The climate awakening of global capital

Abstract

“Green recovery” presents an opportunity for governments to confront climate change as they work to overcome the economic fallout of the COVID-19 pandemic. Yet many corporate and financial leaders are increasingly focused on the urgent need to forestall far graver long-term risks by more firmly reorienting the economy toward a zero-carbon future. Despite the severity of the immediate health and economic crises, a growing number of top global companies are publicly committing to net-zero goals. Oil-and-gas giants BP and Shell recently took multibillion-dollar write-downs on their fossil fuel assets, a telling sign of a gathering energy transition, and BlackRock, the world’s largest asset manager, has begun screening investments for their climate implications. Dozens of the world’s central bankers recently underscored the links between the two crises, calling the pandemic “a real-life stress test of what we could potentially experience in an increasingly unstable climate.” Enormous political and economic obstacles remain, and much hinges on the US election and the course of the pandemic. But the compelling economic case for climate action–both for near-term recovery and to avert profound long-term risks–could soon help create unprecedented openings for strong government action.