As countries around the world continue to battle the spread of Covid-19, economic forecasts remain grim. The World Bank estimates a 5.2% contraction in our global GDP for 2020.
As we contemplate our way out of this crisis we are faced with two choices: A return to our economic model that has come at the cost of our planet’s regenerative capacity and will undoubtedly put us, again, on the path towards a future crisis; or re-imagining a sustainable economic model that prioritizes the health and well-being of people and the planet.
Each of these options can be built into the economic stimulus packages and can make or break the world’s net-zero pathway post-pandemic.
The need for a green recovery
A briefing paper recently released by Climate Action Tracker, for instance, warns that if governments fail to implement low-carbon measures or roll back existing climate policies, emissions could rebound and even overshoot pre-COVID projected levels by 2030.
Earlier this year, a WWF study projected that the loss of nature would cost the world at least $479 billion annually by 2050, demonstrating the intrinsic link between economy and environment. Emerging infectious diseases similar to COVID-19, particularly, are linked to deforestation and habitat-loss pushing wildlife into closer contact with human settlements.
The role of the private sector
The private sector presents a largely untapped opportunity for the implementation of nature-based solutions that benefits business, society, and the planet.
However, CDP’s recent policy brief indicates that only 15% of the 543 responding companies are undertaking nature-based solutions within their operations, such as forest conservation and reforestation, with Asian companies (25%) leading the trend.
The economic case for a green recovery from the present crisis is as clear as ever and now overwhelmingly supported by business leaders around the world. Last month, 155 companies — with a combined market capitalization of over US$ 2.4 trillion and representing over 5 million employees — came together to call on governments to align their policies and recovery efforts with science-based targets.
Raising policy ambition to recover better
With the capital markets poised to finance such a shift, a few countries are emerging as the frontrunners in ensuring the accountability of public spending and its alignment with existing climate actions.
Canada, for instance, has announced a series of economic response measures requiring companies to disclose on climate-related issues in order to avail of the government support, while the European Commission has pledged that its €750bn recovery plan will stay committed to EU’s climate goals.
This vision is also shared by developed economies in the Asia Pacific (APAC) region: New Zealand and South Korea. Both are lauded for their effective handling of the COVID-19 pandemic and are putting forth comprehensive national plans that jointly address job creation and green recovery.
Notably, it is not the first time that South Korea is turning a large-scale economic crisis into a catalyst for inclusive development. The country spearheaded a national strategy for “green growth” back in 2009 in the wake of the 2007-08 financial crisis.
Although the heavy reliance on coal-powered energy in Southeast Asia remains a challenge for the region’s emerging economies to respond to the wider call for a low-carbon transition, there have been regulatory developments paving the way for increased sustainable finance initiatives.
This includes the proposed plan of Malaysia’s central bank Bank Negara Malaysia (BNM) on an EU-style green taxonomy for banks and insurers in identifying and classifying climate-related risks and opportunities. Most recently, the Indonesian government is reportedly working with a local organisation to roll out an ambitious USD$1b economic recovery plan by installing thousands of rooftop solar panels. The plan is expected to create new green jobs, help save public costs in electricity subsidies, and address the energy needs of the country’s poorest households.
A wake-up call for renewed, inclusive environmental action
Whether or not these affirmative initiatives remain top of the region’s recovery plans hinges upon the renewed commitment from our world leaders.
This present health crisis and its economic impacts is a wake-up call, and in response, governments must use this critical moment to invest in a more resilient and sustainable future.
Mandating and increasing the standards for ESG data transparency would be the first steps in steering our economies in the direction that our world desperately needs.