and related data into quantifiable projected socioeconomic impacts
and can be updated and adapted as models and data sets change.

3. A more comprehensive view across socioeconomic factors. This planning instrument

provides quantitative projections of the potential impacts across a broad set of
socioeconomic metrics, time horizons, and demographic groups. Stakeholders can use
this view to inform climate commitments and financing at the subnational, national, and
global levels.

A net-zero transition aligned with the Paris Agreement can deliver significant co-benefits,
although the burdens may not be evenly distributed across countries and people. The illustrative
results presented are based on the NGFS Net Zero 2050 and Current Policies scenarios,2 which
were developed using REMIND-MAgPIE, the Potsdam Institute for Climate Impact Research’s
integrated assessment model. The output from running such climate model scenarios through
the framework is a heat map of projected co-benefits and burdens across selected metrics.
Comparisons among the outcomes of different models and different climate action pathways
can then be used to inform decision making. Applying the framework in this way may support
decision makers in evaluating their in-country policy mixes, such as financing approaches,
measures to amplify potential opportunities, and compensating mechanisms to support
impacted communities; global financiers in prioritizing investment; and climate diplomats in
finding common ground on each country’s path to net zero.

Decision makers can put people at the heart of climate action by projecting the potential
socioeconomic impacts of climate action choices. This framework is a first step on the journey,
and it will continue to be refined with a broad set of stakeholders at the national and international
levels. Refinements to the framework and modeling updates are slated to be released regularly.
A significant amount of work has gone into transition planning and quantifying the challenge
ahead. Institutions have dedicated themselves to advancing this body of work; as climate
science, modeling, and data availability evolve, the ability to address these challenges with the
sophistication needed will improve.

The following chapters outline the C-TIF framework, planning-tool use cases, the modeling
approach, illustrative results, and future development.

2
“NGFS scenarios portal,” NGFS, accessed November 7, 2023.

2 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Web <2023>
Exhibit E1 Climate Action Assessment Report- Roundtable>
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Exhibit <1> of <8>

The Climate Transition Impact Framework could enable decision makers to

compare the potential socioeconomic impacts of various climate action pathways.

Affordable energy
access
Energy cost, security,
and access

Lived environment Investment

and health requirement
Day-to-day experience Financial resources
of environmental and required (and
health outcomes What are the reallocated) to support
C-TIF dimensions? the transition

Growth and Jobs impact

competitiveness
Livelihoods and
economic
competitiveness or
productivity
Changes in jobs and
how these changes are
distributed across the
population

The C-TIF could uniquely deliver these six features:

Quantitative analysis Forward-looking
How is and metrics Open-access
the C-TIF Social impacts data inputs
unique?
Regional, national,
Model flexibility
and local granularity

McKinsey & Company

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 3
 01 Introducing the Climate
Transition Impact Framework
The dimensions and metrics of the Climate Transition Impact Framework (C-TIF) seek to
represent socioeconomic outcomes that enable a broad understanding of the transition’s
impact on people (Exhibit 1). Its initial list of dimensions and metrics was compiled through a
review of more than 20 existing environmental, climate, policy, and socioeconomic indexes
and frameworks as well as academic thought leadership. This list was then refined through
consultation with numerous external stakeholders to ensure that it comprehensively represents
socioeconomic impacts. 3 The C-TIF covers 16 of the United Nations’ 17 Sustainable Development
Goals (SDGs), using the same or related metrics (Exhibit 2).

The dimensions and metrics

of the Climate Transition
Impact Framework seek to
represent socioeconomic
outcomes that enable a
broad understanding of the
transition’s impact on people.

3
More than 60 organizations and 180 individuals contributed to the creation of the C-TIF through concept testing interviews
and working-group sessions.

4 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Web <2023>
Exhibit 1 Climate Action Assessment Report- Roundtable>
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Exhibit <2> of <8>

The Climate Transition Impact Framework is a syndicated set of

socioeconomic dimensions and metrics.
Current subdimensions Under consideration for future development

Affordable energy access Jobs impact

Subdimension Metrics Subdimension Metrics

Energy cost ! Final electricity price Size of impact ! Jobs supported
! Final energy price ! Green jobs supported
! Energy spend ! Jobs at risks
Fossil-fuel subsidies Demographic ! Green jobs supported – youth
Carbon pricing impact ! Green jobs supported – women
Affordability Green jobs supported – low-skilled
Inclusivity
Energy security Energy imports workers
Hours with power Job quality Average annual wage of green jobs
Energy access ! Stable access to energy Social
Access to social protection system
protection
Clean fuel and tech for cooking
Skills readiness People requiring green-job reskilling
Regional Regional concentration of green jobs
Investment requirement
concentration Regional concentration of jobs at risk
Subdimension Metrics
Total annual ! Low-emission technology Lived environment and health
investment ! High-emission technology
Investment Public funding source Subdimension Metrics
source Private funding source Air quality ! PM2.51 emissions

Annual ! Investment as a % of GDP Food security ! Food prices

investment ! Change in annual average Crops and livestock price
change investment Prevalence of undernourishment
Biodiversity ! Forest area
Growth and competitiveness Marine acidity
Wildfire
Subdimension Metrics
Biodiversity intactness
Economic growth ! Purchasing-power parity (PPP)
Climate hazard ! Exposure to climate hazards
GDP per capita
GDP impact from climate damage
! PPP GDP per low-skilled worker
Mortality and Disability-adjusted life years
Population under empowerment
morbidity Infant mortality
line
Domestic supply Mortality rate from pollution
Indirect and direct gross value
chain for Healthcare expenditure
added (GVA)
transition sectors
Water access Access to water sources
Labor
productivity in GVA per worker Treatment of domestic and
transition sectors industrial wastewater
Agricultural Water stress
! Agricultural yield for cereal
productivity Adaptation Adaptation investment
Energy
! Energy intensity of GDP
productivity
1
Particulate matter.

McKinsey & Company

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 5
 Web <2023>
Exhibit 2 Climate Action Assessment Report- Roundtable>
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Exhibit <3> of <8>

The Climate Transition Impact Framework could support assessment of the

transition’s impact on 16 of the 17 UN Sustainable Development Goals.

Dimensions SDG goals supported

Affordable energy access Energy cost, security, and access 7 10 12

Financial resources required (and

Investment requirement 7 9 12 17
reallocated) to support the transition

Changes in jobs and how these changes

Jobs impact 1 4 5 8 10
are distributed across the population

Livelihoods and economic

Growth and competitiveness 2 7 8 9 12
competitiveness or productivity

Day-to-day experience of environmental

Lived environment and health 1 3 6 9 11 13 14 15
and health outcomes

Sustainable Development Goals

1.1 No poverty 6 Clean water

6. 10. Reduced inequalities
10 14. Life below water
14
and sanitation
2.
2 Zero hunger 11.
11 Sustainable cities and 15 Life on land
15.
7 Affordable and
7. communities
3.
3 Good health and 16 Peace, justice and
16.
clean energy
well-being 12
12. Responsible strong institutions
8.
8 Decent work and consumption and
4 Quality education
4. economic growth production 17 Partnerships for the
17.
goals
5 Gender equality
5.
9 Industry, innovation
9. 13. Climate action
13
and infrastructure

McKinsey & Company

6 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
The C-TIF seeks to provide an initial quantitative projection of the socioeconomic impacts
for a given climate pathway across five dimensions: affordable energy access, investment
requirement, jobs impact, growth and competitiveness, and lived environment and health.
Together, these dimensions would provide a comprehensive analysis of the economic factors
and experiential aspects associated with a chosen pathway. Across the dimensions, more than
50 metrics have been developed to understand key potential co-benefits and burdens (see
appendix for full detail). 4 This list of metrics aims to provide granularity for nuanced decision
making and is not intended to be aggregated to score or rank countries or regions. Within each
dimension, individual metrics may have more or less relevance to each country or region.

