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We Need a Green and Just Transformation to Recover from Covid-19

2 Jun 2020

• Authors: Isabell Kempf, Dunja Krause

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This blog post is part of the UNRISD Covid-19 series, in which authors explore the uneven distribution of impacts of both the pandemic and the crisis response, as well as the social, political and economic drivers of these disparities. The series will engage UNRISD’s networks and draw on its vast body of social development research to provide evidence-based responses to the current crisis as it develops and suggest viable strategies for a future where similar crises are not only less devastating, but also less likely to happen.

Now more than ever, the world is at a crossroads. Not only are rapid and effective policy interventions, and massive investment, crucial to protect well-being—particularly of vulnerable groups and those at the margins of our societies. At the same time, the sheer amount of public investment to be made in a short amount of time to tackle the unfolding economic downturn presents us with an opportunity to finally put the world on a more sustainable and low-carbon path using new technologies that are now available. Time and again climate scientists, environmentalists and grassroots activists have pointed to the growing urgency of climate action, while policy makers and global elites have chosen profit over people and planet.

But the Covid-19 crisis is showing that ambitious and profound public intervention is possible when there is sufficient political will and trust. As such, it presents a unique window of opportunity for transformation. We must not go back to business as usual, which is what led to many contemporary development problems ranging from climate change and biodiversity loss to widespread poverty and inequalities. Instead of building back—even if it is “better”—let us be more ambitious and aim for transformative change!

Climate crisis and inequalities need to be tackled in an integrated manner

The challenge now is to quickly implement not just separate economic, social and environmental recovery packages but integrated policies. We need to combine universal social protection with climate action and economic recovery not to build back, but to transform economies and societies in a just and green manner.

This implies taking climate action with a strong social focus on the nexus between pollution and health, creating new green and decent jobs, and reinvesting fuel taxes into universal social protection. Progressive taxes not only on carbon (and fuels), but more broadly on income and wealth, as well as fair benefit-sharing schemes with regard to natural resources and climate finance, are key to get fiscal incentives right and enable long-term low-carbon and social investments. These are the kinds of measures that will cut carbon emissions while improving lives and tackling rising global economic and pollution inequalities. With rising political endorsement of the idea of a green and just transition, the introduction of fiscal stimulus packages that make support contingent on sustainability considerations and decarbonization seems more and more achievable, and is indeed happening in some countries. In its economic recovery plans after Covid-19, the French government links green conditions to its support for companies such as Air France, including proposals to eliminate internal flights where there are good train connections.

The OECD’s Taxing Energy Use 2019 report describes how tax policy can lead to the adoption of low-carbon technologies and shift investment to greener options. The report—which looks at three types of tax on energy (excise taxes on fuels, carbon taxes, and taxes on electricity use)—says, “Governments should ensure any tax rises resulting from tax reforms do not hurt vulnerable households, firms or workers. Extra tax revenues can be used for social purposes such as lowering income taxes, increasing spending on infrastructure or health, or funding direct transfers to households”. Although it works in the short-term, ultimately relying on fossil fuel-based revenues to fund social policies is of course in the long term not a sustainable policy. Fortunately there are already a number of positive examples from countries such as Indonesia, Ghana and Iran that have removed fossil fuel subsidies and effectively redistributed public revenues to poorer households in order to alleviate the burden of increased fuel prices.

The Covid-19 crisis has reignited debates on social spending and questions around the introduction of universal social policies to protect the massive numbers of people currently affected by unemployment or reduced levels of income. A number of people, including senior UN officials, are renewing calls for universal basic income (UBI) programmes. While some countries, such as Spain and Singapore, have responded to Covid-19 by providing ad-hoc, temporary cash transfers to a large number of their citizens, UBI programmes could be a long-term way to provide the most vulnerable people in society with a minimum and guaranteed form of social protection. Internationally, transfers could be scaled out in ways that address the inequalities of climate change, recognizing that the countries that suffer most from climate change are not the countries that emit most and are also those lacking universal social protection. Financial flows under the UN-REDD and other climate programmes, for example, could be used for large and fair benefit-sharing schemes for local communities and indigenous peoples, and universal social protection for all citizens.

Some regions and countries have already demonstrated that it is possible to address both climate change and inequality in their government programming: In New Zealand’s well-being budget adopted in 2019, and reinforced in light of the Covid-19 crisis, all new spending must advance at least one of five government priorities:

• improve mental health;
• reduce child poverty;
• address inequalities faced by indigenous Maori and Pacific islands people;
• thrive in a digital age; and
• transition to a low-emission sustainable economy.

Trust between citizens and government is crucial

The importance of trust between citizens and governments has been thrown into even sharper relief by the Covid-19 crisis. In a survey of 45 countries by a market research organization, in a third of the countries more than half of the people surveyed said their government was doing “too little” in response to Covid-19. While correlation shouldn’t be drawn from coincidence, some overlap can be seen between countries with poor approval of their government’s Covid-19 response and countries which experienced recent mass protests in favour of more inclusive social or climate policies. In France, for example, the government’s decision in 2019 to tax diesel fuel as part of its climate policy without fully considering its social impact gave rise to the Gilets Jaunes, or Yellow Vests movement. Many protestors recognized the need for climate action but opposed a reform that compelled working class and poor people to pay for pollution caused to a much greater extent by large multinational companies. Among their broader social demands were minimum wage increases and the re-establishment of the solidarity tax on wealth. In Germany, the government enjoys relatively high approval of Covid-19 response measures when compared to other countries. The country’s Energiewende, or energy transition, has 90% approval, albeit accompanied by strong demands for better social measures, with more than half the population (52%) believing that the issue of social justice is not given due attention.

Inequality itself affects trust. According to the Edelman Trust Barometer 2020, an online survey conducted by an international communications and PR firm across 28 markets, national income inequality is now more important than GDP growth in determining trust in government in both developed and developing regions. Their data show that in developed countries where there is less inequality, 46% of respondents trusted the government, but only 40% in countries with more inequality. The same measure in developing countries came to 62% in countries with less inequality but only 38% in more unequal societies. The gap between trust in business and trust in government is also much wider where there is high inequality (a 12-point gap in favour of business in developed markets and 25 in developing markets) than with low inequality (just 4 and 7 points respectively).

But that was published in January 2020. Now the Covid-19 crisis has increased the trust placed in government: Edelman data for an 11-country survey in May 2020 show an 11 point increase, with trust in government rising to 65%. Arguably, in many places the public is relying on government to protect them in a manner not seen since World War II. At the same time, the impacts of existing inequalities are more visible during the crisis. According to the spring 2020 update of the Edelman barometer, not only do “67 percent of respondents believe that those with less education, less money and fewer resources are bearing a disproportionate burden of the suffering, risk of illness and need to sacrifice in the pandemic”, but also 64 percent said “This pandemic has made me realize how big the gap in this country is between the rich and the working class, and that something must be done to more fairly distribute our country’s wealth and prosperity".

Such tangible public support for redistribution has created a window of opportunity that governments would do well to exploit. Now more than ever, integrated policies simultaneously addressing inequality and the transition to a low-carbon economy are not only possible; they are also likely to generate a virtuous circle of higher levels of trust in government and fairer outcomes for all citizens.

About the Authors
Isabell Kempf is Head of Bonn Office and Senior Research Coordinator at UNRISD; Dunja Krause is Research Officer at UNRISD.

Photo by Ivan Aleksic (public domain on Unsplash)

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This article reflects the views of the author(s) and does not necessarily represent those of the United Nations Research Institute for Social Development.