Methodology

Technical Note

This technical note describes our methods for identifying key systems that must transform, identifying the most critical shifts within each system, translating these shifts into global targets, and selecting indicators with accompanying datasets that we use to monitor annual change. It outlines our approach for assessing the world’s collective progress made toward targets and categorizing recent efforts for outcome indicators as on track; off track; well off track; right direction, no target; headed in the wrong direction; or insufficient data. Finally, it details how we identify critical barriers to change and drivers that can support transformations, as well as limitations to our methodology.

This technical note covers the overall methods that we applied to all systems on the platform. The methods that are specific to each system can be found below.

Parts of this technical note are drawn from the State of Climate Action technical note, Methodology Underpinning the State of Climate Action Series: 2023 Update. While the Systems Change Lab platform focuses on systems change for limiting climate change, protecting biodiversity and improving equity, the State of Climate Action series is solely focused on a subset of the climate-related targets.

Read the 2024 technical note

Please refer to the update log to see what was updated in the 2024 technical note. The 2022 technical note can be accessed here.

System Background Information

Power

See the technical note linked at the top of this web page for an explanation of the methodology underpinning the Systems Change Lab platform. This section explains how the methodology was applied in the power system.

Selection of Shifts

For the power system, we chose four shifts:

Phase out coal and unabated fossil gas electricity generation
Rapidly scale up renewable electricity generation
Modernize grids, scale storage and manage demand
Ensure energy access and a just and equitable transition for all

Decarbonizing power generation is essential to limit global warming to 1.5˚C. These shifts were chosen to represent eliminating polluting generation sources from the system, meeting demand with zero-carbon sources, upgrading physical infrastructure to facilitate a zero-carbon system, and integrating equity and access concerns into the energy transition. Together, these actions can dramatically reduce the carbon intensity of electricity generation and ensure that no one is left behind in the transition.

These shifts conjointly provide a comprehensive picture of progress for the power system, as they represent the key changes needed to decarbonize power generation and supply.

Shifts 1–3 are primarily focused on reducing power system emissions to help limit global temperature rise to 1.5˚C, while shift 4 is primarily focused on improving equity. This system does not include any specific shifts focused on biodiversity, but as described in the following section, we did in some cases consider biodiversity as a safeguard for the other shifts (for instance, limiting biomass use as a method to reduce emissions).

Selection of Targets and Indicators

Decarbonizing power generation is essential to limit global warming to 1.5˚C. This requires transforming the sector from one that relies heavily on fossil fuels to produce electricity to another fundamentally different sector that generates zero-carbon power. Such a transition will entail both the immediate scale-up of zero-carbon power sources and the rapid phaseout of coal and unabated natural gas (IPCC 2022; IEA 2021). Together, these actions can dramatically reduce the carbon intensity of electricity generation.

To track progress made toward accelerating this sectoral transformation, we identified four key shifts laid out in major reports from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA), among others (IPCC 2018, 2022; IEA 2021). Indicators in shifts 1–3 measure climate outcomes as well as equity outcomes associated with their relevant shifts, and indicators in shift 4 measure equity outcomes in providing universal electricity access and managing a transition to zero-carbon electricity.

For each indicator, we adopted targets developed by Climate Action Tracker (CAT) (2023), which employed a combination of top-down and bottom-up methods to establish near- and long-term power generation targets. CAT (2023) first identified modelled pathways that limit global temperature rise to 1.5°C with no or limited overshoot from IPCC (2022) and then filtered them, following four pieces of criteria:

Scenarios were published in or after 2018;
Scenarios have good regional resolution;
Deployment of bioenergy with carbon capture and sequestration is restricted to an average of 5 gigatonnes of carbon dioxide per year (GtCO2/yr) from 2040 to 2060, and carbon removal from afforestation and reforestation is limited to an average of 3.6 GtCO2/yr from 2040 to 2060 and to an average of 4.4 GtCO2/yr from 2050 to 2100; and
Scenarios are consistent with achieving net-zero greenhouse gas (GHG) emissions in the second half of the century, as stated in Article 4.1 of the Paris Agreement.

The median value from these scenarios formed the less ambitious bound of the power sector targets’ ranges, though CAT (2023) made several key adjustments to this global median to better account for equity considerations and feasibility constraints that will likely impact many developing countries’ capacities to transform the power sector. These adjustments included assuming developed countries can reduce fossil fuels at the 75th percentile rate rather than the median rate, allowing developing countries to reduce coal at a slightly slower rate; limiting new fossil gas generation capacity and reallocating GHG savings to coal-fired power fleets; and increasing renewable energy generation to fill gaps in generation as a result of the previous adjustments.

CAT (2023) then combined this analysis of modelled pathways from integrated assessment models (IAMs) with a bottom-up review of global energy system modelling efforts, including assessments of the feasibility and cost of different technologies. It compared targets derived from this bottom-up review with those developed using the 1.5°C scenarios from IAMs (which served as a GHG emissions budget constraint). Using the adjusted median value from this filtered set of IAM scenarios as the less ambitious bound of the target range ensured compatibility with the 1.5°C global temperature rise limit, while deriving the more ambitious bound of the target range from the bottom-up review provided a feasibility constraint on the target.

Equity-related targets were established for three indicators — premature deaths from air pollution, population without access to electricity, and share of household income spent on electricity.

Not every indicator in the power system has an associated target. For climate-related indicators, this is because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation. Some equity- or just transition-related indicators do not have targets because there is no general agreement in the literature about quantitative targets. The equity and just transition indicators for the power system were chosen based on the principles outlined in the Systems Change Lab technical note. Lack of data is also a methodological challenge affecting many of the indicators on equity and just transition.

Works Cited

Bauer, N., C. Bertram, A. Schultes, D. Klein, G. Luderer, E. Kriegler, A. Popp, and O. Edenhofer. 2020. “Quantification of an Efficiency–Sovereignty Trade-off in Climate Policy.” Nature 588 (7837): 261–66. https://doi.org/10.1038/s41586-020-2982-5.

Bhatia, M., and N. Angelou. 2015. “Beyond Connections: Energy Access Redefined.” Working Paper. Washington, DC: World Bank. https://openknowledge.worldbank.org/handle/10986/24368.

CAT (Climate Action Tracker). 2023. Paris-aligned benchmarks for the power sector. Berlin, Germany: Climate Action Tracker. https://climateactiontracker.org/publications/paris-aligned-benchmarks-power-sector/.

Falk, J., O. Gaffney, A.K. Bhowmik, P. Bergmark, V. Galaz, N. Gaskell, S. Henningsson, et al. 2020. “Exponential Roadmap.” Stockholm: Future Earth. https://exponentialroadmap.org/exponential-roadmap/.

IEA (International Energy Agency). 2021. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050.

IRENA (International Renewable Energy Agency). 2021. World Energy Transitions Outlook - 1.5°C Pathway. Abu Dhabi: IRENA. https://www.irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook.

IPCC (Intergovernmental Panel on Climate Change). 2018. Global Warming of 1.5°C. An IPCC Special Report on the Impacts of Global Warming of 1.5°C above Pre-Industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change, Sustainable Development, and Efforts to Eradicate Poverty. Edited by V. Masson-Delmotte, P. Zhai, H.O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, et al. Geneva: IPCC. https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf.

IPCC. 2022. “IPCC Sixth Assessment Report: Mitigation of Climate Change.” Geneva: IPCC. https://www.ipcc.ch/report/ar6/wg3/.

United Nations. 2015. “The 17 Goals - Sustainable Development Goals.” United Nations. https://sdgs.un.org/goals.

Transport

Selection of Shifts

For the transport system, we chose five shifts:

Guarantee reliable access to safe and modern mobility
Reduce avoidable vehicle
and air travel
Shift to public, shared, and non-motorized transport
Transition to zero-carbon cars, trucks and buses
Transition to zero-carbon shipping and aviation

While technological solutions such as electric vehicles are capturing the most attention with announcements by major vehicle manufacturers and countries related to moving away from the internal combustion engine (see IEA 2021), achieving full decarbonization of the transport sector expediently and efficiently requires more than just a change in technology (BloombergNEF 2022).