— Affordable energy access. This dimension supports SDG 7 (“Ensure access to affordable,
reliable, sustainable, and modern energy for all”) and looks at subdimensions across energy
cost, security, and access. Given current macroeconomic instability and energy volatility, the
energy security subdimension is important.

— Investment requirement. Metrics in this dimension include total investment needed in

high- and low-emission technology relative to pathway timelines. The investment change
subdimension contextualizes the required investment against the change needed from
current spending and as a proportion of GDP. 5

— Jobs impact. As transition-exposed sectors (for example, agriculture, power, and mobility)
reconfigure in a low-carbon direction, the labor market will be significantly restructured.6 The
consideration of job impacts includes the number of jobs, their concentration and quality, and
the readiness of job seekers for employment, as well as the distribution of jobs across the
working population.

— Growth and competitiveness. This dimension explores the linkages between emission-
reduction scenarios and growth opportunities, a view that is particularly relevant to the
Global South. Metrics include GDP growth, labor, agriculture, and energy productivity.

— Lived environment and health. This dimension explores the analysis of the lived experience,
including air quality co-benefits, changes in forest coverage, and climate hazard exposure.

4
Co-benefit is defined as positive or beneficial impacts that are caused by climate action mitigation or adaptation (for example,
it does not include emissions reduction but does include health benefits and job creation that come from climate action based
on emission-reduction targets, among others). Burden is defined as negative impacts that are caused by climate action
mitigation or adaptation (for example, rising energy prices when fossil-fuel subsidies are removed). Burdens also include
instances in which additional action is potentially needed compared with today and in which this additional action may be
challenging to achieve or require the redirection of action from other areas. For example, increasing investment is categorized
as a burden, although it could lead to further co-benefits.
5
Higher increases in investment change values here do not necessarily mean that an economy cannot benefit from additional
investment—only that higher levels of investment are required.
6
Molly Broome et al., Net zero jobs: The impact of the transition to net zero on the UK labour market, Resolution Foundation,
June 2022.

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 7
 02 The C-TIF’s modeling
approach
The C-TIF’s modeling approach aims to translate and extend climate scenarios and related
data into projected socioeconomic impacts (Exhibit 3). The user must first select which
decarbonization pathways they wish to assess. These decarbonization pathways—and the
associated climate targets—are often based on integrated assessment models (IAMs). IAMs
are designed to optimize macroeconomic, energy, climate, and land-use systems to achieve a
specific degree of warming at a particular point in time. These models then minimize costs to
determine an “optimal” pathway. The C-TIF aims to translate these pathways into outputs that
consider the following factors:

— Breadth of socioeconomic impacts. Some impacts come from the IAM itself, while others
are derived from additional data. This breadth allows the comparison of a comprehensive set
of impacts across climate action options.

— Socioeconomic impacts over time. These factors could be helpful for decision makers
seeking to ensure equity over time. While decision makers may be interested in shorter time
horizons (three to five years), some impacts may take longer to emerge.

— Distributional outcomes. This factor is important because various demographic groups may
not be affected by climate action in the same way.

Web <2023>
Exhibit 3 Climate Action Assessment Report- Roundtable>
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Exhibit <4> of <8>

The socioeconomic modeling underpinning the Climate Transition Impact

Framework has five key steps.

1 2 3 4 5

Prioritize key Select climate Enhance Transform outputs Analyze metrics

socioeconomic models or analysis to metrics to make
metrics scenarios decisions

Steps Prioritize Choose climate Compile and use Derive socioeconomic Analyze results
socioeconomic scenarios from additional data and metrics from different to inform climate
metrics that are integrated models if needed emissions scenarios action
most relevant to assessment models
country or
region

Example The illustrative The NGFS scenarios The analysis makes use of Outputs were transformed Co-benefits and
approach results show all were selected additional models and data to derive C-TIF results for burdens were
currently from reputable sources the five key dimensions analyzed across
modeled metrics countries and
regions
McKinsey & Company

8 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
The C-TIF is being designed with the following principles to maximize its value in forward-looking
transition planning:

— Flexible input. Input requirements are flexible to enable the analysis of IAMs and climate
scenarios at both the global level—for example, the United Nations’ Inevitable Policy
Response (IPR) and the NGFS climate scenarios—and the local and national levels.

— Granular. Outputs can be developed at the regional, national, or subnational level, depending
on the use case and data availability.

— Horizon agnostic. Outputs can be based on different time horizons by selecting base and
target years for analysis (for instance, 2030, 2040, and 2050) to understand likely impacts
over time.

— Holistic. Impacts are not presented in isolation; they may be affected by other factors (such
as population growth). Examining holistic socioeconomic impacts allows decision makers to
consider society as a whole.

— Comparable across scenarios. Direct comparisons can be made between different

scenarios so that stakeholders can understand potential trade-offs. The framework can
also net out the role of other factors (for example, in comparing low-emissions scenarios and
business as usual), enabling decision makers to take nuanced action to meet climate targets.

— Normalized to be comparable across geographies. Each metric in the C-TIF has a

defined normalization approach to enable accurate comparisons among regions, nations, or
subnational areas.

The C-TIF is being designed to

maximize its value in forward-
looking transition planning.

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 9
 For an overview of the uncertainties associated with the framework, see sidebar “Limitations of
the C-TIF modeling approach.”

As a proof of concept, the C-TIF was applied to NGFS climate scenarios, supplemented with
additional data and models from McKinsey Global Institute, Vivid Economics, World Bank, and
the International Labour Organization to produce illustrative results (Exhibits 5 and 6). Please see
the appendix for additional detail.

Limitations of the C-TIF modeling approach

The modeling approach and illustrative results of the Climate Transition Impact
Framework (C-TIF) are based on the latest available data, current geopolitical context,
and external model assumptions, which are subject to change. As forecasts improve,
the C-TIF can continue to be used to compare the socieoeconomic impacts of different
climate scenarios because the approach is enduring. The C-TIF largely considers first-
order effects, and current uncertainties may lead to under- or overrepresentation of the
magnitude of impacts presented, particularly for indirect and higher-order effects.

