Firms’ Environmental Performance and the COVID-19 Crisis

Pierre Guérin and Felix Suntheim

No 2021/089, IMF Working Papers from International Monetary Fund

Abstract: 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.

Keywords: Corporate sustainability; climate change; transition risks.; Oil market-shock; appendix table; capital markets department; oil price shock; oil inventory demand shock; Oil prices; COVID-19; Sustainable growth; Greenhouse gas emissions; Global; oil market literature; oil demand shocks; Oil-market shock; oil-market shock (search for similar items in EconPapers)
Pages: 25
Date: 2021-03-19
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Citations: View citations in EconPapers (1)

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Journal Article: Firms’ environmental performance and the COVID-19 crisis (2021)
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