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Report

Implications of the COVID-19 pandemic for global sustainable finance

UNEP Inquiry and the International Network of Financial Centres for Sustainability (FC4S Network) developed this paper to support thinking on how to respond to the pandemic from a sustainable finance perspective. Specifically, this paper has two objectives:

  • The first is to set out what we know about the ways in which the many different components of our sustainable financial system – market actors, policymakers, regulators, and international institutions – are thinking, planning and reacting to the pandemic, with a focus on implications for sustainable finance markets. As such, it is a work in progress, and will be updated and refined over time as new information and new ideas come to our attention.
  • The second objective is to set out a framework for assessing what levers may exist to strengthen the role of the financial system in supporting a low-carbon recovery, and the prospective roles for different communities of actors.
Key points

Authors of the report conclude that going forward, an integrated model – linking social, economic and environmental resilience – can emerge in the wake of the pandemic if practical and coordinated actions are taken. Yet, there is an equal chance of the opposite outcome (unequal, unbalanced, isolationist and destructive) if economies immediately revert to a business-as-usual path. In practical terms, this will require three major shifts in thinking:

  • Integrating scenario-based analysis of exponential risks into all policymaking. Governments need tob etter understand the economic, health and societal implications (costs) of a variety of scenarios (climate, pandemics) as well as the upsides (better health, future facing jobs, more stable and predictable tax bases, etc.).
  • Placing resiliency at the core of social and economic organization. As the resilience of a globalized economic system will only ever be as strong as its weakest links, much stronger international coordination will be required to ensure that responses can be rapid.
  • Linking economic, social and environmental health together, through a new agenda for public-private collaboration, and strengthened financial system governance. The scope for actions to align the post-COVID-19 financial system – and broader economy – with sustainability objectives is very broad. Success will require the efforts of a multitude of actors – how these independent activities come together will dictate potential for strengthening resilience. Clearly, financial regulatory measures put in place in the wake of the 2008 crisis have worked – we now need to think of what type of interventions will be needed in the wake of the pandemic to strengthen resilience not only of the financial system, but of the economy, society, and environment.