Four economic principles of just sustainability transition

Equitable income distribution is desirable for moral, economic, and social reasons. Recent studies, however, indicate that improved income allocation will result in increased environmental impacts due to our socio-economic system’s current settings. Therefore, we explored the key aspects of a system that can more evenly reallocate natural and economic resources while reducing negative environmental impacts. We found that the capital is extremely important as a means of material flows and stocks. Thus, effective policy interventions should target mechanisms at this very market. Based on a comprehensive literature review and statistical analyses at various levels, we proposed a four-step policy framework that includes 1) reducing and targeted savings, 2) reshaping governments’ spatial decisions and 3) role in the housing market, and 4) changing the rates of depreciation in income tax legislation used globally.Author summary: Over the last decade, there has been an increasing emphasis on economic inequality in the sustainability discourse. Inequality in wealth and earnings evokes social tensions and keeps holding back the efforts towards a just and sustainable society. However, recent studies show, that we cannot reach an aim of a more equal society and decreased pollution and natural resource use in the same time. We discovered that the capital market is extremely important with regard to the connections between the society and its effect on Nature. As a result, a fundamental intervention should attempt to considerably reshape this layer of the economy in order to address the various problems of our ecological crisis and the inequality issue that it entails. However, a disruption in the capital market would cause substantial social damage, such as shortage on the housing market or through the discontinuation of innovations. The aim, then, is to identify selective yet market-oriented regulatory instruments. Our findings propose a four-step policy framework that provides a theoretical basis for selecting these instruments.