In our previous article on Covid-19, we have compiled the views on the relationship between Climate Change and Covid-19 and we have examined which positive and negative effects could have epidemic on the environment. In this article, we will talk about the effects of the epidemic on the economies of companies and governments and the experts' advice on this issue.

We are able to make radical decisions to eliminate the risk

Dr. María Mendiluce, the CEO of the "We Mean Business" initiative, whose one of the founders is CDP, recently published an article and mentioned the possible economic effects of the Coronavirus[1]:

First, we - families, companies and governments - have seen that we have the power to act radically across a serious risk. We did not hesitate to suspend “normal life” as we saw that the virus could pose a deadly threat on a global scale. Some companies have completely changed their way of doing business to protect their employees and encouraged them to work remotely. Some governments have left their parties aside and cooperated to take serious measures, or offered their citizens unprecedented economic support packages.

As a result, the whole world showed the courage to make radical decisions to eliminate the risk.

There is a message for companies from experts: “You should invest in Green Economy”

The second fact that the epidemic allows us to see is actually a stimulus for us. Life on earth has a delicate balance that we cannot interfere, and humanity's life on earth is fragile and vulnerable. Maybe it takes a little longer than the virus, but the climate crisis also poses such a fatal, destructive risk for our world. This epidemic shows that states should take more decisive steps to reach the net zero carbon target and limit global warming to a maximum of 1.5 degrees by 2050. Mendiluce also has some recommendations for governments to tackle the economic effects of Covid-19:

- The economic crisis that has arisen and the ongoing climate crisis must be handled together and both must be dealt with equally.

- To the extent that investment is made in economic growth, investment should also be made in reducing emissions, providing fresh air and providing quality employment.

- The government’s targets should be accorded with the goals of the Paris Agreement, which is committed to reach the net zero carbon target by 2050 and limit global warming to 1.5 degrees.

Again, according to the article published on the We Mean Business website, another evidence that both governments understand the importance of combating increasing threats, including climate change is: The European Union is set to make ‘greening the economy’ an essential part of its efforts to recover from the impacts of the COVID-19 crisis[2].

Aron Cramer, President and CEO of BSR, shared a few suggestions on how companies should learn from this crisis period[3]:

- The social contract, meaning the roles and responsibilities of government and business and the needs of citizens and employees, is being tested in an extreme way right now. Therefore, you must fulfill your duty.

- Resilience in the face of fast-changing attitudes and actions on the part of a company’s workforce also present questions of fundamental importance. And we also know that political change can come overnight and test our models. In many ways, the rise of ESG investing is asking one simple question: is your business resilient in the face of massive change?

The World Business Council for Sustainable Development says that companies have a lot of responsibilities during the epidemic period. You can visit their website to see what practices the companies that are members of the Council have done to support the fight in this critical period[4].

Reduced carbon emissions are a temporary result, the important thing is to maintain it

The United Nations recently published a report called "Shared Responsibility, Global Solidarity" and mentioned the socio-economic effects of the epidemic.[5]

As a result of social isolation, it has been stated that there is a “short-term” positive result in a certain decrease in carbon emissions due to the cessation of production in some sectors and the home-isolation of many people. But reduced carbon emissions are a temporary result, the important thing is to maintain it.

The report also showed how entire Sustainable Development Goals, which are targeted to be achieved by 2030, will be affected by the outbreak. For example, the goal of “Zero Hunger” will be affected with the disruption of the food production and distribution process; the goal of “Gender Equality” will be affected with the increase in the number of women who have experienced violence at home and that it is impossible for them to leave the house under existing conditions.

With the change in the priorities of the economies, the “Climate Action” target also will become more difficult to achieve.

The number of countries adopting the "Green Economy" for economic recovery is increasing

The idea that investing in climate targets will be an important part of the plan to get rid of the economic effects caused by the outbreak, has already started to be accepted in many countries. European Union officials stated that in the early days of the pandemic, the "Green Deal" document was the source they should get guidance in the recovery processes of the economies. On April 9, 2020, 10 European Ministers of Environment came together to publish a joint letter and reiterated their views[6]. In the letter, they said that the “Green Deal” will enable countries to transition to the green economy while drawing a policy framework that will increase growth. They added that especially “the appeal of short-term solutions” should not be undertaken and investments should be made in areas such as sustainable mobility, energy-efficient buildings, renewable energy and biodiversity recovery.

The Canadian Government has also recently announced that they have begun to make plans for the post-epidemic economic recovery and have devoted a serious budget to climate. "When economic recovery begins, Canada can have the opportunity to transition to a cleaner and healthier economy for everyone," said Moira Kelly, a spokesman for Environment Minister Jonathan Wilkinson[7].

Increasing importance of renewable fuels

Another topic that has been talked about a lot lately is the oil prices that have dropped to the lowest level in the last 20 years due to the Covid-19 epidemic and the decreasing demand, which has affected the whole world. This can lead to the abandonment of fossil fuels and the shift to cheaper, safer and environmentally friendly renewable resources, as many developed countries have already committed to doing by 2025.[8]

After the 2008 crisis, we missed the opportunity to make this radical change, but today's conditions are very different compared to 2008[9]. Renewable energy technologies cost much less than those years. For example, electric vehicles are now much more visible and accessible.

“Multi-stakeholder partnership” is a must in combating risks

It is evident that we need a multi-stakeholder approach at these times when the agenda is common in every country in the world. We have all seen that multi-stakeholder partnership is vital in order to prepare for the upcoming economic, political and social consequences and to react quickly to problems[10]. According to Andrew Winston, an expert in business and sustainability, the lack of multi-stakeholder partnership is the weak muscle of companies. Companies have seen how important it is to cooperate with the government, with customers and supply chains during this period, and they need to strengthen these partnerships to respond to problems they may face in the future.

The World Bank also proposes “Green Growth”

In the blog post published by the World Bank; they stated that using incentive packages and investing in areas such as energy efficiency, nature protection, clean energy options and sustainable transportation will create a very clear win-win situation[11]. For example, restoring the damaged forest areas creates employment for many people in the short term, while on the other hand it can provide billions of dollars in profits as it will bring better crop yields.

The issue of “social bond” is critical in this period

Social bonds, which aim to reduce or eliminate the effects of a particular social problem, are an option where both the public and private sectors have access to the capital needed to meet their health needs and maintain their economic stability during this epidemic period. The International Finance Corporation (IFC), which was established as the private sector arm of the World Bank Group, mentioned 3 different social bond case studies for 3 different sectors in its report focusing on this issue[12]. For example, it is an important social problem that many people become unemployed as a result of the temporary closure of small businesses. The report mentioned the option of providing the necessary financial support to protect these people through this project. If these people do not lose their jobs or continue to be employed in other ways, a serious social problem will be eliminated, and the goal of “Decent Work and Economic Growth”, which is one of the Sustainable Development goals, will not be destroyed.

Making Europe's businesses future-ready: A green and digital New Industrial Strategy

To uphold Europe's industrial leadership, a new Industrial Strategy will help deliver on three key priorities: maintaining European industry's global competitiveness and a level playing field, at home and globally, making Europe climate-neutral by 2050 and shaping Europe's digital future.[13] The strategy identifies the key drivers of the industrial transformation of Europe in general and proposes a number of innovations. For example some of them; modernizing and de-carbonizing energy-intensive industries, supporting sustainable and smart mobility industries, increasing energy efficiency.