Recovery must take climate crisis into account: analysis
As the coronavirus disease (Covid-19) continues to envelop the world, the other great agenda of our time, the climate crisis, has begun to resurface from the shadows. The big question, of course, is whether the pandemic will accelerate our search for a zero-carbon world or slow us down. The lessons of the virus will not automatically be placed on the climate crisis agenda unless deliberate strategic action is taken.
Covid-19 has certainly opened everyone’s eyes to possibilities that can positively impact the climate agenda. Clean, breathable air and the reality of a work-from-home culture are the obvious. For manufacturers, shorter supply chains with lower Scope 3 greenhouse gas emissions will become a business continuity imperative. The similarities between Covid-19 and the climate crisis, both in terms of its detrimental impacts on human life and the economy and in its response that emphasizes science and the need to build resilience, may also benefit the climate agenda.
There are other reasons for optimism. A global report by Standard & Poor’s says that during the pandemic, companies like Microsoft, Royal Dutch Shell, Morgan Stanley, the Bank of Montreal and Citibank have made climate-related promises. A BBC report quoted Frans Timmermans, head of the European Commission (EU) Green Deal (which commits the EU to zero net emissions by 2050), saying that every euro spent on economic recovery measures after the crisis in Covid-19 will be linked to green transitions.
However, history and economics provide a counter-narrative. For example, after the 2008 financial crisis, global carbon dioxide emissions from fossil fuel combustion and cement production fell 1.4% in 2009, but with economic stimulus resources disproportionately allocated to industries pollutants, emissions recovered to 5.9% in 2010.
The impact of the indefinite postponement of COP-26, where countries were expected to announce the improvement of their Paris commitments, is still awaited. Big emitters like China, the EE. USA And Brazil have indicated a relaxation in environmental compliance and its application. Even though the EU reiterates its commitment to the Green Agreement, some member countries have publicly called for moratoriums. Negative growth economies in developed countries will mean less funding available to developing countries to meet their nationally determined contributions, a condition that countries like India have set to meet their own commitments. And historically low oil prices, combined with announcements from major oil producers to increase production, will run counter to the interests of a low-carbon recovery.
Therefore, there are reasons to believe that a post-Covid low-carbon recovery is neither inevitable nor automatic. Therefore, a set of five actions can and should be taken to allow this to happen.
One, push governments down a low-carbon recovery path. Climate advocates (NGOs, think tanks, academics, activists from around the world) must present evidence to demonstrate to governments the long-term resilience and economic gains from economic stimulus programs that prioritize low-track investments in carbon. This could include assisting companies conditioned on drastic emissions cuts and industry bailouts that require banks to invest less in fossil fuels and more in climate crisis mitigation and resilience efforts.
Two, make the climate crisis a popular campaign. The environmental benefits of Covid-19, renewed faith in science, as well as the comparable risks to human life posed by the climate crisis and Covid-19 are good hooks to make this happen. This requires turning the incredible scientific evidence that exists about the climate crisis into simple, understandable and actionable messages that individuals and communities, particularly young people, can use to make changes in their own behavior while influencing companies and governments in their roles as responsible customers, employees and citizens.
Three, strengthen the “business case” for climate efforts. Some of the Covid-19 weather drawbacks, such as shorter supply changes and reduced business travel, are apparent to companies and will happen. Investors and lenders, who have now better understood risk, should see the benefits of building resilience in the companies they finance. Insurers must take these risks into account. All this will incentivize companies to follow a low path.
Four, build a national consensus on the long-term low-carbon strategy. The response to Covid-19 has demonstrated both the need and the possibility of a political consensus, which is essential in a democracy. Actors in the climate crisis, such as expert groups and advocacy groups, must work to ensure that this momentum is sustained. The development of long-term development strategies for low greenhouse gas emissions for India will be a useful instrument to build such a consensus.
Five, strengthen international cooperation and institutions. To address the spatial aspects of a global challenge like the climate crisis, there is a need for a global institution to anchor the process, a role that the United Nations Framework Convention on Climate Change (UNFCC) has long played. However, the somewhat tarnished reputation of the World Health Organization during Covid-19, and the more scattered and private-sector search for a vaccine, suggests that strengthening international cooperation and the UNFCC and the United Nations Environment as institutions is a project that all climate change champions must commit to.
Shankar Venkateswaran is Chief Operating Officer, ESG, ECube Investment Advisors
The opinions expressed are personal.