Key limitations and uncertainties could include the following:

— Magnitude of direct and indirect socioeconomic impacts. The modeled

socioeconomic impacts may differ in magnitude from those that occur. For example, if
the transition is not planned and orderly, investment impacts could be underestimated.

— Economic and societal adjustments needed for the transition. Required

investments may not be of the same scale as predicted. For instance, the costs that
arise from delays to the transition or unforeseen critical adaptation measures may
exceed those predicted through the scenarios.

The C-TIF’s outputs do not provide all the information that decision makers will need.
In particular, the framework does not assess the validity of the scenarios referenced or
make recommendations. Instead, it takes the assumptions underpinning scenarios as
given and projects the socioeconomic impacts. The C-TIF does not consider the merits or
drawbacks of emission-reduction technologies and their implementation, decarbonization
incentives, assumptions regarding trade-flow reconfiguration, and quantification of higher-
order economic effects that result from the net-zero transition. Some metrics will have
high variability from one integrated assessment model and climate scenario to the next
depending on the underlying assumptions, which could result in significant variability of
the potential socioeconomic impacts (for example, large variation in energy prices between
different integrated assessment models).

10 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
03 A sample output: Comparing
the impact of NGFS scenarios
The NGFS scenarios were selected to illustrate how the C-TIF projects socioeconomic impacts.
To highlight how the C-TIF could be applied in principle and explore the range of outcomes a
country may experience, we selected one illustrative country from Europe (“Country A”) and
another from South Asia (“Country B”). Comparing the NGFS Net Zero 2050 and Current Policies
scenarios for these two countries highlights how the transition could affect these nations. (For
more information on the NGFS scenarios, see sidebar “Overview of the NGFS scenarios selected
for illustrative outputs.”)

The sample country-level results demonstrate the potential co-benefits and burdens to help
decision makers compare climate action pathways and amplify—or mitigate—potential impacts.
For example, relevant stakeholders in Country A could focus their attention on how to limit the
greater energy price increases seen under a net-zero scenario, while financiers in Country B
could use the C-TIF to prioritize funding flows to achieve a transition that delivers the outlined
co-benefits.

The C-TIF aims to give

stakeholders an understanding
of the burdens to mitigate and
the co-benefits to amplify while
meeting climate targets aligned
with the Paris Agreement.

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 11
 Web <2023>
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Exhibit 4 Climate Action Assessment Report- Roundtable>
Exhibit <5> of <8>

Climate Transition Impact Framework illustrative results of the NGFS Net

Zero 2050 and Current Policies scenarios for ‘Country A’ in Europe.
Impact: Burden Co-benefit ∆ = change from 2020 to 2050; “final” is a 2050 data point

Affordable energy access Jobs impact1

Energy prices may rise more under a Net Zero 2050 There is marginal difference between NZ and CP in
(NZ) scenario, though overall spend on energy as a % terms of jobs shifts, with both scenarios seeing similar
of GDP may decrease jobs at risk and supported
Net Net
Sub- Current Zero Sub- Current Zero
dimension Metrics Policies 2050 dimension Metrics Policies 2050
Energy cost ∆ final electricity price +1.9 –0.1 Size of Number of jobs supported2 3.0% 3.5%
Final electricity price 13.9 13.3 impact3 Number of green jobs
2.5% 3.5%
∆ final energy price +3.1 +5.5 supported
Final energy price 10.2 13.8 Number of jobs at risks 1.5% 1.5%
Percentage-point ∆ final Demo- % of green jobs
–1.0 –1.6 8.0% 7.5%
energy spend graphic supported filled by youth
impact4 % green jobs supported
Final energy spend 1.8% 1.5% 33.5% 32.5%
filled by women
Energy Time required to
access achieve 100% 0 0
electrification Growth and competitiveness
The NZ scenario has the potential to drive a greater
Investment requirement5 increase in economic productivity than the CP scenario
Country A may not see a significant shift in investment Net
required to transition because it has already invested Sub- Current Zero
considerably in these sectors dimension Metrics Policies 2050
Net Economic % ∆ purchasing-power-
Sub- Current Zero growth parity (PPP) GDP per +75% +80%
dimension Metrics Policies 2050 person6
Total annual Low- Avg. investment ∆ PPP GDP per person +31k +32k
3.0% 4.0%
investment emission as a % of GDP Agricultural % ∆ agricultural yield for
+13% +19%
tech- Avg. investment productivity cereal
nology 110 170
as $ bn Energy ∆ energy intensity of
–1.4 –1.5
Avg. investment productivity GDP
High- 1.0% 0.5%
emission as a % of GDP
tech- Avg. investment Lived environment and health
nology 40 20
as $ bn Country A could see larger health co-benefits and
Annual ∆ Avg. less climate hazards under NZ than CP
investment Low- investment as a +2.0% +3.5% Net
change emission % of GDP Sub- Current Zero
tech- ∆ Avg. dimension Metrics Policies 2050
nology investment vs 3.0x 4.0x ∆ PM2.57 emissions per
2020 Air quality –116k –134k
square meter
∆ Avg. Food
High- investment as a –1.5% –2.0% % ∆ food price index –2% +50%
security
emission % of GDP
tech- Biodiversity ∆ managed and
∆ Avg. 0 +2.3
nology unmanaged forest
investment vs 0.5x 0x
2020 Climate Percentage point ∆
hazard8 annual share of effective
Note: See appendix for metric units and explanations. outdoor working hours
Includes direct and indirect job impacts. Percents rounded to nearest 0.5%.
1
0.5–5 0–0.5
Includes green jobs (enabled by low-emissions technologies) and jobs enabled
2 affected by extreme heat
by high-emissions technologies. 3Includes potential direct job impacts on and humidity in
transition-related sectors (agriculture, buildings, industry, mobility, power, climate-exposed regions
hydrogen, forestry and other land uses) and indirect jobs affected as a result. In
this analysis, job impacts are modeled considering both the effects of the
transition and factors beyond the transition (eg, productivity growth
Percentage point ∆ share
independent of the transition). Hence, jobs supported and jobs at risk should of time spent in drought 0–3 0–3
not be netted against each other. 4Demographic and inclusivity impacts are over a decade
based on demographic characteristics of the current labor force from the ILO
and applied to the potential future job impacts by sector. 5Includes spending on physical assets for energy, material, and land-use systems to achieve net zero
and drive growth. Includes both low- and high-emissions assets. Percents rounded to nearest 0.5%, and totals rounded to nearest 10. 6Percents rounded to
nearest 5.0%. 7Particulate matter. 8Calculated assuming constant exposure. Constant exposure means that we do not factor in any increases in population or
assets or shifts in the spatial mix of population and assets. Calculated as a change from 2018.
Source: National Institute Global Econometric Model (NiGEM); Network for Greening the Financial System; REMIND-MAgPIE; International Energy Agency;
International Labour Organization; World Bank Group; Federal Reserve Economic Data; McKinsey & Vivid Economics Investment and Intervention Impact Model
(I3M); McKinsey Global Institute analysis

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12 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Web <2023>
Exhibit 5 Climate Action Assessment Report- Roundtable>
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Exhibit <6> of <8>

