01 Sep 2020
The Covid-19 pandemic has inspired global citizens, including economic actors, to adopt a sustainability agenda for future generations’ sustainability.
“One in A Century Health Crisis”, says the WHO. Meanwhile, the IMF entitled the World Economic Outlook report last June: “A Crisis Like No Other”. Since WHO and IMF were founded, as world health institutions and world financial and monetary stability institutions, they have never seen a health crisis and an economic crisis as great as the current one.
The question is; whether there is still room to speak up and continue to push the environmental and sustainability agendas, or this is not appropriate as the world is struggling to overcome health crises and economic crises? Some may think so. In fact, some parties take this opportunity to marginalize environmental issues for opportunistic interests deliberately.
However, environmentalists believe that the Covid-19 pandemic crisis will actually strengthen the awareness and commitment of world citizens to environmental and sustainability issues. Because, although very bitter, this pandemic provides very real and meaningful lessons for all of us.
Covid-19 and Learning Opportunities
The first lesson is, do not even try to cross boundaries in exploiting and intervening in the capacity and balance of nature. The equilibrium built up over thousands or maybe millions of years is the basic foundation of human life and existence. Do not cross boundaries in infiltrating wildlife as part of the earth’s balance, let alone systematically consuming wild animals, for example. Because this can break the balance, tear down the fort that protects humans from deadly microorganisms.
The second lesson, just like a cinema, this pandemic is only a teaser; a 2-3 minute snippet of a disaster that can befall us in the future. However, a full 90-minute show will come before us – if we don’t do anything about it. Suppose we do not change our lifestyles, production processes, and consumption patterns; it will spill greenhouse gas emissions into the atmosphere and eventually destroy the earth’s biodiversity.
If that is the case, the IPCC (Intergovernmental Panel on Climate Change) states that the earth’s temperature can rise by up to four to five degrees celsius. Besides, IPBES (Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services) said there would be one million species that would disappear from the earth’s surface.
If the things above happened, they will destroy the balance of the earth, which means that massive disasters will come to terrorize the earth’s inhabitants. However, the Covid-19 crisis does not only provide lessons about the hell that will await us if we continue to “sin” on planet earth. This pandemic also presents a teaser of the heaven of life on earth that awaits if we stop sinning against nature and all God’s creatures.
Although the lockdown that was implemented in Jakarta is certainly not something we want, suddenly Jakarta’s sky glowed a clear blue, as clear as the fresh air we breathe. Suddenly, we hear birds chirping on the streets of Jakarta, and we hear the sound of water gurgling at the Senayan Roundabout which had been drowned somewhere amidst the hustle and bustle of Jakarta. We apparently have a choice: a better and beautiful world to live in.
Covid-19 and a New Milestone in Renewable Energy
Regardless of this lesson, is it true that the world’s citizens have not marginalized environmental issues during this pandemic? The IEA (International Energy Agency) in the last Global Energy Review revealed that energy consumption fell drastically during this pandemic, and is expected to continue until the end of 2020. Energy consumption derived from coal and oil experienced the most extreme decline. Natural gas and nuclear have also decreased. The only energy sources that are still growing are renewable and clean ones, such as solar or wind energy.
Countries in Europe such as Germany, Britain, and Spain have recorded new milestones since the Covid-19 pandemic. Half or more of their current energy consumption comes from clean, renewable sources. Even in India, clean and renewable energy now accounts for 30% of their energy consumption.
Perhaps the most monumental is what happened in the US. This superpower is known to be less “responsible” for environmental issues, especially under the leadership of President Donald Trump. Trump has arrogantly issued statements and policies that are blatantly anti-environmental, including vowing to revive the coal industry in the US.
However, for almost four years he was in power, coal consumption continued to fall drastically. Finally, the Covid-19 pandemic put the nail in the coffin, when finally the consumption of renewable energy in the US surpassed coal energy sources. Common sense, science, and aspirations for better planet earth can defeat even the most powerful leaders of nations.
The Reaction of World Investors to the Covid-19 Crisis
Sustainable investing, or in the capital market more popularly known as ESG (environmental, social, governance), has proliferated recently. ESG investment is a responsible investment, which also considers environmental and social aspects, in addition to financial aspects, of course.
