Environmental Social Governance (ESG)

Covid-19 environmental impacts

By Rebekah Swan
Chartered Member of Institute of Directors (CMInstD) Managing Director / Head of Clients New Zealand

The Covid-19 pandemic has forced us to change how we live and work as social distancing and health and safety restrict our way of life. The resulting changes to our behaviour have also had significant impacts on the environment – in both positive and negative ways. The latest Engagement Report for AMP Capital’s Ethical Leaders Funds explores the environmental impacts of Covid-19 and climate change.

With restricted travel globally and less vehicles and industries operating, positive impacts on the environment include reduced greenhouse gas emissions, improved air and water quality and reduced noise pollution. Air quality improved rapidly at the beginning of 2020 due to lower CO2 emissions associated with Covid-19 measures. Travel restrictions and lower economic activity have also decreased levels of noise pollution and improved the quality and transparency of water globally.

At the same time, although the pandemic improved some environmental conditions, a significant increase in the amount of domestic and medical waste is one of the key negative outcomes of Covid-19. The pandemic is expected to see large amounts of waste – from a shift back to disposables out of hygiene concerns, increased online shopping and associated packaging, food waste from stockpiling and supply chain mismatches plus an increase in medical waste – which may all serve to delay the transition to a circular economy.

From an emissions standpoint, the huge drop in travel and industrial activity has temporarily reduced global carbon emissions and yielded cleaner skies. However, a drop in emissions may be giving a false sense of security about the state of the environment. The crisis may lead to permanent changes in the way certain things are done, such as business travel or the sourcing of goods, but other emissions drivers, such as industrial activity and ground transport, may quickly return to business-as-usual. 

As the economy gradually recovers, emissions are projected to increase again, and temporarily clearer skies shouldn’t provide a reprieve to companies about the urgency to manage environmental considerations.

Long-term environmental issues have been somewhat taken out of the spotlight during the pandemic as companies have grappled with the immediate health, societal and economic issues. However, long-term, systemic issues related to the environment remain critically important and will inevitably resurface once this crisis has passed and the world is fully vaccinated. Indeed, major dislocations like the present provide us with an unparalleled opportunity to achieve rapid and more sustainable change. 

One thing is clear, Covid-19 has clearly signalled the importance of robust crisis planning, stress testing and scenario analysis to ensure long-term business resilience in the face of a changing climate. Though the impacts of Covid-19 on the environment may be short-term, a united effort can strengthen environmental sustainability and help reduce our carbon footprint and global carbon emissions.

Directly or indirectly, the pandemic is affecting human life and the global economy, which is ultimately affecting the environment and climate change. Longer-term issues may necessarily be taking a temporary backseat as the immediate social implications of the crisis are managed. However, the urgency of the climate crisis has not changed. 

You can read more about the implications of Covid-19 for the environment in AMP Capital’s latest Ethical Leaders Funds Engagement Report.

Ethical Leaders Funds Engagement Report

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Important notes

This blog post has been prepared to provide general information and does not constitute financial advice in accordance with the Financial Markets Conduct Act 2013. An individual investor should, before making any investment decisions, consider the information available in the relevant Product Disclosure Statement and seek professional advice. While every care has been taken in the preparation of this document, AMP Capital Investors (New Zealand) Limited and the AMP Group (together, 'AMP') make no guarantee that the information supplied is accurate, complete or timely and do not make any warranties or representations in respect of results gained from its use. The information is not intended to infer that current or past returns are indicative of future returns. The views expressed are those of the author and do not necessarily reflect those of AMP. These views are subject to change depending on market conditions and other factors.

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