The Covid-19 pandemic is a global emergency bringing health and economic devastation, endangering lives and communities everywhere. It is a stark reminder of our economic system’s fragility, exposing deep social inequalities and our vulnerability to systemic shocks, including climate change.
The emergence of this threat does not reduce the need to respond to the ongoing climate emergency, which remains the most significant long-term threat to economic and social stability.
The science is clear: the longer we delay action on climate at the pace and scale needed, the more difficult the impacts will be to mitigate, with disastrous effects on people and the planet.
In the wake of the pandemic governments around the world are unleashing unprecedented stimulus spending plans, with many governments specifying green measures as a core part of the spending. The good news for Europe is that policy leaders have shown clear direction, ensuring that tackling the climate crisis is at the heart of the economic response to Covid-19.
Back in July, the EU agreed the most ambitious climate plan to date with some $572 billion earmarked for climate-related industries including electric cars, renewable energy and sustainable agriculture. Since then, climate ambition has been raised with the President of the European Commission, Ursula von der Leyen, proposing tougher emission reduction targets of at least 55% by 2030, compared to the current target of 40% from 1990 levels.
The latest research shows that this approach is rooted in sound economic reasoning, and harnessing climate action to help recover from the turmoil of the pandemic is good for economic and jobs growth, as well as tackling the escalating climate crisis.
We Mean Business has conducted an analysis with Cambridge Econometrics that shows green recovery measures -both in the EU and globally- are more effective at boosting economic growth and jobs over the long term, compared with traditional stimulus measures by governments, such as a sales tax cut (VAT). Additionally, these measures provide large emissions reductions globally, with a 9% reduction forecast by 2030 versus pre-Covid-19 levels.
The stimulus measures under the green recovery plan covered by the analysis, in addition to a VAT reduction are: public investment in energy efficiency, support for wind and solar power, public investment in upgrading electricity grids, a car scrappage scheme in which subsidies are only provided to electric vehicles (EVs) and a tree planting program.
In the EU, the research shows the VAT recovery scenario and green recovery plan are both effective at stopping the economic and jobs slump getting worse, but the green recovery plan also brings long-term benefits for employment levels in the EU. Additionally, these measures provide large emissions reductions in Europe, of 16% by 2030 versus pre-Covid-19 levels.
[Escuche el ‘podcast’ de ‘Green Deal. La oportunidad de Europa’: ¿Cómo financiamos el Green New Deal?]
Similarly, analysis by Oxford University found that «green projects create more jobs, deliver higher short-term returns per dollar spend and lead to increased long-term cost savings, by comparison with traditional fiscal stimulus.» And as a report led by Corporate Leaders’ Group (CLG) Europe demonstrates, decarbonization policies are essential if we want a resilient and sustainable labor market.
It’s also an approach that has strong backing from citizens around the world, with two-thirds of respondents to a recent Ipsos Mori poll showing support for a green economic recovery from Covid-19.
Business backs bold climate action
Companies around the world, even as they are dealing with the multi-dimensional impacts of Covid-19 recognize that now is a moment to reset the global economy -ensuring a future that protects human health by accelerating the transition to a resilient, zero-carbon economy by 2050 at the latest.
Over 990 companies are now committed to setting science-based emissions reduction targets, with many companies raising ambition in recent months, including accelerating climate investments and projects as part of their plans. And the number of companies committed to Business Ambition for 1.5ºC has surpassed 290, covering 42 sectors, 9.5 million employees.
Meanwhile, more and more companies are calling on governments to invest in climate action and resilience to create jobs and recover better. To date, over 1,200 major global companies have signed letters and statements calling for actions to tackle climate and Covid-19 together, to deliver a just and inclusive economic recovery and accelerate the transition to a zero-carbon economy. This included targeted efforts in major EU nations, including Spain, The UK, Germany, France, Slovenia and Netherlands.
Companies also continue to back bold climate policy ambition. In September, over 170 business leaders and investors, led by CLG Europe, urged EU heads of state to set higher 2030 emissions reduction targets.
Never before have governments seen such decisive support from business to ensure we accelerate the transition to a resilient, zero-carbon economy and all the benefits that would bring to society.
Companies know that the decisions governments make now will lock in the strategic direction of entire economies for years to come, either helping or hindering the world’s ability to increase climate action at the necessary speed and scale.
To address the climate crisis while boosting economic growth, creating decent jobs, addressing inequality and increasing resilience, we call on leaders to:
- Prioritize policy and spending to accelerate the transition to an inclusive, just, resilient, zero-carbon economy, including investments in: innovation, renewable energy, zero-carbon transport, zero-carbon materials and built environment, decarbonizing industrial sectors and embedding circular economy, drive sustainable agriculture and food systems, and invest in natural climate solutions.
- Recognize the vital importance of multilateral institutions and international cooperation to tackle global challenges in line with science.
- Take firm action to permanently remove market-distorting fossil fuel subsidies, and put a meaningful price on carbon that incentivizes cost-effective, zero-carbon investment.
- To fully manage climate change risks and ensure that financial markets act accordingly, make climate-related financial disclosure mandatory across the economy in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
- Ensure that central banks and financial regulators embed effective climate risk management into financial systems and their operations and shift their portfolio investment to zero-carbon investments.
- Ensure that finance flows to support climate transition and build resilience in developing countries and vulnerable communities.
- Support a just, fair and inclusive transition: invest in zero-carbon industries and job creation, while supporting workers and communities through the transition.
This moment of crisis can be a turning point in the race to reaching net-zero emissions together, as a healthier, more prosperous society. One where health is protected from pollution and climate change impacts, such as rising temperatures; one where people have decent jobs with long-term prospects that aren’t tied to outdated, polluting technologies. Together we can build back better to create a future where societies and people are more resilient and prosperous.