Climate Transition Impact Framework illustrative results of the NGFS Net

Zero 2050 and Current Policies scenarios for ‘Country B’ in South Asia.
Impact: Burden Co-benefit ∆ = change from 2020 to 2050; “final” is a 2050 data point

Affordable energy access Jobs impact1

Net Zero 2050 (NZ) could lead to a more pronounced The difference in job shifts between NZ and CP are
increase in final energy price than Current Policies (CP) minimal, with both scenarios facing the same jobs at
as subsidies are lifted and carbon prices are levied risk and slightly more jobs supported in NZ
Net Net
Sub- Current Zero Sub- Current Zero
dimension Metrics cover Policies 2050 dimension Metrics cover Policies 2050
Energy cost ∆ final electricity price +2.9 +1.5 Size of Number of jobs supported2 1.0% 1.0%
Final electricity price 9.4 8.7 impact3 Number of green jobs
0.5% 1.0%
∆ final energy price +2.7 +6.3 supported
Final energy price 6.8 10.7 Number of jobs at risks 2.5% 2.5%
Percentage-point ∆ final Demo- % of green jobs
+2.6 +2.8 13.5% 12.0%
energy spend graphic supported filled by youth
impact4 % green jobs supported
Final energy spend 4.9% 5.6% 15.0% 15.5%
filled by women
Energy Time required to
access achieve 100% 25 10
electrification Growth and competitiveness
NZ drives greater economic growth and productivity
Investment requirement5 than CP, because of climate hazard avoidance and
more efficient energy use
Country B may face a significantly higher low-
emissions investment need under an NZ scenario Net
Sub- Current Zero
Net dimension Metrics cover Policies 2050
Sub- Current Zero
dimension Metrics cover Policies 2050 Economic % ∆ purchasing-power-
growth parity (PPP) GDP per +80% +90%
Total annual Low- Avg. investment person6
4.0% 8.0%
investment emission as a % of GDP
tech- ∆ PPP GDP per person +3k +4k
Avg. investment
nology 20 40 Agricultural % ∆ agricultural yield for
as $ bn +14% +64%
productivity cereal
High- Avg. investment
6.0% 4.0% Energy ∆ energy intensity of
emission as a % of GDP +5.3 –1.0
tech- productivity GDP
Avg. investment
nology 30 20
as $ bn
Lived environment and health
Annual ∆ Avg.
investment Low- investment as a +8.5% +20.0% A major co-benefit of the transition may be that fewer
change emission % of GDP people are exposed to climate hazards in NZ than CP
tech- ∆ Avg. Net
nology investment vs 3.5x 7.0x Sub- Current Zero
2020 dimension Metrics cover Policies 2050
∆ Avg. ∆ PM2.57 emissions per
investment as a +7.0% –1.0% Air quality –293k –299k
High- square meter
emission % of GDP Food
tech- ∆ Avg. % ∆ food price index –10 +57
security
nology investment vs 2.0x 1.0x
2020 Biodiversity ∆ managed and
–0.2 –0.0
unmanaged forest
Note: See appendix for metric units and explanations. Climate Percentage point ∆
1
Includes direct and indirect job impacts. Percents rounded to nearest 0.5%. hazard8 annual share of effective
2
Includes green jobs (enabled by low-emissions technologies) and jobs enabled
by high-emissions technologies. 3Includes potential direct job impacts on outdoor working hours
> 10 0.5–5
transition-related sectors (agriculture, buildings, industry, mobility, power, affected by extreme heat
hydrogen, forestry and other land uses) and indirect jobs affected as a result. In and humidity in
this analysis, job impacts are modeled considering both the effects of the
transition and factors beyond the transition (eg, productivity growth climate-exposed regions
independent of the transition). Hence, jobs supported and jobs at risk should Percentage point ∆ share
not be netted against each other. Demographic and inclusivity impacts are
4

based on demographic characteristics of the current labor force from the ILO of time spent in drought <0 <0
and applied to the potential future job impacts by sector. 5Includes spending on over a decade
physical assets for energy, material, and land-use systems to achieve net zero
and drive growth. Includes both low- and high-emissions assets. Percents rounded to nearest 0.5%, and totals rounded to nearest 10. 6Percents rounded to
nearest 5.0%. 7Particulate matter. 8Calculated assuming constant exposure. Constant exposure means that we do not factor in any increases in population or
assets or shifts in the spatial mix of population and assets. Calculated as a change from 2018.
Source: National Institute Global Econometric Model (NiGEM); Network for Greening the Financial System; REMIND-MAgPIE; International Energy Agency;
International Labour Organization; World Bank Group; Federal Reserve Economic Data; McKinsey & Vivid Economics Investment and Intervention Impact Model
(I3M); McKinsey Global Institute analysis

McKinsey & Company

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 13
 Overview of the NGFS scenarios selected for illustrative outputs
The NGFS climate scenarios,
developed using the REMIND MAgPIE
integrated assessment model (IAM),1
were selected to illustrate how the
C-TIF shows projected socioeconomic
impacts at a country level. They are
available on an open-source basis,
cover all major energy and land-
use systems, are included in the
Intergovernmental Panel on Climate
Change’s Sixth assessment report,2
and are widely used in the financial
sector. The specific scenarios selected
are Net Zero 2050 (NZ), which is
taken as the transition scenario, and
Current Policies (CP), which is the
counterfactual scenario in which no
additional action is taken to current
trajectories.
The NGFS Net Zero 2050 scenario
optimizes for global net-zero CO₂
emissions by 2050, thus limiting global
warming to around 1.5°C in line with the
goals of the Paris Agreement. This end
state is achieved through implicit policy
assumptions such as enforced carbon
prices. The Current Policies scenario
models future emissions based on
a continuation of current mitigation
policies, 3 resulting in around 3.2°C of
warming by the end of the century.
Illustrative results are based on
agriculture yield, energy price, energy
consumption, emissions, food price,
forest cover, and GDP variables from
these NGFS scenarios. Other modeling
approaches and scenarios would result
in different values for these variables
and show different socioeconomic
impacts.
— GDP. In REMIND-MAgPIE, GDP
Outlined below are some key
assumptions used in the NGFS
scenarios. 4
— Carbon price. The underlying
model for both the Current Policies
and Net Zero 2050 scenarios uses
an implicit carbon price. Under
NZ, the carbon price increases
across regions up to approximately
200 times greater than in the CP
scenario (for example, to $200 to
$800 in 2050 from $0 to $30 in
2020, depending on region).
— Energy mix. Under Net Zero
2050, the proportion of fossil fuels
in the energy mix decreases to
achieve an “optimal” net zero, with
renewables making up the majority.
This optimization is influenced
by factors such as carbon price,
technology cost, and resource
depletion. Photovoltaic solar and
onshore wind account for the
largest proportion of renewables,
because they are the most cost-
efficient options. Under the CP
scenario, fossil fuels would remain
the largest energy source in the
mix.
is a semi-endogenous variable;
calibration is performed using
external International Monetary
Fund (IMF) projections and
productivity data associated with
Shared Socioeconomic Pathway
2 (SSP2) GDP trajectories, upon
which endogenous adjustments
are made. These adjustments do
not account for climate risks. Since
climate risks will be important
to consider, GDP was adjusted
by the National Institute Global
Econometric Model (NiGEM) 5
REMIND-MAgPIE growth rates
in C-TIF illustrative results. These
growth rates account for climate
impacts such as transition risk and
economic stimulation due to carbon
tax revenue reinvestment.

