Blog post

Sustainability and Resilience in the Wake of the Pandemic

19 November 2020

By Lucas Loh

The COVID-19 pandemic has been a generational shock, which has increased the salience of preparing for global, long-term threats–including the existential issues of climate change and resource resilience. Governments, businesses and communities have all made public commitments to a more sustainable and resilient post-pandemic world. However, some contend that this newfound burst of interest will be short-lived. Prioritising sustainability and long-term resilience can conflict with more immediate concerns such as supply constraints and limited resources. It is unclear whether commitments and aspirations to sustainability will endure as their costs become clearer and dearer, and as the world returns to pre-COVID work and consumption habits. It will be incumbent on voters, consumers and shareholders to lock in the pandemic’s catalysing effects on sustainability and resilience, and take them forward into the post-COVID world.

COVID and the energy transition

Global lockdowns led to sharp drops in economic activity, energy demand and greenhouse gas emissions. In April, researchers reported a 25% global drop in CO2 emissions and 30% in NOx; in Singapore, the Circuit Breaker reportedly cut air pollutant levels by 24%. Lockdowns also appear to have shifted the energy market in ways that favour renewables. The International Energy Agency (IEA) reports that ageing coal plants have borne the brunt of the reduction in energy demand. In contrast, renewable energy has remained largely unaffected, owing to regulations prioritising grid access for renewables and the essentially zero marginal cost of operating solar and wind plants once they are built. Utilities in North America, Europe and Australia have also reported that the shift to remote work has “flattened” the hourly energy demand curve, by distributing energy use peaks at the start and end of traditional office hours, which could lessen the intermittency disadvantages of renewable energy sources.

Without concerted action, however, these reductions may prove ephemeral. Even 2020’s nadir brought emissions no lower than 2006 levels, and one study estimated that the global warming trajectory may have been lowered by just 0.01oC. One source of the global reduction in emissions was a temporary fall in land transport as people stayed home, which could reverse as people return to work, particularly if they shun public transport–as record used car sales in multiple countries suggest. COVID-induced slowdowns and low oil prices could also lead countries to delay renewable energy transitions. With governments channelling resources to address immediate health and economic risks, projects with longer-term payoffs may be vulnerable to the inevitable fiscal hangover.

Sustainable businesses — green profit, or greenwashing?

Even prior to COVID-19, many businesses had pledged to integrate sustainability into their business practices. Some observers have suggested that this engagement will deepen further post-COVID. Facing much the same challenges as governments–difficulties in managing globe-spanning supply chains, the newfound importance of resilience, and ever-tightening climate constraints–many companies have reaffirmed their commitments. Some commentators have likened the pandemic to a “dress rehearsal” for climate change, warning that companies would not be forgiven for underpreparing for future crises. Cynics, however, suggest that commitments to sustainability are exercises in reputation management, reflecting a desire to look sustainable rather than truly embrace sustainability.

One industry which is acutely feeling the competing imperatives of long-term environmental sustainability and immediate commercial survival is travel and tourism, which has been particularly hard-hit by COVID-19. Industry leaders have declared that the post-pandemic normal in global travel must feature sustainability as a norm rather than a niche, but carbon emissions are concomitant with air travel. Environmentalists have proposed strict green demands on airlines in return for public assistance to weather COVID; in some countries, bailouts have required airlines to commit to adopting biofuels, or to give up lucrative domestic routes to cleaner rail services. In Singapore, SIA’s initial proposals for “flights to nowhere” sparked an outcry and passionate debate. The #SaveSingaporeAirlines campaign appealed on social media for ideas as to how to support a beloved national airline and cater to a restless public, while minimising the environmental footprint. The campaign generated over 2,000 ideas, some of which (such as ground tours and dining packages) were ultimately taken up by the company.

