In our previous article, we focused on how the world’s poorer citizens are most vulnerable to the globe’s most dangerous crises: COVID-19 and climate change. The people at most risk of contracting COVID-19 – low-income individuals, women, workers dependent on working in the informal economy, and racial and ethnic minorities – are also the same citizens that are most at risk due to the climate crisis. Reaching true social equity will require a focus on both addressing climate risks and ensuring some level of finance is available to all.
Social equity requires a focus on long-term recovery
The past several months of the COVID-19 pandemic can tell us a lot about how to address climate risks, and importantly how to do so in ways that can achieve social equity. A strong post-COVID-19 recovery could be a unique policy and investment opportunity to address both climate resilience and equity issues by squarely incentivizing, or even mandating, the financial sector to fill what has otherwise been a gap in financing in order to create resilience for the most vulnerable.
Many policy makers are thinking through practical ways to action this right now. For example, a recent OECD report on Green COVID Recovery recommends “integrating environmental sustainability and socioeconomic equity” in policy packages – by, for example, lowering labor taxes concomitantly with raising taxes on pollution – in order to build long-term resilience, boost the prospects for social equity, and mitigate the regressive effects of environmental policies.
In addition, the IMF has been supporting this idea by promoting a “smarter, greener and fairer” recovery. As the current IMF Managing Director, Kristalina Georgieva, has stated, “We cannot turn back the COVID-19 clock, but we can invest in reducing emissions and adapting to new environmental conditions.”
However, how exactly sustainable and equitable