Climate change and economic growth are often cast as opposing forces: one demands restraint, the other relentless expansion. Yet in a packed lecture theatre at the London School of Economics and Political Science, two of the world’s most influential voices on climate policy argued that this is a false choice. In a joint public lecture, Adair Turner and Nicholas Stern set out a stark question for policymakers, businesses and citizens alike: how can societies limit global warming while still expanding prosperity-and what is really holding us back?
Drawing on decades of economic research, political experience and climate science, the speakers dissected the structural, political and psychological barriers that have slowed action, even as the costs of delay mount. From entrenched interests in fossil fuels to short-termism in finance and governance, they examined why solutions that are technologically feasible and increasingly affordable still struggle to gain traction at the speed required. Their message was clear: a prosperous low‑carbon future is within reach, but only if governments, markets and publics can overcome the obstacles that keep us locked into a high‑emissions path.
Political inertia and vested interests blocking ambitious climate policy
For all the talk of net zero and green growth, the machinery of government frequently enough moves at a glacial pace compared with the speed of climate change. Elected leaders operate on short electoral cycles, yet the benefits of bold decarbonisation policies arrive beyond their term limits, while the costs are immediate and highly visible. This structural mismatch creates fertile ground for delay, dilution and distraction. Ministers face relentless pressure from lobby groups who warn of job losses, rising bills or lost competitiveness if carbon prices rise or fossil fuel subsidies are removed. Behind the scenes, well-resourced interests deploy political donations, targeted media campaigns and legal challenges to stall reforms that would reallocate capital and power away from carbon-intensive incumbents.
These dynamics shape policy outcomes in ways that are both subtle and systematic. Regulatory standards are weakened, timelines extended and loopholes inserted at the drafting stage, so that the letter of climate legislation survives while its spirit is compromised. Choices about what to prioritise are rarely technocratic; they are negotiated between actors with very unequal influence:
- Fossil fuel producers lobbying to preserve extraction and infrastructure
- Energy-intensive industries seeking exemptions from carbon pricing
- Financial institutions protecting legacy high-carbon portfolios
- Communities and workers fearful of unmanaged transition risks
| Actor | Typical Tactic | Policy Impact |
|---|---|---|
| Industry lobby | Impact studies stressing job losses | Weaker regulation |
| Media allies | Framing climate as a “cost of living” threat | Public scepticism |
| Financial sector | Quiet resistance to disclosure rules | Slower capital reallocation |
| Civil society | Campaigns, litigation, shareholder pressure | Occasional policy breakthroughs |
Financing the transition mobilising private capital and reforming global investment rules
At the heart of a credible path to net zero lies the question of who pays, on what terms, and under which rules. Public budgets alone cannot shoulder the trillions needed for clean energy, resilient infrastructure and low‑carbon industry, particularly in emerging and developing economies where capital is scarce and borrowing costs are high. The task is to turn climate ambition into a bankable pipeline of projects that institutional investors,sovereign wealth funds and pension schemes can hold with confidence. That means deploying blended finance to de‑risk early‑stage investments, expanding green bond markets, and using multilateral development banks less as direct lenders and more as catalysts for private flows. In practice,this involves targeted guarantees,first‑loss tranches and policy‑linked credit enhancements that compress risk premiums without socialising all the downside.
- Lowering risk through guarantees, insurance and clear policy frameworks
- Scaling instruments such as green, sustainability‑linked and transition bonds
- Reforming development banks to leverage balance sheets rather than maximise lending volume
- Aligning incentives for institutional investors with long‑term climate stability
| Reform Area | Main Goal | Key Actor |
|---|---|---|
| Multilateral bank mandates | Shift from volume to mobilisation ratios | Shareholders & G20 |
| Debt architecture | Embed climate resilience in restructurings | IMF & creditors |
| Investment treaties | Protect green over fossil investments | Trade negotiators |
Yet capital will not flow at the necessary speed while the global investment rulebook continues to privilege fossil‑era assets and lock developing countries into high‑cost finance. Today’s sovereign risk models, credit ratings and investment treaties often penalise countries that invest aggressively in green infrastructure, while offering stronger protections to carbon‑intensive incumbents. A new playbook is emerging, centred on climate‑aligned financial regulation, mandatory transition plans for large firms, and revisions to investor‑state dispute mechanisms that prevent fossil fuel companies from using litigation to slow down policy change. If combined with transparent carbon pricing and clear phase‑out dates for unabated coal, oil and gas, these reforms can tilt the global financial system towards low‑carbon assets, making climate‑safe investment the rational default rather than a niche choice.
