Climate change is a priority for governments, corporations and citizens globally as well as the world's largest investors.
Investors who are becoming increasingly reluctant to allocate already scarce capital towards businesses which are not taking climate considerations into account.
But since January, our world has been rocked by a different crisis: a global pandemic. Lives and business models have been transformed overnight.
So, you may ask, will investors think of climate change as a less urgent challenge in light of Covid-19?
No, if anything, the pandemic has reinforced beliefs that climate change is more important than ever. Covid-19 has dramatically highlighted what happens when countries and businesses do not prepare for long-term resilience, prioritising instead short-term considerations.
It has also shown with terrifying clarity that the fall-out cost can far exceed the upfront, protective investment.
The clear signs
In my view, clear parallels exist between climate change and coronavirus:
1. Covid-19 is a catastrophic, unprecedented event - one that the markets did not price in. If we ever wanted to see what a disorderly climate transition might look like, the current situation could give us a pretty good insight.
2. Just like climate change, the pandemic is a systemic tidal wave. It has ripped through countries at speed, leaving behind profound socio-economic destruction. Its systemic nature means the effects are swiftly magnified, highlighting how interconnected our world has become, and how easily complex global supply chains can collapse. The impact both in health and economic terms is disproportionate, with the Covid-19 pandemic hitting hard in poorer, densely populated urban areas.
3. The pandemic is an immediate, short-term risk, whereas climate change is a slow burn threat which will continue to play out over the long-term. But left unchecked, such as Covid-19, climate change will reach a tipping point - maybe sooner than we think - which will produce its own uncontrollable consequences.
We knew a global pandemic was long overdue - the World Economic Forum's annual risk reports regularly flag infectious disease as a high impact and high probability risk. But when this crisis hit, we found governments around the world woefully underprepared. The lack of readiness reinforces the value of reporting standards like the TCFD, that give investors and corporates greater transparency and better frameworks to improve long-term resilience.
But learning from the pandemic and applying those lessons to our fight against climate change could bring us long-term benefits.