1
REMIND-MAgPIE combines the Regional Model of Investment and Development (REMIND), which covers energy and economy issues, with the Model of
Agricultural Production and its Impact on the Environment (MAgPIE). For more information, see “The REMIND-MAgPIE model and scenarios for transition risk
analysis,” Potsdam Institute for Climate Impact Research, November 2, 2020.
2
“Sixth assessment report,” IPCC, accessed November 7, 2023.
3
A stylized representation of current policies based on the Climate Policy Database and including all commitments made until March 2022.
4
For more detailed assumptions, see “Explore scenarios,” NGFS, accessed November 7, 2023; and “NGFS Scenarios Technical Documentation v3.1,” NGFS,
accessed November 7, 2023.
5
NiGEM is a global macroeconomic model that is designed to forecast the impact of economic events. It was developed, and is maintained, by the National Institute
of Economic and Social Research (NIESR).

14 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
04 The C-TIF applications
For many stakeholders, a fully developed C-TIF may provide strategic insights to drive
sustainable, inclusive growth, such as the evaluation of in-country climate pathways,
prioritization of investment by global financiers, understanding the socioeconomic impacts
of nationally determined contributions, and strategic planning for private-sector executives
(Exhibit 6).

Web <2023>
<MCK237224
Exhibit 6 Climate Action Assessment Report- Roundtable>
Exhibit <7> of <8>

As a tool, the Climate Transition Impact Framework could have many uses.

Optimizing net-zero policies Ensuring climate investments

to maximize co-benefits and consider socioeconomic impacts
minimize burdens

Enabling an inclusive transition Informing the global dialogue

at the community level in around the path to net zero
terms of jobs and skills

McKinsey & Company

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 15
 Key takeaways from COP28
roundtable discussion
At COP28, more than 40 climate leaders gathered to discuss the C-TIF. Participants from
intergovernmental organizations, multilateral development banks, academic institutions,
philanthropies, and the private sector pressure-tested the tool’s design and approach.
Participants included representatives from Absa, the Commonwealth Bank of Australia, Earthna,
the Energy Transitions Commission, IFC, Standard Chartered, the UN Conference on Trade
and Development (UNCTAD), the World Bank, and the World Business Council for Sustainable
Development (WBCSD). The key takeaways from the discussion were as follows:

There is a need for a common framework

“A framework like this is indispensable.”
Punki Modise, Absa

“We do a lot of [transition] work in frontier and emerging markets … and are always
asked ‘make the case for my people’ … having this data in a considered and rigorous
way will help make the case.”
Marisa Drew, Standard Chartered

— There was broad consensus from attendees that there is an information gap for
decision makers and that a common framework such as the C-TIF can close this
gap.

— Taking a predictive, forward-looking stance would complement existing tools and

initiatives and is needed to support climate action.

— Potential users of the C-TIF include decision makers at the international, national,
and subnational levels; financial institutions and others in the private sector; and
leaders in public development finance.

Collaboration is essential
“What is needed is a coalition from the Global North and South.”
Chantal Line Carpentier, UNCTAD

— The framework needs to be developed and established in a way that complements

and works in tandem with other climate initiatives.

— Data, transparency, and methodology are of utmost importance for public- and
private-sector decision makers when using frameworks to aid decision making.

16 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
 The framework provides a first, systematic look
at a broad set of projected metrics but should be
developed further over time with new metrics, models,
refined analytical approaches, and granularity
“[The framework should be] developed at the company level—the private sector will
have massive impact in the transition, and no company I know can do this alone. There
is a capacity-building need for the people who will be affected by job changes looking
across the entire value chain.”
Peter Bakker, WBCSD

— The C-TIF needs a stronger sectoral lens because sectors and geographies will
transition in different ways (see Exhibit A7 in the appendix for proposed additional
sectoral granularity).

— Within sectors, the framework should look across the value chain; in the
automotive sector, for example, impacts from switching to electric vehicles may be
felt more acutely by suppliers than by original equipment manufacturers.

— The C-TIF should extend to the subnational level, both to enable mayors,
governors, and other local decision makers to make use of the framework and to
analyze localized impacts such as employment shocks and displacement between
regions.

— Including both value chain and subnational perspectives could allow the framework
to inform decisions on reskilling and measure impacts such as internal migration,
helping decision makers direct support to the communities most affected.

Implementation would require a coalition and broad

adoption to avoid fragmented approaches
— The framework now needs to be road tested in various countries (including
subnationally).

— An implementation guide would allow the C-TIF to achieve maximum usage

globally.

The path forward

Still in the concept phase, the C-TIF is the first step on a multiyear journey to elevate the
socioeconomic impacts of the transition and provide information to guide the trade-offs
that decision makers must consider on the path to achieving the Paris Agreement. The way
forward would include continued refinement with input from a broad set of stakeholders, road
testing with institutions and governments, and the establishment of a multiparty coalition to
operationalize this concept to make it an asset for the global community. In addition, a C-TIF
technical report containing insights on the socioeconomic impacts from the latest climate
scenarios is slated to be released regularly.

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 17
 Appendix: C-TIF metrics