We chose these shifts because they broadly follow the avoid-shift-improve framework in the transportation literature (Dalkmann and Brannigan 2014) while also accounting for equity and just transition concerns. Guaranteeing reliable access to safe and modern mobility (accessible, affordable, and zero-carbon travel) is a priority for equity. Reducing avoidable travel by vehicle and plane is a strategy to avoid travel. Shifting to public, shared, and non-motorized transport moves passengers from high-carbon internal combustion engine vehicles to more efficient, lower-carbon modes and helps address additional concerns such as traffic, air pollution, and safety. Transitioning to zero-carbon cars, trucks, shipping, and aviation improves the modes that we use to transport people and goods by lowering carbon emissions from the modes we use when we cannot shift to other modes.

Together these shifts provide a comprehensive picture of progress for the transport system because they tackle supply and demand across all major transport modes, including passenger transport and freight.

Shift 1 is focused on improving equity, while shifts 2–5 are primarily focused on reducing transport system emissions to help limit global temperature rise to 1.5°C. This system does not include any specific shifts focused on biodiversity, but as described in the following section, we did in some cases consider biodiversity as a safeguard for the other shifts (for example, limitations on biomass use as a method to reduce emissions).

Selection of Targets and Indicators

The targets and indicators used on this platform cover all three elements of the avoid-shift-improve framework (Bongardt et al. 2019). The “avoid” segment of this framework is also accounted for in the cities system because it entails urban planning and behavior changes that affect transportation infrastructure in cities.

Indicators and targets in this system minimize the use of primary biofuels because only a small amount of sustainable biomass is available for energy production in hard-to-abate sectors without jeopardizing the land and resources needed to feed a growing population (Searchinger et al. 2019).

Two of the climate-related transport system targets on this platform are derived from the Climate Action Tracker (CAT) consortium’s 2020 paper, Paris Agreement Sectoral Benchmarks: Methods Report (CAT 2020). These targets were compared with other targets in the literature from sources such as IEA 2021, IRENA 2021, and ICCT 2020. These targets were chosen because they represent the high-end of ambition within 1.5°C-compliant pathways. Using a similar approach to the power system analysis, the CAT team first considered integrated assessment models (IAMs that were able to limit warming to 1.5°C (“no overshoot” and “low overshoot” scenarios in which a brief and limited overshoot of average warming occurred). They refined their selection to include only those scenarios that assumed sustainable use of carbon removal and use of biomass. These pathways are defined on a least-cost pathway and do not consider equitable distribution of costs and required action. Finally, the CAT team also used a combination of its own bottom-up modeling (for example, for electric vehicles) and other independent literature to finalize the more disaggregated targets. Each sectoral target that was derived from such bottom-up analyses was still compared with 1.5°C-compatible IAMs to ensure that, if there were any discrepancy, it would be at least as ambitious as the IAM targets (and therefore 1.5°C-compatible).

Four targets were chosen from 1.5°C-compatible pathways in the literature, including the International Energy Agency’s Net Zero by 2050 report, Mission Possible Partnership’s Making Net-Zero Aviation Possible, and UMAS’s A Strategy for the Transition to Zero-Emission Shipping (IEA 2021; Mission Possible Partnership 2022; UMAS 2021). For the targets and indicators designed and selected by WRI, the sources and methodological approaches used are described in each indicator tooltip.

Not every indicator in the transport system has an associated target. For climate-related indicators, this is because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation. Currently, none of the equity- or just transition-related indicators have a target. This is because there is no general agreement in the literature about quantitative targets. The equity and just transition indicators for the transport system were chosen based on the principles outlined in the Systems Change Lab technical note found at the top of this web page. Lack of data is also a methodological challenge affecting many of the indicators on equity and just transition.

Works Cited

BloombergNEF. 2021. “Electric Vehicle Outlook 2021.” New York: BloombergNEF. https://about.bnef.com/electric-vehicle-outlook/.

BloombergNEF. 2022. “Electric Vehicle Outlook 2022.” New York: BloombergNEF. https://about.bnef.com/electric-vehicle-outlook/.

Bongardt, D., L. Stiller, A. Swart, and A. Wagner. 2019. “Sustainable Urban Transport: Avoid-Shift-Improve (A-S-I).” Bonn and Eschborn, Germany: TUMI. https://www.transformative-mobility.org/assets/publications/ASI_TUMI_SUTP_iNUA_No-9_April-2019.pdf.

CAT (Climate Action Tracker). 2020. “Paris Agreement Compatible Sectoral Benchmarks: Methods Report.” Berlin, Germany: CAT. https://climateactiontracker.org/documents/753/CAT_2020-07-10_ParisAgreementBenchmarks_FullReport.pdf.

Dalkmann, H., and C. Brannigan. 2014. “Transport and Climate Change. Module 5e: Sustainable Transport: A Sourcebook for Policy-Makers in Developing Cities.” Bonn, Germany: Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH. https://doi.org/10.13140/2.1.4286.8009.

ICCT (International Council on Clean Transportation). 2020. “Vision 2050: A Strategy to Decarbonize the Global Transport Sector by Mid-Century.” ICCT. 2020. https://theicct.org/publications/vision2050.

IEA. 2021. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050.

IRENA (International Renewable Energy Agency). 2021. “World Energy Transitions Outlook - 1.5°C Pathway.” Abu Dhabi: IRENA. https://www.irena.org/publications/2021/Jun/World-Energy-Transitions-Outlook.

ITDP (Institute for Transportation and Development Policy). 2021. “Rapid Transit Database.” ITDP. https://www.itdp.org/rapid-transit-database/.

Mission Possible Partnership. 2022. “Making Net-Zero Aviation Possible.” Mission Possible Partnership.

Montgomery County Planning. 2017. “Level of Traffic Stress Methodology.” Maryland: Montgomery Planning. https://montgomeryplanning.org/wp-content/uploads/2017/11/Appendix-D.pdf.

Moran, D., K. Kanemoto, M. Jiborn, R. Wood, J. Többen, and K.C. Seto. 2018. “Carbon Footprints of 13 000 Cities.” Environmental Research Letters 13 (6): 064041.

Moser, D. and A. Wagner. 2021. “Here Is Why Cities around the World Should Build 2 Km High Quality, Segregated Cycling Lane per 1000 Inhabitants.” Bonn: TUMI. https://www.transformative-mobility.org/assets/publications/TUMI_Strategy-Outlook_2km-bike-lanes-per-1000-inhabitants.pdf.

Mueller, N. D. Rojas-Rueda, M.Salmon, D.Martinez, A. Ambros, C. Brand, A. de Nazelle, et al. 2018. “Health Impact Assessment of Cycling Network Expansions in European Cities.” Preventive Medicine 109 (April): 62–70. doi:10.1016/j.ypmed.2017.12.011.

Searchinger, T., R. Waite, C. Hanson, and J. Ranganathan. 2019. “World Resources Report: Creating a Sustainable Food Future.” Washington, DC: World Resources Institute (WRI). https://research.wri.org/sites/default/files/2019-07/WRR_Food_Full_Report_0.pdf.

Teske, S., S. Niklas, and R. Langdon. 2021. “TUMI Transport Outlook 1.5°C - A Global Scenario to Decarbonize Transport.” Bonn: TUMI. https://outlook.transformative-mobility.org/.

UMAS. 2021. “A Strategy for the Transition to Zero-Emission Shipping.” London: UMAS. https://www.u-mas.co.uk/wp-content/uploads/2021/10/Transition-Strategy-Report.pdf.

United Nations. 2015. “The 17 Goals - Sustainable Development Goals.” United Nations. https://sdgs.un.org/goals.

United Nations. 2019. World Urbanization Prospects: The 2018 Revision.

United Nations General Assembly. 2020. Improving global road safety. Resolution adopted by the General Assembly on 31 August 2020. A/RES/74/299.

Finance

Selection of Shifts

For the finance system, we chose five shifts:

Scale up public investment for climate and nature
Scale up private investment for climate and nature
Scale down investment harmful to climate and nature
Extend economic and financial services to underserved and marginalized groups
Ensure that the financial system accounts for climate- and nature-related risks

These shifts were chosen to track the investments and financial incentives needed to achieve the system transformations necessary to limit global temperatures to 1.5 degrees C (2.7 degrees F) while protecting biodiversity and improving equity. Finance is a key means of enabling climate action, with investment and aligned financial incentives playing a critical role in enabling change across all other systems. To reach net-zero greenhouse gas (GHG) emissions, halt biodiversity loss and ensure an equitable and just transition across all systems, sufficient finance from both public and private sources must be made available, and investments in emissions-intensive practices and technologies must be disincentivized through the removal of harmful subsidies and financing. The shifts reflect the different types of public and private financing and the various roles they can play, from corporate finance to international climate finance dedicated to adaptation.

