June 3, 2020 / 5:54 PM / a month ago

Post-virus green reset urged for divided, ailing economies

LONDON, June 3 (Thomson Reuters Foundation) - As protests over racial injustice sweep the United States and a virus-driven global downturn threatens to hike inequality, spending to restart economies must focus on creating a “greener, smarter and fairer world”, top public figures urged Wednesday.

About 170 nations will see their economies shrink this year, bringing more debt, deficits and “a very high risk” of greater poverty and economic disparity, said Kristalina Georgieva, managing director of the International Monetary Fund (IMF).

“We know that this pandemic, if left to its own devices, is going to deepen inequality,” she told an online event organised by the World Economic Forum (WEF).

But if stimulus spending - which the United Nations says could amount to 10% of global GDP - helps strengthen “the social fabric of our societies” and protect vulnerable people, it could result in “a better world for all”, she said.

The money might be invested in expanding social programmes, improving education, creating low-carbon jobs and reducing climate-change risks, which hit the poor hardest, she said.

Britain’s Prince Charles said the pandemic - and financial stimulus to battle it - offered a rare opportunity to wrest the world’s economy onto a more sustainable path.

“We have a golden opportunity to seize something good from this crisis. Its unprecedented shockwaves may well make people more receptive to big visions of change,” he added.

But, as climate change and other threats to stability grow globally, there is only a “rapidly shrinking window of opportunity to rethink”, he added. “It’s an opportunity we have never had before and may never have again,” he warned.

The WEF and partner organisations on Wednesday proposed a “Great Reset” initiative to ensure the pandemic recovery puts economies onto a more sustainable and fairer path.

CONSUMER CHOICES

Ma Jun, chairman of the China Green Finance Committee, said government spending to battle coronavirus-linked economic downturns is likely to reach 10% of GDP in the United States and Europe, and about 8% of GDP in China.

With global warming-related risks rising each year, those “very, very big” sums must be spent in ways that not only create jobs and restart economies but set the world up to deal with the looming climate crisis too, he said.

“The recovery has to be greener than any of the previous recoveries,” he said.

That could mean taking a hard look at the carbon footprint of stimulus projects and giving consumers incentives to spend support cash on everything from energy-efficient air conditioners and refrigerators to electric cars, he said.

Bernard Looney, CEO of British energy giant BP, said bailout funding for companies should have “green conditions” attached, and that current low fossil-fuel prices presented a perfect opportunity to ditch subsidies for oil, gas and coal.

“Energy prices should reflect real costs,” he told the event.

One of his company’s own U.S. refinery workers had told him he would prefer to see his hydrocarbon job vanish than put his grandchildren’s lives at risk from climate threats, Looney said.

Brad Smith, president of tech multinational Microsoft, said he believed consumer products should carry emissions labels - like nutrition indicators on packaged food - to help buyers choose low-carbon options.

“If we can empower consumers, I think we unleash this next generation to have a broader impact more quickly,” he said, noting that his firm aims to remove more planet-warming emissions from the atmosphere than it emits by 2030.

But whether corporate behemoths and international finance agencies are genuinely prepared to make the sweeping changes required to rapidly slash emissions, abandon short-term financial incentives and narrow inequality remains unclear.

Klaus Schwab, the WEF’s executive chairman, warned that the risks of failing to transform are rising.

Ignoring growing threats "would lead to amplification of many of the events we see today - polarisation, nationalism, racism and ultimately social unrest and conflicts", he said. (Reporting by Laurie Goering @lauriegoering; editing by Megan Rowling. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters. Visit news.trust.org/climate)

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