Technological innovation scaling clean energy and efficiency in emerging economies
Across Africa, South Asia and Latin America, a wave of technological ingenuity is redefining how energy is produced, distributed and consumed. Start-ups and public utilities are weaving together solar mini-grids,digital payment platforms and AI-driven demand forecasting,creating systems that leapfrog the heavy,centralised infrastructures of the past. Pay-as-you-go rooftop panels, smart meters linked to mobile money, and cloud-based tools that balance intermittent renewables with local storage are not just cutting emissions; they are expanding access to reliable power for communities long beyond the grid’s reach. Crucially, these innovations are being designed in situ, by engineers and entrepreneurs who understand local conditions, informal economies and the politics of land, labor and subsidy.
- Decentralised solar and storage powering villages and peri-urban settlements.
- Digital finance turning energy access into a service rather than a one-off asset purchase.
- Efficiency-by-design in appliances and buildings to curb demand growth.
- Data and AI tools guiding infrastructure investment and grid planning.
| Innovation | Main Benefit | Key Barrier |
|---|---|---|
| Solar mini-grids | 24/7 low-carbon power for remote areas | High upfront capital costs |
| Pay-as-you-go systems | Affordable entry for low-income users | Credit and default risk |
| Efficient appliances | Lower bills and reduced peak loads | Weak standards and enforcement |
| Smart grids & AI | Better integration of variable renewables | Data gaps and skills shortages |
To move from thousands of pilots to systems-level transformation, these technologies must be embedded in supportive policy, credible regulation and de-risked finance. Carbon-intensive energy subsidies still distort markets in many emerging economies, while fragmented planning leaves innovators wrestling with uncertain grid rules and opaque procurement. Where governments align tariffs with social goals, open data to developers and use public banks to crowd in private capital, the results are striking: faster roll-out of clean generation, falling technology costs and rising local manufacturing capacity. In this sense, technological progress is not an automatic saviour but a lever that, when pulled by coherent institutions and international climate finance, can simultaneously limit emissions growth and expand economic prospect.
From pledges to practice governance reforms to align growth strategies with climate goals
Translating declarations into durable institutional change means redesigning how economic decisions are made, not merely adjusting emissions trajectories on paper. Governments are beginning to embed climate objectives into the machinery of the state by giving finance ministries binding carbon budgets,mandating that infrastructure plans pass a climate-compatibility test,and requiring central banks and supervisors to assess system-wide transition risk. This shift is visible in the emergence of cross‑departmental climate cabinets and independent advisory bodies that can scrutinise whether industrial strategies, trade agreements and labour policies are genuinely aligned with net zero pathways rather than short‑term political cycles. Such reforms do not remove controversy, but they create a framework in which arguments are conducted around evidence, scenarios and trade‑offs, rather than wishful thinking.
- Hardwire climate metrics into budget and spending reviews
- Reform state-owned enterprises to meet clear decarbonisation mandates
- Link executive pay and public‑sector incentives to climate targets
- Disclose transition plans for major projects and public investments
| Governance Tool | Main Purpose |
|---|---|
| Carbon budget law | Sets economy‑wide emissions caps over time |
| Green taxonomy | Defines which investments count as enduring |
| Transition‑risk stress tests | Checks financial stability under net zero scenarios |
| Climate‑conditioned subsidies | Ties public support to credible decarbonisation plans |
For businesses and investors,the new rulebook is re‑drawing the boundary between legitimate profit and stranded value.Boards are under pressure to align growth plans with national climate strategies, which means treating emissions, resilience and resource efficiency as core to competitiveness. Robust governance reforms push firms to shift from opportunistic, project‑by‑project decisions towards long‑term portfolio choices that anticipate carbon pricing, evolving regulation and shifting consumer norms. In this emerging landscape, those who thrive will be organisations able to integrate climate risk into capital allocation, collaborate with regulators on standards, and innovate in sectors-from clean energy to low‑carbon materials and services-that define prosperity in a warming world.
The Way Forward
Ultimately, the debate sketched by Adair Turner and Nicholas Stern is not about choosing between prosperity and the planet, but about recognising how tightly the two are now bound together. The barriers they identify-political short-termism, financial inertia, technological lock-in, and uneven global trust-are formidable but not immovable.
As the lecture underlined, the tools exist: cleaner technologies are cheaper than ever, smarter regulation is well understood, and the economic case for rapid decarbonisation is far stronger than when Stern first set it out nearly two decades ago. What remains uncertain is not the direction of travel, but the speed and scale at which societies are prepared to move.
If there was a single message from the LSE stage, it was that delay is itself a decision-one that raises both the climate risks and the economic costs. Overcoming the barriers to action will demand clearer policy signals, bolder political leadership and a reframing of climate action as an engine of growth rather than a brake on it.
Whether the world can limit warming while expanding prosperity will depend less on technological breakthroughs than on institutional courage. The contours of a thriving, low‑carbon global economy are already in sight. The question now is whether governments,businesses and citizens are willing to cross the remaining distance before the window for credible action narrows beyond repair.
