For the first time ever, major economies have experienced lockdown and the effect on the world’s climate has been spectacular. In the run up to lockdown a few key events had left us all in no doubt of the damage being done. Recently, Greta Thunberg’s achievements in 2019 and David Attenborough’s stark warnings about the climate’s ‘crisis moment’ in January clearly demonstrated the need for bold action.
Yet the coronavirus lockdown has resulted in an incredible outcome for the environment; one that seemed an impossibility a few short months ago. As polluting factories went into immediate shut down and travel emissions ceased overnight, the result has been reduced pollution, clear skies and silent roads.
A CARBON CRASH
With scientists now starting to report on the statistics, the sheer extent of the change is almost unfathomable; a carbon crash in the making. The International Energy Agency (IEA) has reported that 8% of this year’s carbon dioxide emissions will never be generated; an event never before seen in the last century.
As emissions dropped, the effects became apparent, with the Himalayas now visible to residents in Northern India and growing numbers of fish spotted in the clear canals in Venice. In fact, it is possible to track the spread of the virus just by looking at the grid activity of power plants, initially in China and then Central Asia, to Europe and the US. Satellites and sensors are also reporting on other changes, with less movement of people and vehicles resulting in the planet actually vibrating less.
Consequently, the IEA noted that demand for energy across the world will fall by 6% in 2020; the same as India’s entire energy needs for a year.
THE EFFECT ON TRAVEL
One of the most heavily hit sectors has been travel. Rush hour has vanished, with Mumbai seeing 59% less traffic congestion and London a reduction of 28%. European flight activity has dropped by over 80%, with more than 16,000 passenger planes grounded. As a result the demand for oil has slumped, resulting in an unprecedented negative price for the commodity.
A LEGACY FOR CLIMATE CHANGE
So what is likely to change following this global shift? Many people have been able to quickly transform their working practices and travel patterns, leading to companies considering more long-term remote and flexible working strategies. There’s a greater understanding that what has gone before – burning fossil fuels, increasing levels of pollution – has a catastrophic effect on our health and our lungs. Further to this, some early scientific studies into the pandemic indicate that there is greater mortality for those who catch COVID-19 and live in polluted areas, where their lungs have already suffered damage.
With this in mind, cleaner cities and less pollution are possible. Solar power, wind farms, and electric vehicles can all play their part; indeed sales of electric cars and bikes have already surged across Europe, despite the challenges for car manufacturers.
IS IT ENOUGH?
As lockdowns ease, and people find a new normal, it’s troubling to consider that the benefits to the environment may be quickly reversed. Economies cannot exist in lockdown forever; recovery must take shape as soon as it safely can. And despite the sheer scale of the changes, the pace of global warming continues regardless. The level of CO2 has risen steadily since 2010 and experts fear that even this year’s pause button won’t stop the increase in global warming.
THE RESPONSIBILITY FOR BUSINESS
As businesses and economies recover, the need for green promises and ambitious corporate social responsibility plans will be more important than ever. Governments are already showing the first signs of setting the trend, with policymakers in the UK attempting to use reduced traffic in London to re-write transport plans and promote safer streets for bikes and walkers.Ultimately our own behaviours will help drive change, as investors become even more focused on environment and social governance (ESG). Research has even shown a link between good ESG practice and company performance, so it’s likely that this theme will become increasingly relevant in corporates’ attempts to survive the impact of the pandemic.
We have recently launched our own range of ethical portfolios for those who are keen to invest with a greater focus on ESG. For more information on ethical investing, or any other aspect of your portfolio management, please contact your nearest office.
Charlie Buxton, Portfolio Manager