18 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Web <2023>
<Climate Action Assessment Report>
Exhibit A1
Appendix <1> of <9>
More than 50 metrics underpin the Climate Transition Impact Framework.
Base year = baseline or reference year at
beginning of period of interest (eg, 2020)
Target year = end year of impact period of
interest (eg, Net-Zero 2050, target year = 2050)
∆ = “change in”
Affordable energy access
Subdimension Metric
Energy cost ∆ final electricity price (cents per
kWh, target year minus base year)
Final electricity price (cents per kWh, Final electricity price (cost to deliver electricity
target year)
∆ final energy price (cents per kWh,
target year minus base year)
Final energy price (cents per kWh,
target year)
Percentage-point ∆ in final energy
spend (% of GDP, target year minus
base year)
Final energy spend (% of GDP,
target year)
∆ energy price without fossil fuel
subsidies (cents/kWh, target year
divided by base year): Oil, Gas, Coal
∆ carbon pricing ($/tCO2e,1 target
year minus base year)
∆ energy spend (as a % of
household income) for bottom
quartile of household (target year vs
base year)
Energy security % share of net imports to final
energy consumption (target year)
Average number of hours without
power (hours per year per
household, target year)
Energy access International Energy Agency (IEA)
time required to achieve 100%
electrification1 from base year (years)
∆ population with primary reliance
on clean3 fuel and technology for
cooking (% of population, target
year divided by base year)
Note: $ are 2010 dollars.
1Metric tons of carbon dioxide equivalent.
2
Defined as enough electricity to power four lightbulbs operating at five hours per day, one refrigerator, a fan operating six hours per day, a mobile phone
charger, and a television operating four hours per day, which equates to an annual electricity consumption of 1,250 kWh per household with standard appliances
and 420 kWh with efficient appliances.
3
“Clean” is defined by the emission rate targets and specific fuel recommendations (ie, against unprocessed coal and kerosene) included in the World Health
Organization’s indoor air quality guidelines for household fuel combustion.
McKinsey & Company
Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Demographic granularity Metric under revision
for future releases Under consideration for
Sectoral granularity future development
for future releases May be replaced by demographic
granularity in future releases
Description Unit
Average cost of final electricity (cost to deliver +/– cents
electricity to end user, incl transformation cost, per kWh
transmission and distribution, taxes, and
subsidies) in target year vs base year
Cents per
to end user, incl transformation cost, kWh
transmission and distribution, taxes, and
subsidies) in target year
Weighted average cost of final energy across +/– cents
all available sources of energy (eg, coal, solar, per kWh
wind, etc) in target vs base year
Weighted average cost of final energy across Cents per
all available sources of energy (eg, coal, solar, kWh
wind, etc) in target year
Total change in spend on energy as a % of +/–
GDP in target year compared with base year percentage
points
Final energy spend in target year as a % of %
GDP
Change in cost of energy, excluding fossil-fuel +/– cents
subsidies, across all sources of energy in target per kWh
vs base year
Change in carbon pricing per tCO2e1 in base +/–
year vs target year $/tCO2e1
Energy spend as a percentage of household Percentage
income for households at the bottom 25% points
based on household income distribution (target
year vs base year)
Energy imported in target year to meet %
domestic energy demand in target year as a %
of final domestic consumption
Average number of hours each month a Hours per
household is without power year per
household
Time in years for 100% of the population to Years
have stable access to a minimum electricity
level2 (as defined by the IEA)
Proportion of people using clean fuel and +/– %
technology for cooking, heating, and lighting
compared with total population in target vs
base year
19
 Web <2023>
Exhibit A2 Assessment Report>
<Climate Action
Appendix <2> of <9>
More than 50 metrics underpin the Climate Transition Impact Framework.
Base year = baseline or reference year at
beginning of period of interest (eg, 2020)
Target year = end year of impact period of
interest (eg, Net-Zero 2050, target year = 2050)
∆ = “change in”
Investment required
Subdimension Metric
Total annual Average investment (% of GDP,
investment base year to target year)
in the following:
low-emission technology1
high-emission technology
Average investment ($ billion,
base year to target year)
in the following:
low-emission technology1
high-emission technology
Investment % average investment from public
source funding sources:
low-emission technology1
high-emission technology
% average investment from
private funding sources:
low-emission technology1
high-emission technology
Annual ∆ average investment (% of GDP,
investment average [base year to target year]
change minus base year) in the following:
low-emission technology1
high-emission technology
∆ average investment (% of GDP,
average [base year to target year]
divided by base year) in the
following:
low-emission technology1
high-emission technology
Note: $ are 2010 dollars.
1As defined by McKinsey Global Institute, “low-emission technology” includes: blue-hydrogen production, basic oxygen furnaces, and fossil-fuel kilns, all with
carbon capture and storage (CCS); green-hydrogen production using electricity or biomass; biofuel production; generation, transmission, distribution, and storage
of wind, solar, hydro, biomass, and gas with CCS and nuclear power; heat production biomass; steel furnaces using electric arc furnaces (EAFs) and direct reduced
iron (DRI) with hydrogen; cement kilns with biomass; low-emission vehicles and supporting infrastructure; building heating equipment run on electricity or biomass,
such as heat pumps; district heating connections; clean cooking technology; building insulation; greenhouse gas–efficient farming practices, food crops, poultry,
and egg production; and land restoration.
McKinsey & Company
20 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Demographic granularity Metric under revision
for future releases Under consideration for
Sectoral granularity future development
for future releases May be replaced by demographic
granularity in future releases
Description Unit
Average investment required from base to %
target year to build capacity, switching from
existing assets or spend (incl continued
investment), split by low- and high-emission
technology
Average investment required from base to $ billion
target year to build capacity, switching from
existing assets or spend (incl continued
investment), split by low- and high-emission
technology
Percent of average total investment required %
from public funding sources from base to
target year to build capacity, switching from
existing assets or spend (incl continued
investment), split by low- and high-emission
technology
Percent of average total investment required %
from private funding sources from base to
target year to build capacity, switching from
existing assets or spend (incl continued
investment), split by low- and high-emission
technology
Annual average total investment in the period +/– %
from base to target year vs base year (incl new,
switch, and continued investment) as a
proportion of base year’s GDP, split by low-
and high-emission technology
Annual average total investment (incl new, Multiple of
switch, and continued investment) in period base year
from base to target year vs base year spend
Web <2023>
<Climate Action Assessment Report>
Exhibit A3
Appendix <3> of <9>

More than 50 metrics underpin the Climate Transition Impact Framework.

Base year = baseline or reference year at Demographic granularity Metric under revision
beginning of period of interest (eg, 2020) for future releases Under consideration for
Target year = end year of impact period of Sectoral granularity future development
interest (eg, Net-Zero 2050, target year = 2050) for future releases May be replaced by demographic
granularity in future releases

Jobs impact
Subdimension Metric
Size of impact Number of jobs supported (% of
population, target year minus base
year)
Number of green jobs supported
(% of population, target year
minus base year)
Number of jobs at risk (% of
population, target year minus base
year)
Demographic % of green jobs supported filled
impact by youth1 in target year
% of green jobs supported filled
by women in target year
Inclusivity % of green jobs supported filled
by low-skilled workers2 in target
year
Job quality Average annual wage of green
jobs supported as a % of GDP
Social Proportion of population that have Share of population with access to a social
protection social-protection floors or systems protection system (eg, child and maternity
available
Skills Average number of people
readiness requiring green-job reskilling
([base year to target year]
minus base year)
Regional Share of regions with a
concentration concentration of green net jobs1
supported above a threshold
(10%) in target year
Share of regions with a
concentration of net jobs at risk
above a threshold (10%) in target
year
Description Unit
Difference between jobs supported in target %
year and base year from the net-zero transition
(based on total investment) as a % of
population
Difference between jobs supported in target %
year and base year from the net-zero transition
(based on the investment in green
technologies) as a % of population
Difference in jobs lost in target year and base %
year from the net-zero transition (eg, in heavy-
emitting industries) as a % of population
Green jobs supported in target year by the %
transition, filled by workers aged 15–29 years,
compared to population in target year
Green jobs supported in target year by the %
transition, filled by women, compared to
population in target year
Green jobs supported in target year by %
transition filled by low-skilled workers2
compared to population in target year
Median wage of green jobs supported as a %
proportion of GDP
%
benefits, support for persons without jobs, etc)
Annual average number of people requiring Multiple of
training or education to fill supported green base year
jobs from the base year to the target year vs figure
base year
Proportion of regions where green jobs %
supported significantly outweigh jobs at risk
(eg, net jobs supported > 10%)
Proportion of regions where jobs at risk %
significantly outweigh green jobs supported
(eg, net jobs risk > 10%)

Note: Green jobs are direct and indirect jobs supported from investment in low-emissions technologies.
1“Youth”
is defined as people aged 15 to 29, as defined by the International Labour Organization.
Low-skilled workers are those whose work mainly involves “simple and routine tasks which require the use of hand-held tools and often some physical effort,” as
2

defined by the International Labour Organization.

