Emissions have fallen dramatically since the start of the COVID-19 crisis and shuttering of much of the global economy. At the peak of the pandemic in China, CO2 emissions fell by as much as 25 percent. In the European Union emissions have fallen by nearly 60 percent. All told, forecasters expect global emissions to fall by over 5 percent overall in 2020—the greatest annual reduction on record.
Yet these short-term gains will have minor long-term effects unless they facilitate deeper and longer-term changes. So is it possible to merge economic prosperity with sustainability? We asked some experts to join our spring virtual summit, Paradigm Shift and share their views.
Making a choice between quick and dirty or slow and sustainable
Many factors will affect the direction of travel, says Bertrand Badré, CEO and Founder, Blue like an Orange Sustainable Capital, speaking at our recent virtual event, Paradigm Shift.
“We had this conversation twelve years ago following the global financial crisis,” he says. “And there’s been little meaningful progress towards achieving the goals set out following that event. And that’s because the underlying system never really changed.”
“The recovery phase of this crisis will be difficult because of the state of the economy and lack of finance available.”
Badré is more optimistic about greater change occurring now, however. He believes the COVID-19 crisis has exposed the fault lines in the system to the point where it can’t be rebuilt as it was before—something that didn’t happen during the GFC.
But that doesn’t guarantee sustainability will be a key pillar of the rebuild. “The recovery phase of this crisis will be difficult because of the state of the economy and lack of finance available,” he says. “Because of these issues, governments and business leaders have hard decisions to make about what to prioritize.
"The question is: will they fall back on old habits and ways of working to rebuild quickly? Or will they take the time to rethink and rebuild more sustainably?”
Kicking the crisis down the road
Jenny Davis-Peccoud, Partner, Global Sustainability & Corporate Responsibility at Bain, agrees that it’s crucial to find a way to stimulate economic growth more sustainably. Yet, like Badré, she fears policymakers and business leaders will make short-term decisions detrimental to long-term sustainability goals.
There’s evidence of this happening already. China, for instance, is seeking a quick economic bounceback by investing in profitable, yet polluting industries. The government approved more coal-powered plants in the first three weeks of March than it did overall in 2019. While in the US, the $2 trillion relief package carries no environmental stipulations.
The consequences of these decisions will likely lead to far greater challenges down the road, Davis-Peccoud says. She stresses that despite the disruption caused by COVID-19, this is only a “dress rehearsal” for the bigger climate crisis that’s coming unless things change.
Bridging the gap between economic prosperity and sustainability
So, what’s the solution? How can businesses balance short-term economic recovery with their longer-term sustainability goals? For Gert Sylvest, co-founder of Tradeshift and GM of Tradeshift Frontiers at Tradeshift, part of the solution comes from digitizing corporate supply chains.
The average consumer company’s supply chain accounts for more than 80 percent of greenhouse-gas emissions, according to McKinsey. Yet, this is a “hidden truth” for most organizations, says Sylvest, because they have very little transparency into their ecosystem of suppliers.
This all comes down to the fact that most global supply chains run on paper,” he says. “Companies just don’t have the data needed to spot and change the unsustainable behaviour occurring in their supply chains.”
However, with the COVID-19 crisis putting supply chains under immense pressure, there’s a renewed focus from business leaders to digitally transform their supply chains. This is creating an opportunity for businesses to rectify this problem.
“Companies just don’t have the data needed to spot and change the unsustainable behaviour occurring in their supply chains.”
“When businesses make digital connections with their suppliers they start illuminating what’s happening in their supply chain,” says Sylvest. “And with this transparency, they can work with their suppliers and use tools like sustainable finance to incentivize them to make better and more sustainable choices.”
Is true sustainability finally within reach?
There is no guarantee that business behaviour will change coming out of this crisis. The desperate need to drive short-term recovery may well override any long-term sustainability targets.
But, in digitizing the supply chain businesses have a chance to minimize their carbon footprint while also creating more resilience and adaptability in their business.
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