WHAT’S NEXT FOR CLIMATE CHANGE?
● Relentless efforts to combat Covid-19 have shifted the world’s focus away from other hot-button issues that had been gaining momentum, such as climate change.
The good news is that the massive curtailment of travel and other economic activity because of the Covid-19 outbreak has reduced carbon emissions across the board this year. Energy use in China is down 25% as manufacturing activity and fuel consumption declined as businesses were shuttered and millions of people stayed at home under a strictly enforced quarantine.
Blue skies are now seen across much of China as the lack of traffic has brought a sharp improvement in air quality, while clear water has returned to the canals of Venice as Italy undergoes a lockdown.
Analysts say this year could see the first fall in global emissions since the 2008 global financial crisis. However, it is unlikely the pandemic will reverse the ongoing upward trend in global emissions. This is because the outbreak is already causing severe economic conditions, leading many countries to consider sacrificing long-term environmental goals to reboot their economies.
China, for example, is exploring easing emissions standards for the automotive industry which has been hard hit this year.
Economic disruption and behavioural adjustments could present other opportunities for long-term changes in the way we consume energy as poor air quality damages people’s health, especially their lungs, making them more vulnerable to the virus. Others have argued that Covid19 is a direct result of people’s mistreatment of animals and the illegal wildlife trade.
The future of work is one area where Covid-19 could result in long-term change, given the current trend of working from home, which reduces transport-related emissions among other things.
As remote working gathers pace it could also transform the way people interact with one another, leading to fewer physical meetings while reducing demand for longhaul business flights.
Global air traffic declined by 4.3% year-on-year in February, even before countries started imposing travel bans and quarantines. With the transport sector being one of the biggest contributors to greenhouse gas emissions, changes to business travel could result in some significant reductions in energy consumption.
As country leaders start to repair their economies they could also consider focusing on the development of clean technologies and other environmentally friendly growth areas as part of their economic stimulus packages.
This crisis is a wake-up call for companies to take environmental, social and governance risks seriously
Perhaps more importantly, this crisis is a wake-up call for companies to take environmental, social and governance (ESG) risks seriously and to understand their operations within this framework to better meet the challenges of the modern world.
As we grapple with greater and more severe climate risks, investors and decision-makers will need to look carefully at how their businesses are responding to the growing complexities in the world.