McKinsey & Company

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 21
 Web <2023>
Exhibit A4 Assessment Report>
<Climate Action
Appendix <4> of <9>

More than 50 metrics underpin the Climate Transition Impact Framework.

Base year = baseline or reference year at Demographic granularity Metric under revision
beginning of period of interest (eg, 2020) for future releases Under consideration for
Target year = end year of impact period of Sectoral granularity future development
interest (eg, Net-Zero 2050, target year = 2050) for future releases May be replaced by demographic
∆ = “change in” granularity in future releases

Growth and competitiveness

Subdimension Metric Description Unit
Economic % ∆ purchasing-power parity % change in economic production (PPP GDP) +/– %
growth (PPP) GDP per person ($, target per person in target year vs base year
year divided by base year)
∆ PPP GDP per person ($, target $ value difference in economic production +/– $ GDP
year minus base year) (PPP GDP) per person in target year vs base per person
year
∆ PPP GDP per low-skilled $ value difference in economic production +/– $ GDP
worker1 ($, target year minus base (PPP GDP) per low-skilled worker1 in target per person
year) year vs base year
% ∆ of population living under the % change in population with purchasing +/– %
empowerment line (target year power under the empowerment line who
minus base year) cannot meet their essential needs and realize
more of their potential (target vs base year)
Domestic Ratio of indirect and direct gross Ratio of supply chain to direct GVA in the +/– $
supply chain for value added (GVA) supported region in target year vs base year as a measure
transition (target year) to capture the economic benefits within the
sectors region
Labor GVA per worker ($, target year) Productivity per worker measured by average $ per worker
productivity in GVA contribution over total jobs in target year
transition % change in GVA per worker ($, Difference in productivity per worker as +/– %
sectors target year divided by base year) measured by average GVA contribution over
total jobs in target year vs base year
Agricultural % ∆ agricultural yield for cereal % change in total cereal yield in tDM per ha +/– %
productivity (metric tons of dry matter per per year between target year and base year
hectare [tDM per ha], target year
divided by base year)
Energy ∆ energy intensity of GDP Change in energy consumption required to +/– MJ per $
productivity (megajoules [MJ] per $MER, produce $1 GDP in target year vs base year
target year minus base year)

Note: $ are 2010 dollars.

1
Low-skilled workers are those whose work mainly involves “simple and routine tasks which require the use of hand-held tools and often some physical effort,” as
defined by the International Labour Organization.

McKinsey & Company

22 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Web <2023>
Exhibit A5 Assessment Report>
<Climate Action
Appendix <5> of <9>
More than 50 metrics underpin the Climate Transition Impact Framework.
Base year = baseline or reference year at
beginning of period of interest (eg, 2020)
Target year = end year of impact period of
interest (eg, Net-Zero 2050, target year = 2050)
∆ = “change in”
Lived environment and health
Subdimension Metric
Air quality ∆ PM2.51 emissions per square
meter (metric tons of black carbon
emissions per annum [tBCpa] per
square meter, target year minus
base year)
∆ PM2.51 emissions in urban
centers (metric tons per annum
[tpa] per million people, target
year minus base year)
∆ PM2.51 emissions in rural areas
(tpa per million people, target year
minus base year)
Food security % ∆ food price index (2050
divided by 2020)
% ∆ nonenergy crops and
livestock price ($ per metric ton of
dry matter, target year divided by
base year)
Prevalence of undernourishment
(% of population, target year
minus base year)
Biodiversity ∆ managed and unmanaged forest
(million hectares [ha], target year
minus base year)
% ∆ average marine acidity (pH,
target year divided by base year)
% ∆ average area of wildfires (ha,
target year divided by base year)
∆ Biodiversity Intactness Index2
(%, target year minus base year)
Climate hazard Percentage point ∆ annual share of
effective outdoor working hours
affected by extreme heat and hu-
midity in climate-exposed regions
Percentage point ∆ share of time
spent in drought over a decade
∆ GDP due to climate damage ($,
target year minus base year)
Note: $ are 2010 dollars.
1
Particulate matter.
2
The Biodiversity Intactness Index was developed by the National History Museum, London, and is defined as an estimated percentage of the original number of
species and their abundance that remains in any given area, despite human impacts.
McKinsey & Company
Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Demographic granularity Metric under revision
for future releases Under consideration for
Sectoral granularity future development
for future releases May be replaced by demographic
granularity in future releases
Description Unit
Difference in tBCpa per square meter of land +/– tBCpa per
between target year vs base year square meter
Difference in PM2.5 1 emissions (all contributing +/– tpa of
gasses and particulate matter) in cities or PM2.51 per
urban centers between target year vs base million people
year
Difference in PM2.5 1 emissions (all contributing +/– tpa of
gasses and particulate matter) in rural areas PM2.51 per
between target year vs base year million people
Difference in food price index of all nonenergy +/– %
crops and livestock between target year vs
base year
Change in weighted average cost of food +/– %
across all crops and livestock (eg, corn,
soybean, wheat, etc) in target year vs base year
Proportion of population experiencing +/– %
undernourishment based on food availability,
food consumption, and energy needs
Change in million ha of natural forest, managed Million ha
forest, and afforestation and reforestation area
in target year vs base year
Change in ocean acidity levels based on +/– %
change in pH between target year vs base year
Change in the average area burned by wildfires +/– %
between target year vs. base year
Change in the Biodiversity Intactness Index +/– %
between target year vs base year
Change in annual share of effective outdoor +/– percentage
working hours affected by extreme heat and point
humidity in climate-exposed regions based on
the average percentage of a given 12-hour work-
day lost in regions exposed to these hazards
Change in share of time spent in drought based +/– percentage
on land-weighted percentage of time spent in point
drought conditions
GDP impact from chronic climate damage (eg, +/– $
excludes acute hazards) in target vs base year
23
 Web <2023>
Exhibit A6 Assessment Report>
<Climate Action
Appendix <6> of <9>

More than 50 metrics underpin the Climate Transition Impact Framework.