The question is, during the current economic crisis due to Covid-19, do world investors still care about environmental and social issues?
In the first quarter of 2020, amid the Covid-19 crisis, the Financial Times said funds flew out of various investment products (mutual funds) in Europe, reaching 148 billion euros. However, the opposite happened to ESG mutual funds; the funds that flowed in was 30 billion euros. This trend continued in April 2020, when 12 billion euros of funds flowed into ESG investment products.
A similar phenomenon occurs in the US. In the first quarter of 2020, ESG investment products set a new record in terms of inflow.
More and more investors and investment managers are adopting ESG principles in their investment decisions, not only reflecting the increasingly widespread adoption of the principle of sustainability but investing by considering ESG aspects on average can provide better financial returns.
The same thing was proven again during the Covid-19 pandemic. When the market is volatile, ESG investment products tend to perform better. Likewise, in Indonesia, the ESG SRI KEHATI index shows better performance than the LQ45 or IDX30 indexes, for example.
Consumer Behavior Responding to Covid-19
The world’s leading consultant, McKinsey, conducted a survey in Europe this past April, when the Covid-19 pandemic was peaking on the continent. The pandemic has inspired consumers to be more committed to protecting the environment.
The survey showed 57% of consumers changed their lifestyle significantly to be more environmentally friendly. 67% of consumers said they were trying to recycle from the products they bought. And 61% said they chose products with environmentally friendly packaging.
A consumption phenomenon that is relatively new but growing quite rapidly in recent times is “sustainable meat”, which is plant-based meat and culture meat. Plant-based meat is made entirely from plants. With technological developments, the shape, texture, and taste are almost indistinguishable from real meat. Whereas cultured meat comes from breeding meat cells in a laboratory or factory, not by breeding livestock.
However, currently, the price for sustainable meat is still higher than regular meat. When the economic crisis hit, many people predicted that the consumption of sustainable meat would decrease. But the reality says otherwise. AC Nielsen stated that during the peak of the pandemic in the US from March to April 2020, plant-based meat sales actually jumped by 264% and grew far above the growth in consumption of ordinary meat.
AT Kearney consultants estimate that 15 to 20 years from now, most of the meat consumed by global citizens will not come from livestock, but plant-based and cultured meat. Plant-based meat and cultured meat are considered solutions for meat consumption that is more environmentally friendly.
Livestock does provide a significant enough burden on the earth. The World Food and Agriculture Organization (FAO) says livestock is responsible for 20% of greenhouse gas emissions, uses 30% of the earth’s existing land, and 8% water consumption. Not to mention, livestock for many is considered an unethical process; breeding living things to simply kill them.
New Normal = New Norms = Sustainability
The Covid-19 pandemic has also become a momentum for world-class companies to show their commitment to sustainability agendas, especially related to climate change. The world’s two most prominent companies, Apple and Microsoft, announced their commitment to neutralize the company’s carbon emissions and their entire supply chain no later than ten years from now. Microsoft even allocated US $ 1 billion specifically to invest in efforts to mitigate climate change and other environmental issues.
Blackrock, the world’s largest investment manager and currently considered the world’s most influential financial company, this year also announced various commitments related to responsible investing.
The most interesting is perhaps the recent announcement by BP (British Petroleum), one of the world’s largest oil and gas companies. BP said it would cut its oil and gas production capacity drastically, by 40%, in the next ten years. And, at the same time, it will increase their renewable energy capacity by 20 times! This announcement was greeted positively by the market; BP’s share price shot up 8% on that day.
This pandemic has indeed had an impact on sustainability agendas. At least inspire and encourage world citizens, including economic actors, to adopt sustainability agendas to ensure the earth’s sustainability for future generations. Humanitarian civilization continues to move forward, and the Covid-19 crisis accelerates it even further.
In the future, a lifestyle that is environmentally friendly and ensures the sustainability of life on earth will become mainstream and considered as new norms. Then, those who use the Covid-19 pandemic to deny the rights of the public and future generations, as well as the sustainability of the earth will be eliminated and pay dearly for this crime, in this world and the hereafter. (Riki Frindos, Executive Director of the KEHATI Foundation)
This article has been published on katadata.com