Wealthy individuals fuel climate crisis through wealth more than consumption: Climate Inequality Report 2025

“…wealthy individuals often serve as shareholders in high-emitting industries — profiting from and shaping the very processes driving the climate crisis. The findings show that the world’s wealthiest 1 per cent account for 41 per cent of emissions associated with private capital ownership versus 15 per cent of emissions associated with consumption. This implies that per-capita emissions for an individual in the global top 1 per cent are about 75 times higher than those of someone in the bottom 50 per cent under the consumption-based approach, and about 680 times higher under the ownership-based approach,” it said.

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As per the ownership-based approach, the carbon footprint of the wealthiest 10 per cent in France, Germany, and the US is three to five times higher than suggested by consumption-only estimates, it said. In the US, for instance, the top 10 per cent account for 24 per cent of emissions under the consumption-based approach, but 72 per cent under the ownership-based approach, the report said adding that the contribution of the wealthiest 1 per cent is disproportionately large.

In the consumption-based approach, the share of total emissions of the top 1 per cent stands at 3 per cent in France, 2 per cent in Germany, and 6 per cent in the US. When seen for ownership emissions, these shares rise to 44 per cent, 45 per cent and 43 per cent for France, Germany, and the US, respectively, the report said.

This concentration of emissions linked to wealth, could be partly addressed via a tax on the carbon content of wealth, the report said. “We propose a carbon-adjusted tax on wealth and investments, with the double goal of discouraging high-carbon investments and financing the green transition in a progressive manner,” the report said. Such a tax could be designed as an additional component of a wealth tax, adjusting each taxpayer’s liability according to the carbon intensity of the assets they own, it said adding that implementing such a scheme would require systematic data collection from asset holders and financial institutions.

A wealth tax on the carbon content is likely to be more progressive than standard carbon taxes, which are almost entirely passed on to final consumers, it said, adding that carbon taxes on wealth rather than consumption may prove more effective as consumers often lack immediate substitutes for fossil fuels, whereas asset owners — particularly those with financial portfolios — can more readily shift their investments to cleaner alternatives.

Citing a 2025 study by Chancel and Yannic Rehm, the report said a 150 euros per tonne tax on the carbon content of wealth could yield around 36 billion euros in France, 74 billion euros in Germany, and $534 billion in the US.

As other policy options, the report suggested a ban on new domestic dirty investments, such as fossil fuel exploration, to halt further contributions to climate change along with public investments and shared public ownership (international, national, local, and cooperative), to accelerate the shift to a resilient, low-carbon energy infrastructure that has the potential to reduce wealth inequalities.

“…the poorest and most vulnerable bear the heaviest burdens of climate damage while having the fewest resources to adapt or to invest in mitigation. Without decisive action, climate change risks deepening both private and public inequalities worldwide: not only the distribution of future climate damage but also the ownership of climate-related investments will have profound consequences for the global distribution of wealth,” the report said.

The report said climate change is advancing faster than ever and projections suggest that the remaining global carbon budget for limiting warming to 1.5°C could be exhausted within three years. Maintaining global temperature increases below 2°C is a “tremendous challenge”, it said. Publicly-owned low-carbon assets can help rebuild productive state capacity and create lasting public value. New sovereign green investment funds can be an effective tool to accelerate the transition, the report said.