Imagine you don’t yet know who you are. You have no idea whether you’ll be born a subsistence rice farmer in Bangladesh in 2030, watching saltwater creep across your fields as sea levels rise, or a comfortable pensioner in Bergen, Norway, drawing dividends from the world’s largest sovereign wealth fund – built substantially on petroleum revenues. You don’t know if you’ll inherit a draughty Victorian terrace in Birmingham or a solar-powered villa in Provence. Behind this curtain of ignorance, what rules would you choose to govern carbon emissions, resource extraction and the sharing of environmental burdens?
This is, in essence, the thought experiment proposed by the philosopher John Rawls back in 1971. His A Theory of Justice asks us to design the rules of society from behind a ‘veil of ignorance’, stripped of knowledge about our own position, talents or advantages. Rawls argued that rational people in this ‘original position’ would choose principles that protect the worst-off, because any one of them might turn out to be that person. His famous Difference Principle holds that inequalities are only justifiable if they benefit the least advantaged members of society.
Applied to climate change, the Rawlsian framework is seductive. If none of us knew whether we’d be born in a flood-prone delta or a temperate suburb, we’d presumably agree to strict emissions limits, aggressive redistribution of climate finance and binding commitments to protect the most vulnerable. It’s a compelling intellectual exercise – and it has, in various guises, underpinned decades of international climate negotiations, from the principle of ‘common but differentiated responsibilities’ in the 1992 Rio Declaration to the ‘loss-and damage’ provisions debated at recent COPs.
There’s just one problem — nobody is behind the veil and not many want to pretend either.
We know exactly who we are
The Rawlsian framework assumes impartiality. But the nations, corporations and individuals making climate decisions know precisely where they sit. Wealthy countries know they are less immediately affected by the adversities of climate change, even though they emit disproportionately more per capita. The average American is responsible for roughly 14 tonnes of CO₂ per year, compared with about 0.5 tonnes for the average Bangladeshi, according to the Global Carbon Project. Yet it is Bangladesh, not the United States, that faces greater existential risk from rising seas.
Older generations, too, operate with full knowledge of their position. A homeowner aged 70 making decisions about household energy efficiency knows, however uncomfortably, that the worst projected climate impacts fall well beyond their own expected horizon. The young face the inverse burden: they will inherit the consequences but currently hold little decision making power and limited influence.
Corporations are similarly self-aware. A fossil fuel major understands that its current business model is profitable now, whatever the externalities. The gap between what companies pledge in glossy sustainability reports and what they actually do – the corporate say-do gap – has been widely documented. Research by the NewClimate Institute in 2024 found that only a handful of the world’s largest companies had climate strategies that could be considered reasonable.
None of this is surprising once we abandon the pretence of the veil. These actors are not making choices from behind a curtain of ignorance. They are making them with acute awareness of their own interests, time horizons and vulnerabilities.
The say-do gap is the real veil
If there is a veil in climate action, it is not the Rawlsian one. It is the veil of stated intention – the persistent gap between what people and institutions say they will do about the environment and what they actually do.
The data on this is striking. According to a 2023 Deloitte survey, 64% of consumers across major economies said they were concerned about climate change and wanted companies to act. Yet when it comes to paying more for sustainable products, action falls away sharply. A long-standing body of research, including work by the OECD and leading behavioural economists, consistently shows that roughly 30 to 40 percentage points separate stated willingness to pay for environmental goods from actual purchasing behaviour.
At the household level in the UK, the pattern holds. In 2023, nearly two-thirds of adults told the Office for National Statistics they were worried about climate change. But Santander’s ‘Tomorrow’s Homes’ report, based on a survey of more than 4,000 people, found that when offered a meaningful sum to spend on home improvements, households would rather upgrade their kitchens than insulate their walls. Cost reduction and comfort – not climate – topped the priority list, with 79% citing bill savings as the primary driver.
This isn’t a failure of morality. It is blind reliance on the assumption that moral concern translates reliably into action.
The biases we cannot legislate away
Behavioural economics offers a far more honest account of why climate action stalls – and, more usefully, what to do about it.
Hyperbolic discounting and present bias.
Most people place disproportionate weight on immediate costs and benefits relative to future ones. This is why a household will spend £15,000 on a new kitchen that delivers instant gratification but baulk at spending the same on a heat pump whose payback period could stretch to ten years or more. The ecological benefits of decarbonisation – lower emissions, cleaner air – arrive relatively quickly. But the economic benefits to the individual household lag significantly. Rawlsian theory assumes rational agents who weigh present and future costs evenhandedly. Actual humans do not.
Loss aversion.
People feel losses roughly twice as acutely as equivalent gains, a principle first established by Kahneman and Tversky in their landmark 1979 paper on prospect theory (Econometrica, 47(2), 263–291) and further developed in their 1991 work on reference dependent preferences (Quarterly Journal of Economics, 106(4), 1039–1061). For homeowners, spending £10,000 or more on retrofitting feels like a definite loss, while the promised gains – lower bills, higher property values, reduced carbon footprint – appear uncertain and distant. This asymmetry makes inaction the psychologically comfortable default. It’s not that householders don’t care about the climate. It’s just that the timing and structure of the decision works against them.
The same bias plays out in the corporate world. Consider a mid-sized UK manufacturer that supplies components to a large multinational. The multinational, under pressure to report and reduce its Scope 3 emissions, sends its supplier a detailed decarbonisation questionnaire. The manufacturer knows that investing in lower-carbon processes – upgrading plant equipment, switching energy contracts, measuring and reporting emissions rigorously – would strengthen its position in the supply chain and may even be necessary for contract renewal. But the upfront cost is certain and immediate; the commercial reward is conditional and deferred. Faced with that asymmetry, the rational short-term response is to do the minimum: fill in the questionnaire as generously as the data allows, comment about developing a transition plan and hope the customer doesn’t probe too deeply. Present bias and loss aversion, not indifference, drive the response.
