Sustainable investing in a post-Covid world

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The coronavirus outbreak has sent shockwaves through the global economy, and as businesses struggle to cope with the impact, one thing has become increasingly clear. 

In its wake, the pandemic will leave major changes, reshaping the ways most of us live, work, learn and find entertainment on a day-to-day basis. But, amid the alarm and disruption, it has also created the opportunity and impetus to consider what all of us – from governments to public and private enterprises and individuals - should be doing to “build back better”. 

That means rejecting a blind resumption of past practice and expectations and, instead, committing to bold and effective measures to promote the principles of a green economy and sustainable investing. 

The first steps have already been taken through digitisation and initiatives to boost energy efficiency. But Covid-19 is now accelerating the process, as populations around the world realise the imperative of tackling issues like public health, pollution and global warming - and governments promise the funding to make it happen.  
    
“There is a huge amount of interest in a ‘green-shaped’ recovery,” says Phineas Glover, Credit Suisse’s head of ESG (environmental, social and governance) research for the Asia-Pacific region. “People see it is the way to stimulate growth in the short term, deal with some of the recent fallout, and tackle the next big systemic crisis of climate change.”  

But those, he adds, aren't the only compelling reasons for backing the concept of a green stimulus. For instance, a number of respected studies have shown a very clear “multiplier effect”, with new jobs and attractive returns in developed markets laying a foundation for sustainable growth. 

In addition, renewables and green technologies have improved in terms of productivity and price competiveness over the past decade. There is a clear need for new investment in everything from transport infrastructure and power systems to construction projects, renovation and the development of smart cities. And the sheer scale of the related recovery packages announced by the EU and others - though much of the funding is not yet earmarked – has the potential to be truly transformative.  
 
“So, for a green recovery, the fundamentals are there,” Glover says. “When we talk about job creation, the evidence stacks up, and in the global scheme of things, there will be a much bigger lift than after the 2008-09 financial crisis. Back then, the argument was less clear and the productivity trade-offs were less obvious.”