As countries release stimulus packages to revive economies, questions are being asked about how sustainable these measures are, and what needs to be done to achieve green recovery from COVID-19. On 1 October 2020, the Singapore Institute of International Affairs (SIIA) held a webinar on “Re-examining Sustainability and Resilience Post-COVID-19” as part of the New Horizons – a series that was started by the SIIA to support the Singapore government’s Emerging Stronger Taskforce (EST). The session featured views from Mr. Chris Stephens, Asia Director of the Carbon Trust, Ms. Fang Eu-Lin, Partner and Sustainability & Climate Change Leader at PwC Singapore, Ms. Jessica Cheam, Founder and Managing Director of Eco-Business, and was moderated by Associate Professor Simon Tay, Chairman of the SIIA. The full recording is available as premium content on the website for SIIA members.
Comparing the Green Recovery in Europe and ASEAN
In December 2019, the European Union (EU) presented the €1 billion European Green Deal to reduce carbon emissions by 2050. At a global level, this is a positive example of regional efforts to transition to a low-carbon economy, including assisting businesses and workers under a “leave no one behind” mantra. While the European Green Deal pre-dates the pandemic, it is note-worthy that 37 percent of the European Union’s €750 billion (US$830 billion) COVID-19 stimulus funding is being channelled to support its climate-neutral roadmap.
Unfortunately, the EU is an outlier.
According to a report by environmental consultancy company Vivid Economics, the world’s leading economies are not doing enough to mobilise funds for a green recovery. The G20 economies have collectively pledged over US$12 trillion in stimulus packages, and about a third of this amount is going towards industries that have a high carbon footprint, such as agriculture, transport, and fossil fuel energy. In many countries, economic stimulus is going towards supporting business rather than environmental objectives.
By global standards, Singapore is not doing too badly. A study by ING Group estimated that 10 percent of Singapore’s pandemic recovery budgets is going towards climate-related areas, including a S$5 billion (US$3.7 billion) coastal defence fund.
However, in general, Southeast Asia as a region is not placing the same amount of emphasis on sustainability as compared to Europe. Looking across ASEAN, very few national stimulus packages highlight green investment or infrastructure. To some extent, the low crude oil prices caused by the pandemic and the continued presence of fossil fuel subsidies in ASEAN markets are also a disincentive to explore more sustainable energy options.
A Call to Action Across All Sectors
There is a real need for public policy in ASEAN to step in and encourage the release of capital to support a regional green transition. Creating jobs and economic growth has emerged as the key concern for states during the COVID-19 crisis, but sustainability sectors can be growth drivers. Governments can direct stimulus funds to areas such as energy efficiency, as well as offer incentives such as tax breaks for companies involved in green initiatives.
As the world’s citizens are becoming increasingly aware of climate risks, there is a shift from shareholder-focused capitalism to a more stakeholder-centred model. The shift was happening even before the pandemic, and COVID-19 has accelerated this trend. A report released in September 2020 by the Data-Driven EnviroLab at Yale-NUS and the New Climate Institute in Germany indicated that net-zero emission commitments by cities and countries have doubled since last year. This calculation was made before China recently announced it would become climate-neutral by 2060.
Going forward, there will be greater pressure on businesses and governments to invest in long-term sustainability rather than short-term profits. Additionally, regulated standards for performance must be implemented in the private sector, along with the reliable disclosure of information to track progress and goals.
Domestically, Singapore has been working towards embracing environmental objectives through various mechanisms – including green loans issued by major banks. However, more work must be done at the regional level to ensure significant change. As a financial hub, Singapore needs to play an active role in ASEAN’s green transition and support a coordinated, effective response to climate change.
