COVID-19 has dealt a devastating blow to humanity and the global economy in a shockingly short period of time. The impact to life, health and economic output has been obvious and immediate. Investors and scientists couldn’t help but notice the connections between COVID-19 and climate change.
Both are large-scale calamities that put massive strain on global systems, but the COVID-19 disruptions have had a much faster impact on public health, economies and financial markets. The stakes of climate change are high, and climate change is rapid compared with the history of Earth’s climate variability, but many still question the immediacy of the effects on modern society.
That said, there are clear connections between the two: Some are directly observable impacts that are easy to see day to day. Others are broader characteristics that can help us understand how to tackle such expansive and borderless challenges.
A Greater Appreciation for Global Systemic Risks
The sequence of interconnected events that has unfolded so far with COVID-19 has helped many people visualize how powerful—and devastating—its secondary impacts and systemic risks can be. The follow-on impacts from COVID-19 have become painfully clear to the entire world, and they may serve as a preview of climate-risk impacts that may have seemed abstract to many onlookers.
When we think of climate change, we also think about how its physical stresses can impact food security, water security, human displacement and forced migration—complex and daunting downstream effects. We’re seeing the same thing in a compressed time frame with COVID-19: the tragic human toll and also the strain on critical economic systems, political systems and emergency-response networks.
The scope of COVID-19 has also demonstrated the pointlessness of trying to reduce complex solutions to a simple checklist. The interrelationships between the public-health dimension and any other human activities are undeniable—and defy binary answers. History doesn’t give us a crystal ball for how to manage disasters—whether we’re talking about severe weather events or infectious diseases.
Brief Climate Relief from Shutdowns—But Can It Inspire More?
One highly visible near-term impact of the novel coronavirus is a reduction in emissions and concentrations of pollutants caused by manufacturing shutdowns and stay-at-home guidelines. The flow of particulates and aerosols from factories and vehicles has dropped by as much as 50%, though most of these remain in our atmosphere for only a short period of time.
More long-lasting greenhouse-gas emissions might be down by roughly 6% so far in 2020. That’s significant, but it’s also unlikely to move the needle on global warming or rising sea levels unless those reductions continue. Still, the noticeable environmental response to these sudden reductions illustrates the sensitivity of our environment to changes in human behavior and economic activity.
Despite the relatively fleeting impact of reduced emissions, there’s something profound about the visual impact of clearer skies. In some parts of Asia, people have been able to see the Himalayas for the first time in a generation as pollutants retreated from the atmosphere. Water in many areas has been dramatically clearer. We can only hope that dramatic visual evidence like this will resonate with citizens in a way that quantitative models haven’t. But only time will tell.
Exposing Vulnerabilities in Segments of Society
The spread of COVID-19 has also shined a harsh light on the most vulnerable segments of the world’s population—through the lens of both the pandemic and climate change.
In the context of racial justice, environmental justice and economic justice, many of the most vulnerable communities to COVID-19 will also be more at risk from extreme weather events fueled by global warming. Many segments of society don’t have the backstop of a social safety net and may not be as able to socially distance due to rapid urbanization or because they’re needed on the front lines—whether it’s protecting the public or serving in an essential business. As a result, they’re more exposed to COVID-19 infection.
With weather patterns growing more extreme, people recovering from the virus could be more susceptible to summer heat waves. Families without air conditioning that would typically go to cooling centers might find access limited by social-distancing restrictions. Poorer or marginalized communities are likely to be more at risk from extreme weather events because of substandard housing, inadequate access to quality health care or sparse backup resources.
So, the urgency around protecting the most vulnerable communities in our world is another link between the pandemic and climate change. To the extent that both amplify disparities in basic health, economic and social needs, they’re bringing attention to what we haven’t done to help—and what we can do.
Behavioral Changes from COVID-19 Could Be Less Climate-Hostile
The world is trying to restart economic activity and ease social distancing with varying results and as progress in the public-health situation permits. The path hasn’t been smooth, and we’ve seen localized setbacks. But eventually, the world will move forward. To what extent will we return to the climate-harming activities curtailed by COVID-19?
We don’t know the ultimate answer, but we do know that changes are likely in many areas—including the need for all office workers to commute to urban centers five days a week. Many firms forced to adapt—successfully—to a fully remote work model are reexamining work protocols and office footprints. It’s likely that the forced migration to Zoom and other videoconferencing platforms has permanently changed the assumption that conferences and seminars also mean mass airline and automobile travel and hotel stays.
These are just a few examples of how changes forced by COVID-19 health concerns are also being evaluated from an economic and behavioral perspective. And there’s ultimately a climate-change dimension since any adaptations have real implications for the amount of carbon dioxide produced and the level of carbon fuels used. The implications for corporate ESG profiles likely aren’t lost on management teams either and have been a cornerstone of AB’s engagement with company management teams over the past several months.
Some connections between COVID-19 and climate change will take longer to assess. To what extent will the massive policy response to the pandemic affect the impetus to address climate change as well? Nations will have to weigh already heavy debt burdens against the choice to either support the transition to renewable energy or possibly prop up major fossil-fuel producers instead. These choices will factor greatly into the climate-change trajectory and in turn, impact the companies that operate within these jurisdictions and their various regulatory responses.
Looking at the Big Picture
In some ways, the climate-change discussion and related priorities haven’t shifted—the science and the urgency of the issue aren’t going away and will only grow in the coming years They have, however, been superseded for now by a more immediate crisis in COVID-19 that’s also causing widespread disruption to global systems.
Both COVID-19 and climate change require the planet and society to address challenges and potential devastation of high-impact global scenarios—one a deadly virus, the other increasingly extreme and deadly natural hazards. It doesn’t make sense in either case to search for yes or no answers (there aren’t any) or to compile simple checklists. Adaptation is critical and so is developing better frameworks to tackle the expansive impacts of global systemic challenges.
Perhaps what is most imperative and timely is using our experience with COVID-19 to embrace the interconnectedness and complexities that are fueling greater challenges ahead in the scientific and investment communities. While there’s hardly a silver lining to the pandemic, it does offer important lessons that can help us advance our pre-COVID-19 understanding of the risks of climate change.
Sara Rosner is Director of Environmental Research and Engagement—Responsible Investment at AB. Jeff Schlegelmilch is the Director for the National Center for Disaster Preparedness at Columbia University’s Earth Institute.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams. Views are subject to change over time.