Together, these shifts provide a comprehensive picture of progress for the Finance system as they look at the different stages and players necessary to align financial flows with climate, nature and equity goals.

Transforming the global financial system to support ambitious climate, nature and equity goals entails scaling up climate and nature investments, both public and private; ending harmful subsidies and investments; expanding financial inclusion; and accounting for climate- and nature-related risks.

The shifts start by looking at the two sources of investments and financing — the public and private sectors — by analyzing their unique drivers and their interdependent links that can scale up the investments needed to meet climate and nature targets. The next shift looks at the removal of market distortions and investments dedicated to environmentally harmful activities such as fossil fuel investments that support continued emissions and nature degradation. The final shifts cover public policies that can better shape markets, ranging from financial inclusion policies that provide greater access to financial services to underserved groups, and the accounting for climate- and nature-related risks that makes it possible to correctly assess and price those risks into the economic system.

Shifts 1, 2, 3, and 5 are primarily focused on limiting global temperature rise to 1.5 degrees C and protecting biodiversity, but they also incorporate equity considerations. These include the tracking of finance flows destined for low-income countries and the elimination of harmful financing which can reduce the inequities stemming from disproportionate impacts of climate change and nature degradation that will impact vulnerable and marginalized communities the most. Shift 4 is primarily focused on improving equity across underserved communities so that they can have greater access to financial services and resources, thereby helping them become more resilient to climate shocks and natural degradation that affect their livelihoods.

Selection of Targets and Indicators

In the finance system, we examine five shifts, each with respective indicators with 2030, 2035 or 2050 targets for insight into how finance can unlock greater action on climate, nature and equity. We used a variety of methodological approaches to design the outcomes for each indicator. Justification for the selected targets for outcome indicators can be found on the data platform by clicking an indicator’s tooltip icon. Some indicators do not have an associated target because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation.

Some indicators are shown in more than one shift, especially in shifts 1 and 2, as the targets identified in the literature involve all sources (public and private), and a breakdown of the target is either not available or cannot be reliably calculated. In these instances, indicators show the total amount to match the target while providing a breakdown of the amount by source when data is available. It is important to note that methodologies and efforts to account for climate and nature finance flows are still in development. Due to fragmented reporting and limited data availability from both public and private sources, it remains difficult to make exact projections in these areas (Buchner et al. 2021).

Works Cited

Bhattacharya, Amar, Homi Kharas, and John McArthur. 2023. “Keys to Climate Action: Chapter 1 | Overview: How Developing Countries Could Drive Global Success and Local Prosperity.” Working Paper. Brookings Institution. https://www.brookings.edu/wp-content/uploads/2023/02/Chapter-1.-Keys-to-Climate-Action-Overview.pdf.

Boehm, S., L. Jeffery, J. Hecke, C. Schumer, J. Jaeger, C. Fyson, K. Levin, A. Nilsson, S. Naimoli, E. Daly, J. Thwaites, K. Lebling, R. Waite, J. Collis, M. Sims, N. Singh, E. Grier, W. Lamb, S. Castellanos, A. Lee, M. Geffray, R. Santo, M. Balehegn, M. Petroni, and M. Masterson. 2023. State of Climate Action 2023. Berlin and Cologne, Germany, San Francisco, CA, and Washington, DC: Bezos Earth Fund, Climate Action Tracker, Climate Analytics, ClimateWorks Foundation, NewClimate Institute, the United Nations Climate Change High-Level Champions, and World Resources Institute. https://doi.org/10.46830/wrirpt.23.00010.

Buchner, Barbara, Baysa Naran, Pedro de Aragão Fernandes, Rajashree Padmanabhi, Paul Rosane, Matthew Solomon, Sean Stout, et al. 2021. “Global Landscape of Climate Finance 2021.” London: Climate Policy Initiative. https://www.climatepolicyinitiative.org/publication/global-landscape-of-climate-finance-2021/.

CBD. 2022. Kunming-Montreal Global Biodiversity Framework. https://www.cbd.int/doc/c/e6d3/cd1d/daf663719a03902a9b116c34/cop-15-l-25-en.pdf.

Climate Analytics and World Resources Institute. 2021. “Closing the Gap: The Impact of G20 Climate Commitments on Limiting Global Temperature Rise to 1.5°C.” Washington, D.C., and Berlin, Germany: Climate Analytics and World Resources Institute. https://www.wri.org/research/closing-the-gap-g20-climate-commitments-limiting-global-temperature-rise.

COP 26 Presidency. 2021. “Statement on International Public Support for the Clean Energy Transition.” 2021. https://ukcop26.org/statement-on-international-public-support-for-the-clean-energy-transition/.

Demirgüç-Kunt, A., L. Klapper, D. Singer, and S. Ansar. 2022. The Global Findex Database 2021: Financial Inclusion, Digital Payments, and Resilience in the Age of COVID-19. The World Bank. doi:10.1596/978-1-4648-1897-4.

Forbes. 2022. “The Global 2000.” https://www.forbes.com/lists/global2000/?sh=6b81aed65ac0.

G7. 2016. “G7 Ise-Shima Leaders’ Declaration.”G7 Ise-Shima Summit, May 26-27 2016. Ise-Shima. https://www.mofa.go.jp/files/000160266.pdf.

G20. 2009. “Leaders’ Statement: The Pittsburgh Summit.” G20 Pittsburgh Summit, September 24-25, 2009. Pittsburgh. https://www.oecd.org/g20/summits/pittsburgh/G20-Pittsburgh-Leaders-Declaration.pdf.

GFANZ (Glasgow Financial Alliance for Net Zero). 2021. “The Glasgow Financial Alliance for Net Zero: Our Progress and Plan towards a Net-Zero Global Economy.” Glasgow: The Glasgow Financial Alliance for Net Zero. https://www.gfanzero.com/progress-report/.

Global Canopy Programme. 2022. “Forest 500 - 2022 Annual Report.” https://forest500.org/sites/default/files/forest500_2022report_final.pdf.

IEA. 2021. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: International Energy Agency. https://www.iea.org/reports/net-zero-by-2050.

IEA. 2023. “World Energy Investment 2023.” IEA. https://www.iea.org/reports/world-energy-investment-2023/overview-and-key-findings.

IPCC. 2022. “IPCC Sixth Assessment Report: Mitigation of Climate Change.” Geneva: IPCC. https://www.ipcc.ch/report/ar6/wg3/.

Net Zero Asset Managers Initiative. 2021. “Net Zero Asset Managers Initiative - Progress Report.” https://www.netzeroassetmanagers.org/media/2021/12/NZAM-Progress-Report.pdf.

Sovereign Wealth Fund Institute. n.d. “Top 100 Largest Insurance Rankings by Total Assets.” https://www.swfinstitute.org/fund-rankings/insurance.

S&P Global Market Intelligence. 2021. “The World’s Top 100 Largest Banks 2020.” https://pages.marketintelligence.spglobal.com/SM-Global-Bank-Ranking-Content-request-Global.html.

TCFD (Task Force on Climate-related Financial Disclosures). 2017. “Recommendations of the Task Force on Climate-Related Financial Disclosures.” TCFD. https://www.fsb-tcfd.org/wp-content/ uploads/2017/06/FINAL-TCFD-Report-062817.pdf.

Thinking Ahead Institute. 2021. “The Asset Owner 100 – 2021.” https://www.thinkingaheadinstitute.org/research-papers/the-asset-owner-100-2021/.

Thinking Ahead Institute and Pensions & Investments. 2021. “The World’s Largest Asset Managers – 2021.” https://www.thinkingaheadinstitute.org/research-papers/the-worlds-largest-asset-managers-2021/.

TNFD (Taskforce on Nature-related Financial Disclosures). 2022. “TNFD Nature-Related Risk & Opportunity Management and Disclosure Framework.” https://framework.tnfd.global/.

UNCDF. n.d. “Financial Inclusion and the SDGs - UN Capital Development Fund (UNCDF).” https://www.uncdf.org/financial-inclusion-and-the-sdgs.

UNEP. 2021a. Adaptation Gap Report 2020. https://www.un-ilibrary.org/content/books/9789280738346.

UNEP. 2021b. “State of Finance for Nature.” Nairobi, Kenya: United Nations Environment Programme. https://www.unep.org/resources/state-finance-nature.

UNFCCC (UN Framework Convention on Climate Change). 2009. Copenhagen Accord. https://unfccc.int/process-and-meetings/conferences/past-conferences/copenhagen-climate-change-conference-december-2009/cop-15/cop-15-decisions.

