The COVID-19 pandemic has not only affected all aspects of our lives in unprecedented ways, but it might also constitute a threat to a green future. When identifying resulting immediate impacts, what becomes clear is that the COVID-19 crisis exacerbates poverty due to income and financial losses, bankruptcies, effects of supply chain disruption on energy, resource use and businessproductivity. These lead to worldwide economic recession and a decrease of climate engagement. The decline of CO2 emissions caused by the COVID-19 crisis should only be considered a short-term result of global lockdowns, since the risk of carbon lock-in as part of governmental recovery plans is real and immediate in many countries.

However, the post-COVID-19 recovery programmes being proposed by a number of global investors offer unique opportunity to limit global warming and build climate resilience. A recent study conducted by the Oxford Economic Review reveals key areas of post-COVID-19 investment including clean research and development, digitalisation, green infrastructure and technology investments, green bonds, green loan guarantees for small and medium enterprises, green building, natural capital investment, investment in education and sustainability training. These initiatives could enhance green innovation and climate action. Digitalisation and green guarantee loans will potentially enable companies to improve low carbon solutions, grow faster and contribute to global economy greening.

Important efforts in mobilising resources to tackle COVID-19 impacts are already effective through issuance of green and social bonds within the international green finance agenda. As such, the Nordic Investment Bank recently issued an inaugural “Green Response Bond” for financing healthcare system reforms and labour market solutions to alleviate critical impacts on communities and supply chains. Furthermore, various development banks and issuers have stepped up to issue green awareness bonds to support companies, health interventions and economy greening, particularly in Europe and Asia, aiming at extension and diversification on a global scale.

In this regard, effectively and durably addressing the systemic impacts of COVID-19 provides an opportunity to rebuild the global economy in more equitable and greener ways, including growing transitional green finance, reinventing green supply chains and business models that anchor long-term performance. These ways enhance low carbon development, socially responsible investment and sustainability.

In summary, sustainable recovery from COVID-19 ultimately calls for a holistic focus of green finance for real prosperity.

This article has been contributed by Ir Dr Alex Gbaguidi with the coordination of the Environmental Division.