- The COVID-19 pandemic has exacerbated inequalities in our societies and economies – and the recovery is expected to be uneven.
- At the same time, the crisis has brought hope – and an opportunity to “build back better and more widely”.
- A new briefing paper outlines a three-step agenda for an equitable, inclusive and sustainable recovery that will build a better society and economy.
There is a widespread and deep realization that the COVID-19 crisis has come at the expense of the forces and trends in our societies and economies that were becoming unsustainable – in terms of the environment, distribution and inclusion, and of resilience. As the pandemic has exacerbated many of these trends, the recovery is expected to be uneven across countries, primarily due to asymmetric access to vaccines, as well as the overwhelming capacity to respond to the crisis. differed from country to country.
That the next decade will be decisive was already clear before COVID-19 – but the pandemic has brought out the immediacy of our vulnerability and highlighted the inequalities in our system. At the same time, it also brought hope, an appreciation of solidarity and the government acting forcefully and on a large scale.
“Rebuilding better and more widely” has become both more urgent and more feasible.
The goal is to recover quickly and achieve strong long-term growth that is ecologically sustainable and economically and socially inclusive and resilient. The Sustainable Development Goals (SDGs) and the Paris Agreement provide benchmarks, embodying values and principles for the new era. In a time of growing international division and threats to world order, these themes can and must come together.
The new path does not mean trading prosperity for abstract principles. The perception that the current generation would be asked to somehow pay for their sins has weighed down the discussion and weighed on the psychology of change. Quite the contrary: to chart a new course will allow a more complete use of all the assets (human, natural, physical, social) within the planetary and societal limits. Today’s inequalities and market failures mean that capacities, talents and potential resources are wasted, while others are consumed to an unsustainable excess. Sustainability, anchored in new technologies and practices, is the engine of a new industrial revolution.
To ‘build back better’ we need a large-scale recovery that leaves no one behind. We need to build a more resilient and inclusive society. And we need to grow our economy quickly and sustainably.
We have laid out the key elements of this agenda in a background paper to help frame the debate at the 2021 World Economic Forum Sustainable Development Impact Summit. It draws on the reports and work of many. others (including a recent report from the London School of Economics for the UK Prime Minister for the 2021 G7). The action program includes:
- Complete the rescue and enable large-scale recovery.
- Building a better society through investing in people, promoting inclusion and developing social capital.
- Building a better economy by combining economic growth, climate and biodiversity
Below we outline the key elements.
1. Complete the rescue and allow full scale recovery.
To achieve this, we need to:
- Rebuilding health systems and deploying the COVID-19 vaccine around the world with the aim of vaccinating at least 40% of the population of each country by the end of 2021 and 60% by the first half of 2022.
- Address the impact on human capital by bringing children back to school and reducing disruption in learning, and preventing “scarring” of job seekers.
- Shift from economic rescue to recovery while maintaining a job-rich, investment-oriented economic stimulus until growth is robust and establishing the framework for fiscal sustainability. The macroeconomic framework should allow a significant increase in investments, foreshadowing a surge in public investments of the order of 1 to 2% of GDP.
- Act jointly, internationally and in a coordinated manner to address the uneven recovery between countries.
2. Build a better society by investing in people, promoting inclusion and creating social capital.
This includes acting on four dimensions:
- Fight against insecurity and share the risks with a new “social contract”, protecting people of working age rather than jobs, supporting lifelong learning and rebalancing the care economy around childcare and old age.
- Create access and improve social mobility targeting the availability, quality and distribution of education programs, investing in accessible health care and insurance, tackling the build-up of wealth across generations, and creating technology-driven markets that empower.
- Reassess the distributive impact of public finances increasing the progressivity of tax revenues and expenditures, while fiscally balancing these and other reforms with carbon pricing systems, reforms of the international corporate tax regime and the phasing out of fossil fuel subsidies.
- Implement an approach by the company’s stakeholders capitalize on generational shifts in investor attitudes to broaden companies’ accountability to their broader purpose and footprint, and to longer-term results.
3. Build a better economy by combining economic growth, climate and biodiversity.
The program requires that we:
- Increase global investments above pre-pandemic levels of around 2% of GDP per year during this decade and beyond. Many of these investments can be implemented quickly, can leverage significant private finance, are labor intensive in the short term, and can stimulate innovation (see table).
- Change the composition of investments towards low and zero carbon solutions. This can be achieved through structural policies that set clear market expectations, including carbon pricing, phasing out fossil fuel subsidies, and regulatory measures such as phasing out coal-fired electricity generation. ‘by 2030.
- Accelerate innovation in low-carbon technologies through incentives and public aid. We need major efforts over the next 10 years to bring key new technologies to market on time, including advanced batteries, green hydrogen, sustainable bioenergy, and carbon capture, use and storage (CCUS) .
- Align financial decisions identify return opportunities resulting from the transition to a net zero economy, assess exposure to high carbon assets and physical climate impacts, and factor climate risks into financial decisions.
- Managing the distributive impacts of climate change policies ensure a just and fair transition and gain public support, ensuring that the benefits and opportunities of the transition are widely shared, while helping those most affected by economic losses.
These actions should form the basis of a comprehensive policy package that can harness the combined efforts of the public and private sectors. Action should be coordinated globally, making finance and technology available and accessible to developing countries through international cooperation.