UNFCCC. 2015. Adoption of the Paris Agreement. https://unfccc.int/resource/docs/2015/cop21/eng/10a01.pdf.

UNFCCC. 2021. Glasgow Climate Pact. https://unfccc.int/process-and-meetings/the-paris-agreement/the-glasgow-climate-pact-key-outcomes-from-cop26.

Industry

Selection of Shifts

Moving toward net-zero GHG emissions from industry will be key to limiting global warming to no more than 1.5°C (IPCC 2022). For the industry system, we chose five shifts which, collectively, will help decarbonize the industry sector:

Reduce demand for cement, steel and plastics
Improve industrial energy efficiency
Electrify industry
Commercialize new solutions for cement, steel and plastics
Reduce methane emissions from oil and gas operations as they are phased down

All five shifts are primarily focused on helping limit global temperature rise to 1.5°C. They were chosen to cover both the demand and supply sides of industrial manufacturing and the various emission sources of industrial activities. These shifts represent key mitigation areas, including circularity and the reduction of demand for industrial products, as well as already available technologies to improve energy efficiency. They also reflect the need to develop and deploy new technologies, solutions, infrastructure, and supply chains. Together, monitoring progress toward these shifts provides a comprehensive picture of progress for the industry system because they cover the key mitigation areas required to decarbonize industrial activities.

Significantly increasing energy efficiency, which reduces energy use while maintaining services, can not only help reduce this system’s GHG emissions, but also lower the total amount of energy consumed across industry that would otherwise need to be decarbonized. This must be achieved through technical energy efficiency and retrofits, material efficiency, and service efficiency (ETC 2020). These are covered in shifts 1 and 2.

Electrification with a clean grid or with dedicated distributed/on-site low-carbon electricity supply offers another strategy for curbing releases of GHGs, particularly for low- and medium-temperature heat processes that currently rely on fossil fuels. This is covered in shift 3. However, not all industrial processes can be easily electrified. Thus, decarbonizing these processes requires strategies such as switching to new zero-carbon fuels to deliver high-temperature heat, developing and switching to technologies that eliminate process emissions and/or reliance on high heat, and using conventional technologies with carbon capture, utilization, or storage (CCUS), all of which are covered in shift 4.

The literature shows that production of oil and gas must be significantly scaled down by 2050 to achieve a 1.5°C scenario, and new investments in production would be detrimental (IEA 2021b). As long as oil and gas are still produced and abandoned wells have not been capped, it is important to reduce fugitive methane emissions, which cannot be mitigated through carbon capture and sequestration. This is addressed in shift 5. Methane, a major component of fossil gas, causes the atmosphere to absorb 83 times more heat over 20 years than carbon dioxide (CO2) and about 30 times more over a century, so reducing methane emissions can deliver large GHG benefits in the short term (IPCC 2021). Controlling methane emissions from oil and gas operations requires upgrades to equipment and better data to detect and repair leaks from equipment across the supply chain.

Selection of Targets and Indicators

To track progress made toward accelerating these system-wide shifts, we identified key indicators from the reports and data platforms of major agencies, including the IPCC and the International Energy Agency (IEA).

The industry indicators were selected with the aim of gauging overall progress across the system, as well as progress made in achieving the aforementioned required shifts. We track progress made toward the first shift by tracking the demand for key industrial materials. The shifts 2 and 4 are tracked through a closer look at the production of cement, steel and plastics1 — which, when taken together, account for about 70 percent of CO2 emissions from the industry system (IEA 2021b). We track shift 3 by monitoring the share of electricity in industry’s final energy demand.

Reductions in carbon intensity of cement, steel, and plastics production reflect improvements in energy efficiency, alongside progress made in implementing mitigation measures that go beyond efficiency (for example, electrification of high-temperature heat processes or adoption of new fuels and feedstocks). We placed these carbon-intensity indicators in shift 4, but they are relevant for other shifts as well. We also track green hydrogen production and installed electrolyzer capacity as part of shift 4, as hydrogen is one of the most promising non-carbon chemical feedstocks (for instance, for steel, ammonia, and methanol production) and could also be used as an energy carrier for high-temperature heat generation.

For shift 5, we track overall methane emissions from oil and gas operations and the volume of fossil gas flared (intentionally burned off for economic or safety reasons).

CAT 2020 used both top-down and bottom-up methods to establish targets for the share of electricity in the industry sector’s final energy demand, the carbon intensity of global cement production, and the carbon intensity of global steel production.

For the share of electricity in the industry sector’s final energy demand, we adopted targets from CAT 2023, which employed a top-down approach to establishing near- and long-term targets for this indicator. CAT 2023 identified modelled pathways that limit global temperature rise to 1.5°C with no or limited overshoot from IPCC 2022, then filtered them using a set of defined criteria. The 50th percentile from this set of filtered scenarios formed the less ambitious bound of the target range, while the 95th percentile served as the more ambitious bound.

For the carbon intensities of global cement production and global steel production, we retained targets derived from CAT 2020, which employed bottom-up methods to establish near- and long-term targets, as well as top-down methods to validate these goals. Because integrated assessment models provide less granularity and are thus limited in terms of their potential for defining sectoral targets, CAT relied on bottom-up, sectoral modelling tools, which allowed the authors to apply a wider range of mitigation options that would enable full decarbonization of the sector as quickly as possible. Academic and gray literature assessing the technical and feasible potential of these mitigation options within the industry sector informed this bottom-up, sectoral modelling. CAT then compared the targets derived from this bottom-up, sectoral modelling with those from the filtered set of IPCC (2018) scenarios to ensure that if there was any discrepancy, the targets taken from the bottom-up, sectoral modelling would be more ambitious in achieving decarbonization more rapidly. For the carbon intensity of global cement production indicator, specifically, CAT 2020 considered both direct emissions and emissions generated by power used during production (indirect emissions).

The green hydrogen production target was sourced from IEA (2022a) and installed electrolyzer capacity targets was sourced from (IEA 2021b), which model the projected demand for green hydrogen across sectors and electrolyzer capacity by 2030 and 2050 in order to reach net-zero emissions by 2050.

Targets for oil and gas methane indicators in shift 5 were identified from the IEA’s Global Methane Tracker and Net Zero by 2050 scenario.

Equity-related targets have not yet been established for the industry system but may be included in a future iteration. We are still exploring how best to measure equity in this system. Biodiversity-related indicators are not established under this system, and these are addressed in other systems such as circular economy and biomes-related systems.

Not every indicator in the industry system has an associated target. This is either because no targets have been developed for that indicator or because there is no general agreement in the literature on what the target should be, but the indicator was deemed important based on a review of the literature and expert elicitation.

ⁱ Although plastics are not currently covered in the list of indicators, they will be added in the near-term future.

Works Cited

CAT (Climate Action Tracker). 2020. “Paris Agreement Compatible Sectoral Benchmarks: Methods Report.” Berlin: CAT. https://climateactiontracker.org/documents/753/CAT_2020-07-10_ParisAgreementBenchmarks_FullReport.pdf.

CAT. 2023. Methodology for 1.5°C Compatible Sectoral Benchmarks. Berlin: CAT. https://climateactiontracker.org/publications/paris-aligned-benchmarks-power-sector/.

ETC (Energy Transitions Commission). 2020. “Making Mission Possible: Delivering a Net-Zero Economy.” https://www.energy-transitions.org/wp-content/uploads/2020/09/Making-Mission-Possible-Executive-Summary-English.pdf.

IEA (International Energy Agency). 2021a. “Flaring Emissions.” IEA. 2021. https://www.iea.org/reports/flaring-emissions.

IEA. 2021b. “Net Zero by 2050: A Roadmap for the Global Energy Sector.” Paris: IEA. https://www.iea.org/reports/net-zero-by-2050.

IEA. 2022a. World Energy Outlook 2022. https://www.iea.org/reports/world-energy-outlook-2022.

IEA. 2022b. “Global Methane Tracker 2022.” IEA. 2022.

IPCC (Intergovernmental Panel on Climate Change). 2018. Global Warming of 1.5°C. An IPCC Special Report on the Impacts of Global Warming of 1.5°C above Pre-industrial Levels and Related Global Greenhouse Gas Emission Pathways, in the Context of Strengthening the Global Response to the Threat of Climate Change, Sustainable Development, and Efforts to Eradicate Poverty. Edited by V. Masson-Delmotte, P. Zhai, H.-O. Pörtner, D. Roberts, J. Skea, P.R. Shukla, A. Pirani, et al. Geneva: IPCC. https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/ SR15_Full_Report_High_Res.pdf.

