Is COVID-19 the dress rehearsal for climate change?
The COVID-19 pandemic has had far-reaching consequences, changing society as we know it.
Before the crisis hit, Australia was facing a climate emergency with the worst fire season to-date – taking lives, devastating towns, decimating forests and wildlife, and causing widespread fear about the future.
There has been a push for governments and companies to continue their focus on sustainability. But is it appropriate to be talking about climate risk during a global pandemic that is barely contained?
The impacts of climate change will be far-reaching for organisations, both government and private, but the repercussions of COVID-19 show that many are not ready to manage the climate risks.
Throughout May, UNSW Business School’s Responsible Business Program coordinator, Dr Louise Fitzgerald, with Tanya Dellicompagni presented four online discussions titled ‘Future-Proofing Business’, bringing together researchers, academics, business leaders and practitioners.
For the first discussion, four experts spoke about what can be learnt from the impact of COVID-19 about the capacity of business to manage climate risk.
What climate risk means for businesses
Honorary Associate Professor Mark Diesendorf, a scientist from the Environment and Governance Group at UNSW Sydney, says there are two main types of climate risk – the physical risks and the economic and financial risks they cause.
The physical climate risks include natural disasters, which are increasing in frequency and have direct impacts on tourism, agriculture, infrastructure and more.
These impacts impose economic and financial risks in the insurance sectors and banks, cause stranded assets, impact credit ratings and reputation.
A/Prof. Diesendorf explains COVID-19 is connected to these risks as the pandemic reduces imports and exports, impacts employees and the global oil and gas sectors.
“As far as imports are concerned, there is a reduced availability of products and components and a disruption of our supply chains, reduced overseas earnings,” he says.
A/Prof. Diesendorf says there has been a huge drop in global demand of oil with an international price war which has seen prices plummet.
“Some would say that might be a good thing to assist the transition to renewables.”
Challenges in addressing climate risk in Australia
Professor Jeremy Moss from the Climate Justice Research Program at UNSW Sydney says one of the challenges businesses face is how to decarbonise their operations and switch to renewable energy or cease operating altogether.
“The climate transition in Australia is operating with one hand tied behind its back because of the way in which fossil fuels are subsidised and treated favourably in Australia,” Prof. Moss says.
A recent report by the International Monetary Fund noted that Australia spends around $47 billion every year on subsidising the fossil fuel industry, for example through the diesel fuel rebate scheme and accelerated depreciation of assets.
“This poses all sorts of challenges for businesses who aren’t directly receiving those kinds of subsidies,” says Prof. Moss.
Ebony Stansfield is a journalist and photographer. She gained her Bachelor’s degree focused in Communications and Journalism from Charles Sturt University.