The COVID-19 outbreak has shown that the world is unprepared to react promptly to global health threats. Policies pursued in the wake of the 2008– 2009 and 2011–2012 financial crises failed to achieve integrated health and sustainability targets because policymakers focused mainly on employment and growth in isolation.

The typical siloed approaches of governments to risk management fail to address a global crisis with cascading large-scale health, economic and social effects. To improve resilience to COVID-19 and to longer-term environmental challenges while reducing the environmental footprint of their economies, governments need an integrated approach to guide the huge injection of public resources into the economy required for the post-crisis recovery.

Andy Haines from the Centre on Climate Change & Planetary Health, and Carla Guerriero and Marco Pagano the University of Naples Federico II suggest a government equity fund to recapitalise companies across Europe. Financed by the European Investment Bank (EIB), it would also have participation from long-term investors, and could issue long-term bonds to support recapitalisation.

Importantly, the fund could develop and apply health and sustainability criteria in the choice of firms to be recapitalised and businesses whose products jeopardise public health and environmental sustainability would not be prioritised for government support.

A set of criteria based on firms’ economic viability, but also their environmental and health effects could identify which firms should benefit from recapitalisation with taxpayers’ money. By prioritising these criteria, this fund is likely to attract institutional investors that rely on Environmental and Social (ES) ratings to allocate their investments.

There is evidence that aviation, oil and automotive companies have obtained support from some governments to help recapitalisation post-pandemic while there is a risk that renewable energy projects are less likely to receive support. Returns on investments in renewable energy however, compare favourably with those from fossil fuels in the long term.

Recovery from the COVID-19 crisis is a great opportunity to shift the economy towards sustainability while promoting employment and economic recovery.

Read the full comment piece in Nature Sustainability

Sir Andy Haines talks Green Recovery on LSHTM Viral Podcast:

Photo from World Bank