IPCC. 2021. Climate Change 2021: The Physical Science Basis. Contribution of Working Group I to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Edited by Valérie. Masson-Delmotte, Panmao Zhai, Anna Pirani, Sarah L. Connors, Clotilde Péan, Sophie Berger, Nada Caud, et al. Cambridge, UK and New York, NY, USA: Cambridge University Press. https://www.ipcc.ch/report/ar6/wg1/.

IPCC. 2022. IPCC. 2022. Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Edited by P.R. Shukla, J. Skea, R. Slade, A. Al Khourdajie, R. van Diemen, D. McCollum, M. Pathak, et al. Cambridge, UK, and New York: Cambridge University Press. https://www.ipcc.ch/report/ar6/wg3/.

MPP (Mission Possible Partnership). 2022. Making Net-Zero Steel Possible: An Industry-backed, 1.5°C-aligned Transition Strategy. https://missionpossiblepartnership.org/wp-content/uploads/2022/09/Making-Net-Zero-Steel-possible.pdf.

Technological Carbon Removal

Selection of the Shift

Significantly reducing greenhouse gas (GHG) emissions is essential to reaching net-zero CO2 emissions by around mid-century and should remain the top global priority, but emissions reductions alone will not be enough to meet the goal of limiting global warming to 1.5°C. All modelled pathways that limit warming to 1.5°C rely on CO2 removal (referred to hereafter as carbon removal) as a complement to deep emissions reductions (IPCC 2022). Carbon removal includes a range of nature-based approaches as well as technologies that can pull CO2 directly from the atmosphere (NASEM 2019).

Carbon removal is needed to remove excess CO2 in the atmosphere to stay within the limited carbon budget available for keeping temperature rise to 1.5°C. In the near term, before and at net-zero, it can counterbalance residual GHG emissions for which abatement technologies do not become available or are not cost-effective at scale. This includes, for example, long-haul aviation, some heavy industry, and non-CO2 emissions from agriculture (Honegger et al. 2021; IPCC 2022). In the longer term, carbon removal will be needed to address legacy emissions, or all of the cumulative historical emissions causing climate impacts today, by achieving net-negative emissions. This level of removal can be achieved by scaling up a range of carbon removal approaches and technologies, including strategies generally considered natural or land-based (for example, reforestation, agricultural soil management, and coastal wetland restoration) and those considered more technological (such as direct air capture and enhanced carbon mineralization).

Developing a diverse portfolio of carbon removal approaches will be critical to reducing costs, minimizing risks, and balancing the tradeoffs associated with any one approach (Rueda et al. 2021; Mulligan et al. 2020). A portfolio that includes only nature-based approaches could face uncertainty around permanence and land area constraints, while a technology-specific portfolio would be more costly and lack many of the co-benefits that natural approaches can provide for resilience and biodiversity. For example, a technology-based approach like direct air capture (DAC) is energy-intensive but uses comparatively little land and, when coupled with geologic sequestration, results in permanent storage. On the other hand, tree planting provides many co-benefits but requires comparatively more land (which could be used for other purposes) and can be reversible (for example, through wildfires). Some ocean-based approaches have large theoretical potential but present many ecological and governance uncertainties today.

In the carbon removal system, we include only one shift: scale up technological carbon removal. Shifts related to approaches generally considered to be natural carbon removal can be found in the land system.

Within this shift, we chose one key indicator to track progress on carbon removal: how many tonnes of CO2 have been captured from the air through technological carbon removal approaches and stored permanently. To meet this definition of technological carbon removal, CO2 must be captured from the atmosphere, rather than at a point source like a cement plant (this would be considered emissions reduction rather than carbon removal, since it is preventing emissions from entering the atmosphere). Then it must be permanently sequestered through injection into deep, underground geological formations through the creation of stable carbonate minerals, or used in durable products.

This indicator is focused primarily on our goal of limiting global temperature rise to 1.5°C, but the Systems Change Lab’s other goals of protecting biodiversity and improving equity are key considerations when assessing progress in carbon removal.

Scaling up technological carbon removal will require increased public funding for research, development, demonstration, and deployment of new technologies and approaches, along with private sector leadership in terms of both purchasing and providing high quality removals. At the same time, as technological carbon removal is a relatively new industry, there is an opportunity and imperative to scale responsibly. Deep emissions reductions are needed to reduce new emissions into the atmosphere and carbon removal is a necessary complement, and the only way we have to ultimately reach net-negative emissions to reduce atmospheric concentrations of CO2, which will help reduce the worst impacts of climate change that are disproportionately affecting vulnerable communities today. Along with scaling up the technology, governance frameworks need to be strengthened at local, national, and international levels to ensure projects are developed responsibly. This includes attention to development of consistent and credible measurement, reporting, and verification standards, prioritization of community engagement throughout project development, and focus not only on carbon benefits but also environmental and social impacts of scaling up different approaches. This effort can help build public understanding of and trust in this new industry.

Selection of Targets

The 2030 and 2050 targets for this indicator are based on the range of modelled pathways that limit global temperature rise to 1.5°C with no or limited overshoot, as presented in IPCC (2022). Following CAT (2023), we filtered these pathways to identify a subset that meets sustainability criteria based on Fuss et al. (2018) for biomass cultivation for carbon removal outlined in IPCC (2018). We used a 90th percentile range (from the 5th to the 95th percentiles) for the 2030 and 2050 levels of technological carbon removal (that is, from bioenergy with carbon capture and storage, direct air capture, and mineralization, which are the technologies incorporated into integrated assessment models) as 2030 and 2050 targets. See Boehm et al. 2023 and Jaeger et al. 2023 for more information.

Our targets include a range for both 2030 and 2050 to reflect the uncertainty associated with future need for technological carbon removal, as well as its dependence on the level of mitigation across sectors. The lower end of the range reflects scenarios in which GHG emissions reductions are greater in the near term, and future carbon removal reliance is minimized.

Works Cited

Fuss, S., W.F. Lamb, M.W. Callaghan, J. Hilaire, F. Creutzig, T. Amann, T. Beringer, et al. 2018. “Negative Emissions—Part 2: Costs, Potentials and Side Effects.” Environmental Research Letters 13 (6). IOP Publishing:063002. doi:10.1088/1748-9326/aabf9f.

Honegger, M., M. Poralla, A. Michaelowa, and H.M. Ahonen. 2021. “Who Is Paying for Carbon Dioxide Removal? Designing Policy Instruments for Mobilizing Negative Emissions Technologies.” Frontiers in Climate 3. https://www.frontiersin.org/article/10.3389/fclim.2021.672996.

IPCC. 2018. Special Report: Global Warming of 1.5C. Intergovernmental Panel on Climate Change. https://www.ipcc.ch/sr15/chapter/chapter-2/.

IPCC. 2022. Climate Change 2022: Mitigation of Climate Change. Contribution of Working Group III to the Sixth Assessment Report of the Intergovernmental Panel on Climate Change. Edited by P.R. Shukla, J. Skea, R. Slade, A. Al Khourdajie, R. van Diemen, D. McCollum, M. Pathak, et al. Cambridge and New York: Cambridge University Press. https://www.ipcc.ch/report/ar6/wg3/.

Jaeger et al. 2023. Methods for State of Climate Action. https://systemschangelab.org/sites/default/files/2023-11/23_TN_A4_State%20of%20Climate%20Action%202023_v5.pdf.

Mulligan, J., A. Rudee, K. Lebling, K. Levin, J. Anderson, and B. Christensen. 2020. “CarbonShot: Federal Policy Options for Carbon Removal in the United States.” Washington, DC: WRI. https://www.wri.org/publication/carbonshot-federal-policy-options-for-carbon-removal-in-the-united-states.

NASEM (National Academies of Science, Engineering, and Medicine). 2019. “Negative Emissions Technologies and Reliable Sequestration: A Research Agenda.” Washington, DC: NASEM. https://doi.org/10.17226/25259.

Rueda, O., J.M. Mogollón, A. Tukker, and L. Scherer. 2021. “Negative-Emissions Technology Portfolios to Meet the 1.5 °C Target.” Global Environmental Change 67 (1 March 1): 102238. https://doi.org/10.1016/j.gloenvcha.2021.102238.

Circular Economy

Selection of Shifts

Circular economy is a model of production and consumption, replacing the traditional linear economy model that is based on “take-make-waste" patterns. It not only closes the resource loops, but also narrows and slows the loops, and thereby makes resource use more sustainable, reduces the environmental impact, and creates more economic value from a certain amount of resource.

