rethink sustainability
Covid-19 One-Year-On: our 5 key takeaways
One year ago, on March 11 2020, the World Health Organization (WHO) announced that we were no longer facing1 an epidemic of Covid-19 but a global and growing pandemic. Yet, despite a death toll that has exceeded 2.88 million people, the end may just be in sight as vaccines continue to be rolled out.
The pandemic has disrupted lives and challenged well-established norms. But a year later, as we’re celebrating World Health Day, one thing is clear: while this level of global disruption poses significant challenges, it also creates opportunities to transform the status quo.
Policy and market actors are beginning to rethink our relationship with nature. Why? Today our system is unsustainable and unhealthy and places our Natural Capital2 at risk driving the increase of zoonotic diseases such as coronaviruses. World leaders, investors and consumers must understand that “We depend more on nature than nature depends on us”3. And, in order to build a CLIC™ economy (circular, lean, inclusive and clean), it is increasingly clear that nature will have to be harnessed and protected.
Thanks to unprecedented digital innovations, we were able to adapt and rethink some of our most anchored habits and fight the virus. Technological advancement allowed us to stay home, work and learn. It has been our salvation during the hardest times of confinement. We believe digital technology is a vital enabler to create sustainable change and will support economies and societies to build back better.
Sectors and trends stood out in the face of Covid-19. Discover our key takeaways below:
The force of science
As Yuval Noah Harari says in his essay for the Financial Times, “In the war between humans and pathogens, never have humans been so powerful.” Researchers, biologists and epidemiologists, all came together to fight the Covid-19 battle. After years of research on similar pathogens, the community has been able to rapidly identify the virus’ DNA, sequence it and offer clear measures to stop the chain of infection. The logistics and work that followed to develop the first vaccines has been phenomenal. This solidarity, called “scientific diplomacy,” allowed unprecedented achievements in biotechnology.
Yet, while great scientific progress has happened during the crisis, it has also put the spotlight on enhanced inequalities. Covid-19 has exacerbated disparities in access to health care and disproportionate infection rates amongst ethnic minority groups.
Towards a better mobility
As Covid-19 spread, countries closed their borders and urged their populations to stay home. With transportation ground to a halt and industrial production slowed down, global C02 emissions briefly decreased by as much as 30%, with energy-related emissions for 2020 as a whole estimated to have fallen by 5.8%4 compared to 2019. The impact was tangible: air pollution was down and the sky was clearer. However, the reduction is still below par with what is necessary, annually, by 2050 to achieve the most stringent goals of the Paris Agreement.
Driven by concerns of elevated transmission on public transport, sales of e-bikes boomed in 2020 by 23% year on year, with sales are predicted to grow from 3.7 million bikes sold in 2019 to 17 million by 2030[5]. Cities adapted too. Paris added hundreds of kilometres of cycle lanes and the Mayor, Anne Hidalgo, pledged to create a “15-minute city” with grocery shops, cafes, sports facilities, schools and even workplaces just a walk or bike ride away. In London, research from the exercise app Strava suggests that cycling has increased by more than 35% in London and by nearly 50% in the South East6 of England.
The pandemic has been a key catalyst in furthering sustainable engagement. And as going greener gets cheaper, we expect to see growth opportunities for companies that are leading in this space.
The way to net-zero
While 2020 has been overshadowed by Covid-19, the U.S. election and the resurgence of social justice activism, it was also the year of “net-zero by 2050”. While many thought climate considerations would be put on the back burner, climate commitments kept coming in.
2020 saw Japan, South Korea, and Canada officially promise to target net-zero by 2050. In Europe, The EU Green Deal has been solidified and China announced it aims to achieve carbon neutrality by 20607. On his first day in office, Joe Biden, President of the United States, signed an executive order to re-join the Paris Agreement. This is a key political message, setting the tone for enhanced climate actions and further commitments.
Companies also stepped up with Facebook, Amazon, and Mercedes-Benz, not to mention some of the world's largest oil and gas companies, such as BP and Shell, also committing to net-zero no later than 2050, albeit the details and fine print of some of these commitments differ.
The COP26 conference in Glasgow, rescheduled to November 2021, will be a prime moment to take stock of these commitments and pave the way for future actions.
Supplying our needs
In the months prior to the Covid-19 crisis, trade tensions had been accelerating due to the escalating tariff war between Washington and Beijing8. So, when the virus first hit China, all eyes were on possible “supply shocks” as products distribution started to be affected and demand exploded. The crisis exposed vulnerabilities as we saw dramatic shortage in medical supplies, facemasks, sanitizers but also in food supply as transport was disturbed all around the world. Yet, it also gave the world a generation-defining window to change the emissions curve and build back better.
We expect logistic hubs to re-emerge at the regional level and for governments to eliminate single-source dependencies. With Covid-19, we’ve experienced the first-hand impact of global sourcing in the pharmaceutical industry. Europe, for example, is reliant on India and China for the importation of 80% of pharmaceuticals9. What’s more, advanced technologies such as predictive analytics, machine learning and AI are emerging as the norm. We believe supply chains 2.0 will support innovative companies and keep markets competitive.
Finally, in order to achieve net-zero emissions, change is required across demand, supply and distribution. “Eight supply chains account for more than 50% of global emissions,” shows a report from the Boston Consulting Group and the World Economic Forum10. Supply-chain decarbonisation will be a game changer for the impact of corporate climate action.
The Covid-19 pandemic has been a real global test of supply chain resilience and new trends are underway. This month, the accidental blockage of the Suez Canal by a cargo ship has further reinvigorated supply chain concerns, adding further momentum to these trends.
A green recovery
Government fiscal and monetary responses to the Covid-19 economic crisis have been unprecedented. Yet, while we see governments putting economic recovery measures in place, whether these measures genuinely pave the way towards a sustainable recovery is a matter of concern. We believe it is essential to ensure a recovery that is low carbon, nature-positive and accelerates the transition to a CLIC™ economic model.
According to the United Nations Environment Programme11 report “Emissions Gap Report 2020”, a “green recovery could cut expected emissions in 2030 by up to 25%, and boost the chance of keeping temperature rise to below 2°C, up to 66%”.
To keep warming below 1.5°C, an even greater effort will be required, requiring us to embed sustainability at the heart of recovery measures, simultaneously boosting job creation and economic growth, across all sectors.
1 https://www.who.int/director-general/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19---11-march-2020
2 Natural Capital includes all the renewable and non-renewable resources in our biosphere, including clean air and water, fertile soils and sediments, biodiversity, and finite mineral and fossil resources.
3 https://www.lombardodier.com/contents/corporate-news/responsible-capital/2021/january/hrh-the-prince-of-wales-announce.html
4 https://www.iea.org/articles/global-energy-review-co2-emissions-in-2020
5 https://www.forbes.com/sites/carltonreid/2020/12/02/e-bike-sales-to-grow-from-37-million-to-17-million-per-year-by-2030-forecast-industry-experts/?sh=46f97f4b2876
6 https://www.bbc.com/news/uk-england-london-56521006
7 https://www.bbc.com/news/science-environment-54256826
8 https://www.imd.org/research-knowledge/articles/A-post-COVID-19-outlook-The-future-of-the-supply-chain/
9 https://www.imd.org/research-knowledge/articles/A-post-COVID-19-outlook-The-future-of-the-supply-chain/
10 http://www3.weforum.org/docs/WEF_Net_Zero_Challenge_The_Supply_Chain_Opportunity_2021.pdf
11 https://news.un.org/en/story/2020/12/1079602
Important information
This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.
Read more.
share.