Across the Global South, there is a move towards green industrial transformation and a green transition. That transition will require massive investments that must recognise multiple interdependencies across the value chains. This is sometimes referred to as ‘inclusive investment’ but there is an urgent need to better define what inclusive investment means for governments, the private sector and development stakeholders. This can best be done through G20 channels. Most importantly, a green industrial transformation needs to be incentivised, not thwarted by punitive regulatory measures. This will include incentives for a just transition that are contextualised to different sectors, capacities and economic size, while also working within reasonable timeframes that take into account those contexts.

 The G20 could endorse incentive-based measures that promote inclusive investment in green industrialisation through market mechanisms and that result in local industry, jobs and value-added green exports. To do so will require innovative financing, de-risking, guarantees, and long-term business plans with concessional funding as part of the mix.

The policy brief outlines options to support green industrial transformation in low-income countries and lower-middle-income countries that avoid creating obstacles to investment and identify creative approaches to ‘thorny issues’ facing governments’ desire for a green transition that balances immediate development needs and long-term transformational development objectives. The authors provide definitional parameters to the meaning of ‘inclusive investment’. The brief provides actionable recommendations for the G20 and other stakeholders. These may relate to the implementation of existing initiatives, address challenges relating to data and reporting, or inform emerging areas of interest such as critical minerals.

The policy brief builds upon policy briefs submitted under Brazil’s G20 presidency, as well as outcomes of the Africa Climate Summit and programmes supported by, for example, the African Union Commission, the United Nations Development Programme and the European Union. The brief uses contemporary cases from the African experience in the context of the South African G20 presidency and also draws upon global good practices.