In the circular economy system, we chose six shifts:

Decrease overconsumption
Use recycled, reused, and renewable materials and components
Minimize environmental and social harms in resource extraction
Make production more resource efficient
Use products longer
Increase the quantity and value of resources recovered at end of use

These shifts were chosen to holistically cover all life stages of materials — from resource extraction and material selection, through production and use, to recycling — as shown in Figure 1. It is important to note that these shifts are interrelated to each other and should not be considered independently. Otherwise, the loop cannot be closed and material circulation cannot be achieved effectively. For example, the use of recycled materials and recycling at the end-of-life stage should be matched to close the loop of a circular economy. Resource efficient production can reduce the amount of resources used, but it can also have a side effect of lowering production cost and product prices, which could, in turn, increase final consumption. Strong motivation to narrow the loop by reconsidering the overall level of consumption is necessary.

Graphic showing life stages of materials and shifts for systems change

Figure 1. A circular economy is built off of the life stages of materials (inner circle) and six shifts for realizing a circular economy (outer circle). Materials’ life is formed in a circular manner in a circular economy, and the six shifts are linked to each other like a chain. Each shift is related mainly to one or two life stages.

Circular economy is often explained as a combination of reduce, reuse, and recycle activities; however, practitioners frequently neglect the importance of the “reduce” concept (Kirchherr et al. 2017). Recycling on a large scale is not a solution to replacing the “take-make-waste" linear economy, and priority should be given to “reduce,” as the concept of waste management hierarchy explains. Therefore, one of the shifts addresses overconsumption of resources in both production and use. The shift intends to ensure human activities fit within the global capacity of the environment to achieve a sustainable level of consumption, with attention to equitable access to resources that are necessary for everyone in both developing and developed countries. It is important to find alternative consumption patterns such as sharing and other dematerialization by using business model transformation to avoid overuse and overexploitation of valuable resources.

Three shifts — “Use recycled, reused, and renewable materials and components,” “Minimize environmental and social harms in resource extraction,” and “Make production more resource efficient” — address the selection and efficiency of use of materials and resources in production. For products that are manufactured goods, the utilization of reused components or parts, recycled materials and renewable materials will effectively reduce the burden on sourcing virgin, non-renewable materials. For products from the biosphere, resources that are truly renewable should be used. Production that is more resource efficient by using improved methods and technologies or sharing valuable resources, such as byproducts, also helps effectively reduce overall resource inputs. In some cases, these actions require business model transformation.

Another shift, “Use products longer,” addresses retaining the value of a resource for as long as possible (for instance, retaining the functionality of a product by repairing it). This defers the need to replace the product, reduces the need for additional materials to produce replacement products, and therefore narrows the resource inputs. This is sometimes referred to as slowing the resource loop.

The last shift, “Increase the quantity and value of resources recovered at end of use,” addresses the end-of-use stage. Recoverable materials and components for reuse and recycling, including remanufacturing, are separated from waste streams for reuse or further processing so that maximum net value is gained. Net value here refers to the amount of functional and monetary opportunity in the recirculation of the resource. For example, recovering parts that are used in remanufacturing a product typically has a higher net value than producing recycled materials.

Implementing a circular economy can help toward the goals of limiting climate change to 1.5 degrees C (2.7 degrees F) and protecting biodiversity. If the shifts of reduction, material substitution, and efficient production are applied to fossil fuels, it enables a reduction in the use of fossil fuels (see, for instance, IRP 2020; Ellen MacArthur Foundation 2021). The shift toward minimizing environmental harms is directly related to the goal of protecting biodiversity. Other shifts promote the reduction of natural resource use and thereby reduce associated burdens on the ecosystem indirectly. The shifts toward longer use and resource recovery can contribute to limiting climate change to 1.5 degrees C but can also be contradictory in some cases. For example, if old energy-inefficient products are used longer, they consume more energy (see Tasaki et al. 2013; Bakker and Schuit 2017). Recycling and recovery require a certain amount of energy. If too much energy is needed, for example, due to impurities in the collected waste resulting from poor sorting or an inefficient process of collection and recycling, the justification for recycling and recovery may be reduced. In addition, excessive ownership of products can cause energy use at the use phase as well as production phase. Proper attention by all stakeholders in material circulation is needed to understand the trade-offs.

Selection of Targets and Indicators

No global target for material footprint or circularity has been agreed upon, although the global community has agreed that efficient use of natural resources and decoupling economic growth from environmental degradation are necessary. Therefore, we relied on scientific literature. In a scientific article, Bringezu (2019) suggested targets of global resource use. We employed the targets as global targets of three material footprint indicators in the shift of overconsumption. These targets can be used as national and subnational targets, as they are per capita targets.

Indicators that are highly relevant to the achievement of the shifts and accurate were selected. Data accessibility, completeness, timeliness, and ease of collection were also taken into account, but these are considered secondary because systems change often requires changes in perception and monitoring new aspects.

The indicators used on this platform cover all the elements of “narrowing, slowing, and closing resource flows (loops)," as well as the so-called 3Rs, “reduce, reuse, and recycle.” We understand that there are diverse understandings and perceptions about the concept of circular economy (CE) in the world. For example, in our understanding, practitioners in industries tend to pay more attention to the circulation of materials in the economy, while environmentalists pay attention to environmental impacts resulting from activities toward CE. Traditional waste management experts tend to look at the end-of-use stage and 3R activities, and some producers tend to look at the production stage and innovation of business models. These differences are, to some extent, reflected in national policies. For example, Ernst & Young’s assessment of national CE policy (2022) ranks countries into four levels, ranging from basic waste management and recycling to mature national CE policy. Therefore, we were cautious not to rely on a single view and to select indicators in a balanced way: environmental and social impacts are covered by shift 3 indicators, industries and production views are covered mainly by indicators in shifts 2 and 4, consumption views are covered mainly by indicators in shifts 1 and 5, and end-of-use 3R views are covered by shift 6.

For the selection of indicators, we relied more on public reports, which are typically based more on multiple stakeholders’ opinions. We especially referred to UNEP International Resource Panel (IRP) reports (2019a; 2019b) and public policy such as the European Union’s CE policy package and member countries’ national plans for CE. We also paid attention to CE indicators proposed by the Organisation for Economic Co-operation and Development (OECD) (2020), Platform for Accelerating the Circular Economy (PACE) (2021), Ellen MacArthur Foundation (2022), World Business Council for Sustainable Development (WBCSD) (2022), the emerging ISO 59020 “Circular economy — Measuring and assessing circularity,” and action agendas put forward by PACE.

The indicators attempt to monitor actions made by various stakeholders in the value chain of material use. Attention was paid to both the public and private sectors. The indicators also measure outcomes and efforts in terms of both overall situations and specific situations of materials, products, and waste with high policy attention. Therefore, food waste and municipal waste are included because Sustainable Development Goal targets address these wastes. Single-use products, packaging, plastics, electronics, automobiles, etc., are included because many countries have paid much policy attention to these issues.

Works Cited

Bakker, C.A., and C.S.C. Schuit. 2017. The Long View: Exploring Product Lifetime Extension. United Nations Environment Programme (UNEP).

Bringezu, S. 2019. “Toward Science-Based and Knowledge-Based Targets for Global Sustainable Resource Use.” Resources 8 (3): 140. doi:10.3390/resources8030140.

Ellen MacArthur Foundation. 2021. Completing the picture: How the circular economy tackles climate change.

Ellen MacArthur Foundation. 2022. Circulytics: indicators.

Ernst & Young. 2022. Regulatory landscape of the circular economy.

EU (European Union). 2020. “Regulation 2020/852 on the Establishment of a Framework to Facilitate Sustainable Investment.” http://data.europa.eu/eli/reg/2020/852/oj.

IRP (International Resource Panel). 2019a. Global Resources Outlook 2019: Natural Resources for the Future We Want.

IRP. 2019b. Mineral resource governance in the 21st Century.

IRP. 2020. Resource Efficiency and Climate Change: Material Efficiency Strategies for a Low-Carbon Future.

ISO (International Organization for Standardization). 2023. DIS 59020 “Circular economy — Measuring and assessing circularity.”

Kirchherr, J., D. Reike, and M. Hekkert. 2017. “Conceptualizing the Circular Economy: An Analysis of 114 Definitions.” Resources, Conservation and Recycling 127 (December): 221–32. doi:10.1016/j.resconrec.2017.09.005.

