Firms’ Environmental Performance and the COVID-19 Crisis
Author:
Pierre Guérin
Search for other papers by Pierre Guérin in
Current site
Google Scholar
Close
and
Felix Suntheim null

Search for other papers by Felix Suntheim in
Current site
Google Scholar
Close
The shutdown in economic activity due to the coronavirus disease (COVID-19) crisis has resulted in a short-term decline in global carbon emissions, but the long-term impact of the pandemic on the transition to a low-carbon economy is uncertain. Looking at previous episodes of financial and economic stress to draw implications for the current crisis, we find that tighter financial constraints and adverse economic conditions are generally detrimental to firms’ environmental performance, reducing green investments. The COVID-19 crisis could thus potentially slow down the transition to a low-carbon economy. In light of the urgent need to reduce global greenhouse gas emissions, these findings underline the importance of climate policies and green recovery packages to boost green investment and support the energy transition. Policies that support the sustainable finance sector, such as improved transparency and standardization, could further help mobilize green investments.
  • Collapse
  • Expand
IMF Working Papers