The free-rider problem.
Climate change is a textbook public goods problem – a point made forcefully by Mancur Olson in The Logic of Collective Action (1965) and applied directly to climate by Nicholas Stern in The Economics of Climate Change (2007). The atmosphere is a shared resource, and the benefits of emissions reductions are non excludable. If my neighbour insulates their home, I benefit from a marginally cleaner atmosphere without spending a penny. This creates a rational incentive to let others bear the cost – and hope to enjoy the benefits anyway. At the international level, this dynamic is precisely why decades of climate negotiations have produced ambitious pledges but sluggish delivery. Countries free-ride on one another’s commitments. Within nations, households and organisations do the same.
Status quo bias and choice overload.
The green home-improvement market is bewildering. Should a homeowner install a heat pump, add external wall insulation, upgrade to triple glazing or fit solar panels? What about battery storage? The sheer volume of options, combined with uncertainty about costs, payback periods and contractor quality, can induce paralysis. When the default option – doing nothing – is easy and costless, that is often what most people choose.
Rawls at the negotiating table
The gap between Rawlsian theory and observed behaviour is not merely academic. It has had real consequences for global climate policy.
The principle of ‘common but differentiated responsibilities’ – which holds that wealthier nations should bear a greater share of the climate burden – is essentially Rawlsian in spirit. It asks richer countries to act as though they might have been born in a climate-vulnerable developing state. But in practice, wealthy nations have consistently failed to meet their climate finance commitments. The long-promised $100 billion per year in climate finance to developing countries was not fully delivered until 2022, two years late, and questions persist about whether the accounting is generous. At COP29 in Baku, the agreed target of $300 billion per year by 2035 was dismissed by developing nations as grossly inadequate.
None of this is surprising through a behavioural lens. Wealthy nations discount the future suffering of distant populations, prioritise domestic economic concerns and free-ride on one another’s commitments. They are, in short, behaving exactly as behavioural economics would predict rational self-interested agents would do if they know they are wealthy, powerful and relatively insulated from the very worst effects of climate change.
From moralising to mechanism design
If we accept that moral appeals and Rawlsian fairness principles alone cannot drive sufficient climate action, what should replace them? The answer is not to abandon ethics but to supplement them with interventions that work with what we know about human psychology rather than against it.
Make the future tangible.
One reason households and policymakers discount future climate costs is that those costs feel abstract. Thermal imaging of homes, personalised energy audits and neighbourhood-level benchmarking can make the invisible visible. If a homeowner can see – literally see – the heat escaping from their roof, the case for insulation moves from theoretical to visceral.
Reduce regret and uncertainty.
Government-backed guarantees that homeowners spending significant sums on green improvements will receive some form of base return – whether through stamp duty relief, council tax reductions or future inheritance tax offsets – could substantially reduce the sense of loss. Digital logbooks that tag the cost of home improvements to the property rather than the owner could also help, serving as independent verification when the property changes hands.
Design defaults that favour action.
Behavioural research consistently shows that default states are powerful. Opt-out schemes work far better than opt-in ones – as demonstrated in pension auto-enrolment. Could local authorities make green home assessments a default requirement of the council tax assessment process, rather than an optional extra? Could energy suppliers default customers onto green tariffs with an opt-out rather than opt-in?
Price the externality.
The free-rider problem is best addressed by making carbon emissions costly. The UK Emissions Trading Scheme (UK ETS), which replaced UK participation in the EU ETS after Brexit, currently covers power generation, energy-intensive industry and aviation. It is expanding – domestic maritime emissions join from July 2026, waste incineration from 2028, and a Carbon Border Adjustment Mechanism takes effect
from January 2027. These are welcome steps, but the scheme’s reach remains limited. UK carbon prices have been volatile, trading at roughly £55 per tonne in mid-2025, still below EU ETS levels. For most households and SMEs, the carbon price remains invisible – an abstraction that does not yet alter daily decisions. If carbon pricing is to change behaviour at scale, its signal needs to be felt more broadly and more directly.
Harness social norms.
People are strongly influenced by what their neighbours do. Opower, the US-based energy company, demonstrated that simply showing households how their energy use compared with that of similar homes nearby reduced consumption by 2 4%. Scaled nationally, that translates to meaningful emissions reductions – achieved not through moral exhortation but through the quiet power of social comparison.
Conclusion
John Rawls gave us one of the most elegant thought experiments in political philosophy. Behind the veil of ignorance, rational beings would choose a fair world – including, presumably, one that takes climate change seriously. But we do not live behind that veil, and pretending otherwise has already cost us decades.
The gap between what people say they value and what they actually do – the say-do gap – is not a moral failing. It is a predictable consequence of well-documented cognitive biases: present bias, loss aversion, free-riding and status quo inertia. Climate action that ignores these realities in favour of moral appeals and fairness principles will continue to underperform.
The more productive path lies in all organisations designing policies and incentives that acknowledge human behaviour as it is, not as we wish it to be. That means financial mechanisms that reduce the upfront cost burden, defaults that favour green choices, pricing that reflects the true cost of carbon and trusted digital infrastructure that builds confidence in the entire green investment ecosystem. These are not substitutes for ethical ambition. They are the means by which ethical ambition can be translated into action – one household, one company and one nation at a time.
