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Firms’ Environmental Performance and the COVID-19 Crisis

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  • Pierre Guérin
  • Felix Suntheim

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.

Suggested Citation

  • Pierre Guérin & Felix Suntheim, 2021. "Firms’ Environmental Performance and the COVID-19 Crisis," IMF Working Papers 2021/089, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:2021/089
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    References listed on IDEAS

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    Cited by:

    1. Włodarczyk, Aneta & Szczepańska-Woszczyna, Katarzyna & Urbański, Mariusz, 2024. "Carbon and financial performance nexus of the heavily polluting companies in the context of resource management during COVID-19 period," Resources Policy, Elsevier, vol. 89(C).

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    More about this item

    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;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G39 - Financial Economics - - Corporate Finance and Governance - - - Other
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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