OECD (Organisation for Economic Co-operation and Development). 2020. The OECD Inventory of Circular Economy Indicators. https://www.oecd.org/cfe/cities/InventoryCircularEconomyIndicators.pdf.

PACE (Platform for Accelerating the Circular Economy). 2021. Circular Indicators for Governments: Accelerating action in the circular economy.

PACE. Undated. The Circular Economy Action Agenda. https://pacecircular.org/action-agenda. Accessed 24 May 2022.

Tasaki, T., M. Motoshita, H. Uchida, and Y. Suzuki. 2013. “Assessing the Replacement of Electrical Home Appliances for the Environment: An Aid to Consumer Decision Making.” Journal of Industrial Ecology 17 (2): 290–98. doi:10.1111/j.1530-9290.2012.00551.x.

WBCSD (World Business Council for Sustainable Development). 2022. Circular Transition Indicators V3.0 - Metrics for business, by business.

Cities

Selection of Shifts

In the cities system, we chose three shifts:

Plan urban land use to reduce emissions and increase climate resilience
Increase access to resilient and affordable urban services
Improve urban waste management and transition to zero-waste cities

The world’s urban population is expected to increase by 2.5 billion people by 2050, by which point roughly two-thirds of the global population is expected to live in urban areas. Much of this urban growth will likely occur in low-lying coastal zones and locations vulnerable to severe flooding and extreme heat risks. For this reason, cities play an essential role in limiting climate change to 1.5 degrees C (2.7 degrees F), protecting biodiversity and improving equity.

Cities provide a broad set of services, including housing, transportation, education, health and employment. Because of this, there are many connections between the cities system and other systems on this platform, including systems related to transport, power, buildings and finance. The shifts in this system were chosen for their importance to decarbonization, biodiversity and equity goals in urban areas, and to complement the indicators in other systems.

Planning urban land use to reduce emissions and increase climate resilience helps reduce entrenched inequities, reduce greenhouse gas emissions, build systemic resilience to impacts and improve air quality. Increasing access to resilient and affordable urban services helps reduce inequities within cities, improve public health and reduce environmental damage. Rapidly scaling up zero-waste outcomes in cities cuts a source of methane emissions, improves inequitable health disparities, and encourages more circularity in consumption patterns, which can help drive down emissions in industry.

Selection of Targets and Indicators

For shift 1, the indicators focused on the opportunities inherent in land use strategies that promote efficient utilization of urban land with higher densities, better connectivity to infrastructure and services and preservation of green and blue spaces. Together, these strategies can help achieve lower greenhouse gas (GHG) emissions, ensure more equitable access to opportunities and improve resilience to climate risks. Shift 1 is primarily focused on reducing emissions and protecting biodiversity, in addition to a few equity-related indicators (including the level of air pollution in urban areas and share of urban areas that are in slums or informal settlements). The selection of targets and indicators in shift 1 is described in the “information” modal button on each indicator chart.

For shift 2, the indicators were selected to show how delivering basic urban services to growing populations can serve both climate mitigation and adaptation goals when done in ways that limit GHG emissions and foster climate resilience. The targets for many of the indicators in shift 2 are in line with targets in the Sustainable Development Goals (especially Goals 7 and 11). Shift 2 is primarily focused on improving equity. The selection of targets and indicators in shift 2 is explained in the “information” modal button for each indicator chart.

For shift 3 on zero-waste cities, the indicators were identified to measure two themes: the efficiency of the waste cycle process, and the effectiveness of the waste cycle process. The process includes solid and liquid waste collection, conveyance and disposal within municipal jurisdictions. Within the efficiency category, solid waste indicators track the operational capacity in managing the waste cycle by local governments responsible for collecting household and commercial wastes within their respective jurisdictions. Liquid waste indicators track the efficiency in the management of black and gray water generated by households through toilets, kitchen sinks and other plumbing appliances.

The second set in shift 3 measures the institutional effectiveness of the waste cycle process within municipal jurisdictions. In situations where solid waste management is inadequate, many communities engage in adaptive (albeit informal) practices through the efforts of numerous waste pickers. These individuals, often from the poorest segments of urban society, play a critical role in a broader, systemic approach to waste management and contribute significantly to recycling and the reduction of waste in the absence of formal systems. For liquid waste collection, conveyance and disposal, effective management takes place through water utilities responsible for publicly financed piped wastewater infrastructure that safely treats water and disposes sludge. The default outcome is onsite disposal by informal “pit emptiers” who clean septic tanks or open pits for a negotiated charge and dump the sludge in the nearest open access resource (vacant lands, informal dumpsite and waterways), often leading to pollution of aquifers and waterways.

Not every outcome indicator in the cities system has an associated target. For climate-related indicators, this is because there is no established target in the literature, but the indicator was deemed important based on a review of the literature and expert elicitation. For equity-related indicators that do not have targets, this is because there is no general agreement in the literature about quantitative methane targets. The equity indicators for the cities system were chosen based on the principles outlined in the Systems Change Lab technical note. Lack of data is also a methodological challenge affecting many of the indicators on equity.

Buildings

Selection of Shifts

In the buildings system, we chose three shifts:

Construct zero-carbon buildings
Optimize building energy consumption
Decarbonize building energy use

Buildings provide shelter, services and economic opportunity around the world. The operation of buildings contributes about 18% of global greenhouse gases (GHGs) when considering both on-site operations and the electricity and heat generated off-site to power them. Additionally, the emissions from the production of the materials that go into buildings, such as cement and steel, can be considered embodied in these buildings, increasing their emissions even more. For these reasons, buildings play an essential role in limiting climate change to 1.5 degrees C and improving equity.

Because buildings provide a venue for public and private life, they are deeply connected with several other systems: chiefly, circular economy, cities, finance, power, transport and industry. The shifts in this system were chosen for their importance to decarbonization and equity goals and are organized into three broad categories of action to decarbonize buildings.

First, lowering the carbon dioxide emissions associated with the materials that go into buildings helps reduce their embodied emissions. Next, maximizing energy efficiency and conserving energy helps minimize the emissions generated on-site or off-site. Finally, replacing carbon-intensive heating and cooling technologies as well as appliances with alternatives that can be powered without emitting GHGs helps bring emissions from buildings down to zero.

Selection of Targets and Indicators

For the first shift, the indicators were selected to measure how reducing the emissions associated with building materials, both through material substitution and through lower-carbon cement and steel production, can reduce embodied GHG emissions from buildings. This shift is primarily focused on reducing emissions. The selection of targets and indicators in the shift is described in the “information” modal button on each indicator chart.

For the second shift, the indicators were selected to show how increasing energy conservation and energy efficiency in building operations can reduce GHG emissions from buildings and also make it easier to substitute for zero-carbon solutions. This shift is primarily focused on reducing emissions, but ensuring access to energy efficiency upgrades also touches upon equity. Additionally, the number of jobs available to perform efficiency upgrades is included to measure the labor impacts of this shift. The selection of targets and indicators in the shift is explained in the “information” modal button for each indicator chart.

For the third shift, the indicators were identified to measure the substitution of carbon-intensive technologies for heating, cooling and appliances with zero-carbon alternatives. This shift is primarily focused on reducing emissions, but the number of jobs available to install zero-carbon technologies is included to measure the labor impacts of this shift. The selection of targets and indicators in the shift is explained in the “information” modal button for each indicator chart.

Not every outcome indicator in the buildings system has an associated target. For climate-related indicators, this is because there is no established target in the literature but the indicator was deemed important based on a review of the literature and expert elicitation. For equity-related indicators that do not have targets, this is because there is no general agreement in the literature about quantitative targets, as there is no widely agreed-upon equity or just transition scenario akin to 1.5 degrees C. The equity indicators for the buildings system were chosen based on the principles outlined in the Systems Change Lab technical note. Lack of data is also a methodological challenge affecting many of the indicators on equity.

Future work

There are several issues that will be addressed in future iterations of the Systems Change Lab platform. These include targets for system-wide shifts as well as equity-related indicators and targets. Future updates may track progress for integrating buildings into energy systems. Equity is currently underrepresented in the system and an equity shift may be added with, for example, indicators around housing access, informal housing, floor area per capita, financial constraints and access to clean cooking. Indicators for building occupant behavior change, improvements in energy efficiency of major household appliances, the adoption of passive design measures and regulations around retrofitting, among others, will also be considered in subsequent updates.