Base year = baseline or reference year at Demographic granularity Metric under revision
beginning of period of interest (eg, 2020) for future releases Under consideration for
Target year = end year of impact period of Sectoral granularity future development
interest (eg, Net-Zero 2050, target year = 2050) for future releases May be replaced by demographic
∆ = “change in” granularity in future releases

Lived environment and health

Subdimension Metric
Mortality and ∆ disability-adjusted life years
morbidity (DALYs1) (target year minus base
year)
% ∆ infant mortality (target year
divided by base year)
% ∆ from household pollution
(target year divided by base year)
mortality
Healthcare expenditure per capita
($, target year divided by base
year)
Water access % ∆ households with year-round
access2 to improved water
source3 (target year divided by
base year)
Proportion of domestic and
industrial wastewater flows safely
treated in target year divided by
base year
% ∆ level of water stress4 (%,
target year divided by base year)
Adaptation Average adaptation investment as
share of GDP (% of GDP)
Description Unit
Difference in DALYs 1 in target year vs base +/– DALYs
year
Difference in infant mortality defined as the +/– years per
number of deaths of children under 1 year of 1,000 live
age, expressed as 1,000 live births in target births
year vs base year
Difference in the mortality rate attributed to +/– years per
household and ambient air pollution (per 100,000
100,000 population) in target year divided by people
base year
Average amount of healthcare spend (both +/– $
privately and publicly funded healthcare) in
target year divided by base year
Difference in households with year round +/– %
access to improved water sources in target
year divided by base year
Proportion of domestic (including sewage and +/– %
sanitiation) and industrial wastewater flows
treated safely in target year divided by base
year
% ∆ level of water stress (amount of freshwater +/– %
withdrawal as a proportion of available
freshwater resources) between target year vs
base year
Proportion of adaptation investment as a share % GDP
of GDP over time period

Note: $ are 2010 dollars.

1Sum of all years of life lost because of premature mortality and the years lived with disability because of prevalent cases of a health condition in a population.
2
Access defined as either direct connection to the home or a public facility within 200 meters of the home.
3
“Improved water source” is defined as a source that is, by nature or by its construction, likely to be protected from external contamination (ie, piped water into
dwelling, yard, or plot ; public tap or standpipe; tubewell or borehole; protected dug well; protected spring; and rainwater collection).
4
“Level of water stress” is a UN Sustainable Development Goal indicator that tracks how much freshwater is being withdrawn by all economic activities, compared
to the total renewable freshwater resources available. When a territory withdraws 25 percent or more of its renewable freshwater resources, it is said to be
“water-stressed.”

McKinsey & Company

24 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Web <2023>
Exhibit A7 Assessment Report>
<Climate Action
Appendix <7> of <9>

Further granularity of metrics based on demographic and sector-level

categories can enhance the Climate Transition Impact Framework.

Demographic granularity categories Sectoral granularity categories

Categories Types Categories Types
Gender1 • Men (male) Sector • Agriculture
• Women (female) • Buildings
Population1 • Urban • Forest and other land use
• Rural • Hydrogen sector
• Industry
Age1 • Youth (aged 15–29) • Mobility
• Prime-age workers (aged 30–54) • Power sector
• Older workers (aged 55+)
Income1 • Low
• Lower-middle
• Upper-middle
• High
Property type • Residential
• Commercial
• Industry

1
As defined by the International Labour Organization.

McKinsey & Company

Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 25
 Appendix: Technical documentation
Below are diagrams that contain additional details on the modeling approach used to create the
C-TIF results displayed in this concept note.

26 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Web <2023>
Exhibit A8 Climate Action Assessment Report- Roundtable>
<MCK237224
Exhibit <8> of <9>

The socioeconomic modeling underpinning the Climate Transition Impact

Framework has five key steps.

1 2 3 4 5

Prioritize key Select climate Enhance Transform outputs Analyze metrics

socioeconomic models or analysis to metrics to make
metrics scenarios decisions
Prioritize Choose climate Compile additional data— Using key outputs from Benchmark the
socioeconomic scenarios from eg, on investment levels climate model and other gathered metrics
metrics that are integrated and job impacts— models, derive against those for
most relevant assessment associated with climate socioeconomic metrics, other countries
to country or models—eg, NGFS transition trajectories from which represent costs and or regions
region or the UN’s other models where benefits associated with Analyze results
Inevitable Policy useful1 different emissions to inform climate
Response—to set scenarios commitments
the optimal policy and financing at
mix to reach the subnational,
emissions targets national, and
Ideally also choose a global levels
business-as-usual
(high-emissions)
scenario for
comparison from a
climate model
Our A broad The climate The analysis was Outputs from different The relative
approach sweep of scenarios selected supplemented with: models and data from distribution of
socioeconomic were: McKinsey Global Institute external sources were co-benefits and
metrics ensure Network for (MGI) investment model3 transformed and burdens across
a balance Greening the integrated to derive countries or
between • Provides detailed crucial socioeconomic regions were
Financial System investment data at
comprehensive- (NGFS)2 metrics related to: examined under
ness and policy regional and global the two different
• Current Policies level • Affordable energy
relevance with access (8 metrics) scenarios
data reliability scenario Impacts of investments
(baseline) and other interventions • Investment required
• Net Zero 2050 model (I3M)4 (8 metrics)
scenario (net • Calculates job impacts • Jobs impact
zero by 2050) associated with (6 metrics)
transitions • Growth and
Climate hazard model5 competitiveness
(7 metrics)
• Calculates country-
level population • Lived environment and
exposure to climate health (5 metrics)
hazards under We applied a procedure to
particular scenarios classify values for metrics
Additional data from IEA, as a co-benefit or a
ILO, WBG, FRED6 burden of varying degrees

1
Optional; integrated assessment models (IAMs) may not provide all data that is needed to calculate socioeconomic metrics of interest.
2
Highly respected IAM backed by 116 central banks/supervisors and an academic consortium of 5 research institutions.
3
Used by > 10 leading global financial institutions, aiming to size financial opportunities linked to the climate transition.
4
Used by C40 Cities, FSD Africa, and 50+ other clients in 20+ countries.
5
Based on underlying science by academic and research institutions globally, including NASA and the Intergovernmental Panel on Climate Change.
6
International Energy Agency, International Labour Organization, World Bank Group, Federal Reserve Economic Data.

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Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 27
 Web <2023>
Exhibit A9 Assessment Report>
<Climate Action
Appendix <9> of <9>

Flow for Climate Transition Impact Framework modeling approach.

Proprietary input/output data or model Public input/output data or model

Input data 3 Additional models Outputs

2 Climate model data Affordable
Integrated assessment models energy access
(eg, NGFS or the UN’s Inevitable McKinsey Global Institute
investment model 4
Policy Response) Investment
C-TIF data requirement
Economic activity data transform-
Eora national accounts, I3M input-output model ation Jobs
capex/opex profiles
impact
Climate hazard model
3 Climate impact data Growth and
Modeled spatial climate competitiveness
and weather patterns
Lived
Public auxiliary data
environment
IEA, ILO, WBG, FRED1 and health

1
International Energy Agency, International Labour Organization, World Bank Group, Federal Reserve Economic Data.

McKinsey & Company

28 Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition
Climate Transition Impact Framework: Essential elements for an equitable and inclusive transition 29
Climate Transition Impact Framework:
Essential elements for an equitable and
inclusive transition by McKinsey
December 2023
Copyright © McKinsey & Company
www.McKinsey.com
@McKinsey
@McKinsey