19 March 2020
Covid-19 could cause emissions to fall this year, but it may hinder a crucial COP, says Peter Cripps
I write this comment from my shed. That is because, like many of our readers, I am currently working from home as a result of the coronavirus pandemic sweeping the planet.
As I write this, it seems that the worst is yet to come, and the virus is set to continue to spread like wildfire around the globe, claiming countless victims. There is no certainty about how long the outbreak will last.
Financial markets are reeling, and central bankers and politicians are scrambling to limit the damage to the economy. These are grim times.
But if there is one silver lining amid the coronavirus chaos, it is that 2020 may actually see carbon emissions fall, as a result of the economic damage caused by the reduction in travel, industrial activity, leisure activities and employment.
Even the landmark Paris Climate Agreement four and a half years ago, at which nearly every country in the world agreed to restrict global warming to well below 2°C with the aim of restricting it to 1.5°C, has failed to stop the rise in global emissions.
It is a depressing thought that economic activity remains inherently damaging to the climate, as well as creating other environmental problems.
This has to change. The next opportunity to bring about meaningful change will come at COP26 in Glasgow in November.
Sadly, the coronavirus outbreak looks set to hinder the process, despite forcing us to curb our emissions.
I remember well how the financial crisis a decade ago knocked environmental matters down the political agenda. Overnight, the environment went from being a hot news topic, to one that paled into insignificance compared with the more immediately pressing need to patch up the financial system.
There is a danger that the same will happen now. Politicians will, understandably, be desperate to do whatever they can to resuscitate the economy.
The next COP, which was already having to compete with a looming Brexit deadline for the UK government, will now be starved further of oxygen.
If the coronavirus outbreak is still rampant towards the end of the year, the kind of mass public protests that have helped the subject be taken seriously could be banned (although it is hard to imagine Greta being silenced).
There is already talk that it will have to be a virtual COP, without physical attendance, or that it could be postponed.
Against such a stark backdrop, the role of finance becomes even more important.
The stimulus packages being unveiled across the globe need to, wherever possible, be green stimulus packages. And as central banks prepare to fire up the printing presses again, the money they print needs to be steered towards green bonds and assets with a higher ESG rating.
"Institutional investors, who have become increasingly outspoken about the dangers of climate change, need to find ways to exert pressure on governments to make economic activity more sustainable"
Institutional investors, who have become increasingly outspoken about the dangers of climate change, need to find ways to exert pressure on governments to make economic activity more sustainable.
There needs to be more lobbying by investors, and the sovereign bond market may be their best leverage point.
In short, the coronavirus cannot be allowed to infect investors' climate crusade.
Peter Cripps is editor of Environmental Finance