More broadly, some in the financial sector have suggested that COVID-19 could increase the appeal of sustainable Environmental, Social and Governance (ESG) investments, and thus incentivise managing companies more sustainably. In one survey, two-thirds of Singaporean fund managers expected that COVID would accelerate the shift to ESG investments. Major global asset managers have also reported that ESG investments have outperformed the market amidst COVID, and declared sustainability to be an “equity vaccine”–an enduring source of investment alpha akin to long-accepted investment style factors like value stocks. However, others have argued that the outperformance of ESG was an artefact of excluding underperforming petroleum assets, and the sudden focus on sustainable investing is mere virtue signalling during a (potentially short-lived) period of public interest.

Regardless, even a cynical reading of sustainability as performance may reveal important underlying changes in consumer preferences that businesses will need to respond to. One McKinsey study reported that, amidst COVID, two-thirds of surveyed consumers said that sustainability and climate change had become more important in their life and consumer choices. Substantial proportions of all demographic groups said that they had decreased overall purchases, but increased purchases from local brands. The largest shifts were seen among Millennials and Gen Z, who cited sustainability as a major driver of their consumption decisions moving forward–not merely in reducing their environmental impact, but also seeking out brands that cared for the health of their employees, paid workers well, and made items of a higher quality or which were repairable. In Singapore, activists have called for ambitious green pivots in the post-COVID economic recovery; beyond suggestions for a green finance hub or adopting renewable energy, observers have proposed such ideas as blockchain-based carbon offset or solar energy trading, or regenerating mangroves to promote eco-tourism.

Sustainability may compete with hygiene and resilience

COVID-19 has also brought the ideas of resource sustainability and economic resilience to the fore. The widespread fear and panic buying of food and essential goods such as toilet paper will not soon be forgotten, nor will the lesson that supply chains may stall and trading partners prioritise domestic needs during a crisis, however briefly. The instinct will be to stockpile or re-shore production of essential goods, including food. As Singapore accelerates its 30x30 food resilience efforts, urban farmers have called for fellow Singaporeans to contribute to both sustainability and food security by reducing the farm-to-fork distance and implementing decentralised local farming, through measures such as rooftop plots to grow vegetables for restaurants, or “foodscaping”, integrating edible plants into ornamental landscapes.

However, the desire for sustainability can also conflict with the immediate imperatives for public health and safe distancing. One area that COVID-19 has clearly had a negative impact on is recycling. The understandable bias amidst a pandemic has been to turn towards single-use products, especially in countries lucky enough not to need to reuse personal protective equipment. In land-scarce Singapore, the increase in waste generated will be an issue. One local study found that the Circuit Breaker generated 1,334 additional tonnes of plastic waste from disposable cutlery and takeout containers alone. Another source of increased waste has been medical products such as swab tests and surgical masks. Notably, some equipment is regarded as disposable by local best practice, but may not be treated as such abroad. One surgeon on a fellowship in Singapore reported a culture shock that devices such as plastic retractors were used once and disposed of, whereas they would be sterilised and reused until beyond repair in developing countries.

Moreover, the imperative for domestic resilience in essential goods supply may require reallocation of other scarce resources, and thereby intensify other dependencies. For example, high-tech farming could improve food security, serve as a new source of economic growth and highly-paid skilled jobs, while being more space-efficient than traditional agriculture. It is also likely to increase energy and water consumption, may exacerbate inequalities if it displaces existing farmers, and will likely require considerable fiscal support to develop locally. Resilience and sustainability may also require shifting consumer preferences. For example, shorter, cleaner and greener supply chains in food may entail changes to dietary habits–from reducing the consumption of imported or high-carbon footprint foods, to introducing potentially less palatable sources of nutrition, like lab-grown meats or insects for protein.

Sustainability and resilience in the post-pandemic world

Climate change, sustainability and resilience are each multi-faceted “wicked problems”, where the diversity of stakeholders and complex interdependencies preclude a single silver bullet solution. However, the importance of the task at hand, and the need to do right by future generations, behoves us to identify and embrace “no-regrets” moves that improve one area of sustainability or resilience while not adversely affecting others; while also critically examining the trade-offs and investments that will ultimately be required for broad-based, green and sustainable growth.