Firms’ Environmental Performance and the COVID-19 Crisis

IMF Working Papers, March 19, 2021

Source details

The shutdown in economic activity due to the coronavirus disease (COVID-19) crisis has resulted in a short-term decline in global carbon emissions, but the long-term impact of the pandemic on the transition to a low-carbon economy is uncertain.
Looking at previous episodes of financial and economic stress to draw implications for the current crisis, the authors find that tighter financial constraints and adverse economic conditions are generally detrimental to firms’ environmental performance, reducing green investments.
The COVID-19 crisis could thus potentially slow down the transition to a low-carbon economy.
In light of the urgent need to reduce global greenhouse gas emissions, these findings underline the importance of climate policies and green recovery packages to boost green investment and support the energy transition.
Policies that support the sustainable finance sector, such as improved transparency and standardization, could further help mobilize green investments.

Subject: Economic growth, Environment, Health, Prices
Keywords: appendix table, capital markets department, climate change, Corporate sustainability, COVID-19, Global, Greenhouse gas emissions, oil demand shocks, oil inventory demand shock, oil market literature, Oil market-shock, oil price shock, Oil prices, oil-market shock, Oil-market shock, Sustainable growth, transition risks

Implement climate policies and green recovery packages to boost green investment and support the energy transition.
Support the sustainable finance sector through improved transparency and standardization to mobilize green investments.