Economics

Selection of Shifts

In the economic system, we chose three shifts:

Integrate new prosperity metrics into economic planning and policymaking
Embed climate, nature and equity into economic analysis
Transform economic policies to accelerate action for climate, nature and equity

The way that the global economy works — including its typical patterns of production, consumption and distribution — is not sustainable. Every one of the systems on the Systems Change Lab platform requires transformations of these patterns. In the economic system, we focus on how to transform society’s way of thinking about, understanding and guiding the global economy.

Economic goals and metrics are restricted to governments, international institutions and businesses; economic models are restricted to those that governments and international institutions use to guide economic development; and public policies are restricted to fiscal policies and public sector investment.

The shifts in this system were chosen to reflect three interconnected and critical dimensions of a paradigm shift in economic thinking that can ultimately enable more rapid transformations in other systems (Laybourn-Langton and Jacobs 2018). Mainstreaming well-being, equity and sustainability goals alongside economic goals in economic planning helps decision-makers to develop better targeted and more effective public policies. Similarly, shifting to and scaling more fit-for-purpose economic analytical approaches that better incorporate climate, nature and equity dimensions can help decision-makers better understand and predict the functioning of the economy and help to design more effective, targeted and transformational public policies and investments aligned with economic planning goals.

To recognize the complexity of this system and the diversity of needs of different countries, shifts and indicators for this system were chosen to highlight key areas of global convergence. This was based on a thorough literature review and expert consultations. Shifts and indicators will be revisited over time.

Selection of Targets and Indicators

For the first shift, the indicators were selected to measure governments, international institutions and businesses that are actively embedding well-being, equity and sustainability goals and related metrics into economic planning, strategies and policymaking. Indicators in this shift also track global progress on addressing GDP’s continued dominance as a policy goal. Advancing “beyond GDP” metrics will likely require adjusting the UN’s System of National Accounts (SNA) and/or its satellite accounts, which will require support from countries and international institutions (Hoekstra 2020; Kaufmann et al. 2023; Masood 2022; Stiglitz et al. 2008). Media outlets can also support shifting the narrative on what constitutes economic prosperity and public policy success by reporting on well-being, equity and sustainability metrics. This shift also highlights the level of public support for using alternative prosperity indicators to understand national prosperity, which can influence policymaking. The selection of indicators for shift 1 is described in the “information” modal button on each indicator chart.

For the second shift, indicators focus on the need for governments and international financial institutions to mainstream climate, nature and equity considerations into economic analytical approaches for informing economic and development policy questions (Barbrook-Johnson et al. 2023; Dasgupta 2021; Grubb et al. 2021; IPBES 2022; Mercure et al. 2019; Stern 2022). This shift also recognizes the importance of training economists on new and diverse economic schools of thought that seek to address the global challenges of climate change, nature and biodiversity loss and social inequity, and the importance of highlighting these challenges in mainstream economic journals. This shift does not have an outcome indicator because we assume that economic models and tools ultimately influence economic policies. The selection of indicators for shift 2 is explained in the “information” modal button for each indicator chart.

For the third shift, indicators focus on fiscal policies or the use of government spending and taxation measures to address climate change, protect biodiversity and improve equity. Indicators in this shift focus on three main fiscal policy measures: repurposing environmentally harmful subsidies; pricing greenhouse gas emissions and other environmental harms; and greening public investment for innovation, green jobs, supporting marginalized communities and promoting environmentally-beneficial activities (Horton and El-Ganainy n.d.; OECD 2021; UNEP 2021). The finance system covers public investment as well as investment targets and indicators, while this system is focused more directly on public finance that deals with revenues and expenditures. Other economic policy domains, like monetary, trade, industrial and labor policy, are just beginning to incorporate climate and nature, so they are not covered yet in this system (Fricke et al. 2023; Gronchi et al. 2021; Kenter et al. 2022).

Works Cited

Barbrook-Johnson, P., S. Sharpe, R. Pasqualino, S. de Moura, F. Nijsee, P. Vercoulen, A. Clark, et al. 2023. “New Economic Models of Energy Innovation and Transition: Addressing New Questions and Providing Better Answers.” The Economics of Energy Innovation and System Transition.

Costanza, R., R. Hoekstra, J. Eastoe, and I. Rum. 2024. “Measuring What Matters: A Synthesis of Models, Metrics, and Policies for a Sustainable and Inclusive Wellbing Future.” MERGE. https://mergeproject.eu/synthesis/.

Dasgupta, P. 2021. The Economics of Biodiversity: The Dasgupta Review: Full Report. London: HM Treasury.

Fricke, T., X. Likaj, B.Buchholtz, S. Hennen, T. Krebs, and D. Kläffling. 2023. “Mapping the State of a Shifting Paradigm.” Forum for a New Economy. https://newforum.org/en/studie/mapping-the-state-of-a-shifting-paradigm/.

Gronchi, I., J. Jousilahti, J. Leppanen, N. Lancaster, J. Nuutinen, R. Saramaki, A. Vourdaki, S. Buckton, J. Kenter, and S. Martino. 2021. “Turning the Tide – Landscape Analysis of an Emergent Economic Movement in Europe.” Demos Helsinki, Laudes Foundation, Partners for a New Economy, GANE, and One Project.

Grubb, M., P. Drummond, J.F. Mercure, C. Hepburn, P. Barbrook-Johnson, J.C. Ferraz, A. Clark, et al. 2021. “The New Economics of Innovation and Transition: Evaluating Opportunities and Risks.” Economics of Innovation and System Transition Consortium.

Hoekstra, R. 2020. “Measuring the Wellbeing Economy: How to Go Beyond-GDP.” Wellbeing Economy Alliance.

Horton, M., and A. El-Ganainy. n.d. “Fiscal Policy: Taking and Giving Away.” IMF Finance and Development Magazine. https://www.imf.org/en/Publications/fandd/issues/Series/Back-to-Basics/Fiscal-Policy.

IPBES (Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services). 2022. “Summary for Policymakers of the Methodological Assessment Report on the Diverse Values and Valuation of Nature of the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services.” Bonn, Germany: IPBES Secretariat.

Kaufmann, R., J. Barth, L. Steffens, L.A. Le Lannou, A. Gerer, and S. Kiecker. 2023. “Mainstreaming Wellbeing and Sustainability in Policymaking: Technical and Governance Levers out of the Institutional GDP Lock-In.” ZOE Institute for Future-Fit Economics.

Kenter, J., S.J. Buckton, S. Martino, B. Agarwal, R. Costanza, A. Anger-Kraavi, A.P. Hejnowicz, et al. 2022. “Ten Principles for a New Economics in a Time of Global Crises.” Nature Sustainability.

Laybourn-Langton, L., and M. Jacobs. 2018. “Paradigm Shifts in Economic Theory and Policy.” Intereconomics 53 (3): 113–18. https://doi.org/10.1007/s10272-018-0737-4.

Masood, E. 2022. “GDP is getting a makeover — what it means for economies, health and the planet”. Nature. https://www.nature.com/articles/d41586-022-03576-w.”

Mercure, J.F., F. Knobloch, H. Pollitt, L. Paroussos, S. Serban Scrieciu, and R. Lewney. 2019. “Modelling Innovation and the Macroeconomics of Low-Carbon Transitions: Theory, Perspectives and Practical Use.” Climate Policy 19 (8): 1019–37. https://doi.org/10.1080/14693062.2019.1617665.

OECD (Organisation for Economic Co-operation and Development). 2021. “Tracking Economic Instruments and Finance for Biodiversity.” OECD.

Stern, N. 2022. “A Time for Action on Climate Change and a Time for Change in Economics.” The Economic Journal 132 (644): 1259–89. https://doi.org/10.1093/ej/ueac005.

Stiglitz, J.E., A. Sen, and J.P. Fitoussi. 2008. “Report by the Commission on the Measurement of Economic Performance and Social Progress.” Paris, France: Commission on the Measurement of Economic Performance and Social Progress.

UNEP (United Nations Environment Programme). 2021. “State of Finance for Nature.” Nairobi, Kenya: UNEP. https://www.unep.org/resources/state-finance-nature.

Photo by Roberto García Ruiz

Technical Note

System Background Information

Selection of Shifts

Selection of Targets and Indicators

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Works Cited

Selection of the Shift

Selection of Targets

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Works Cited

Selection of Shifts

Selection of Targets and Indicators

Selection of Shifts

Selection of Targets and Indicators

Future work

Selection of Shifts

Selection of Targets and Indicators

Works Cited

Subscribe for updates