May 7, 2020 - Economy & Business

Coronavirus could do long-term environmental harm by reducing green investments

Dion Rabouin, author of Markets
Reproduced from Moody's, with April data from Refinitiv; Chart: Axios Visuals

In the short term, the coronavirus pandemic is reducing global emissions and helping clear out smog around the world, but it may end up doing more damage to the environment in the long term.

The big picture: The pandemic is helping reduce the use of fossil fuels, but it is decreasing investments in things like wind and solar power and financial assets like green bonds, says Jessica Ground, global head of stewardship at Schroders.

  • "Those longer-term issues that we need finance to solve like climate change haven’t gone away and they’re still going to be here whenever we emerge from lockdown."

Driving the news: In April, total issuance of ESG bonds — green, sustainability, and social bonds — increased by 272% year over year and was double the total from March, reaching $48.5 billion, according to data from Morgan Stanley.

  • And for the first time ever, monthly sustainability bond issuance ($19.4 billion) eclipsed green bond issuance ($16.8 billion).

What it means: ESG bonds are specifically earmarked to raise money for positive social outcomes or climate and environmental projects.

Yes, but: 76% of the total ESG issuance in April came from multilateral development banks, with the majority supporting COVID-19 relief efforts, Moody's found in a recent analysis.

  • The pandemic also is pushing more companies to issue new debt to fortify their balance sheets, crowding out green bonds and other environmentally focused financial instruments.

Where it stands: Total global sustainable bond issuance fell 32% in the first quarter from Q4 2019, and green bond volumes declined 49%, per Moody's.

  • Analysts now expect their original $400 billion forecast for total sustainable bond issuance in 2020 is no longer in reach and anticipate green bond volumes falling well below their previous estimate of $300 billion.

Go deeper: 10 ways coronavirus is changing energy and climate change

Go deeper

Updated 2 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 11 a.m. ET: 6,672,287 — Total deaths: 391,848 — Total recoveries — 2,895,167Map.
  2. U.S.: Total confirmed cases as of 11 a.m. ET: 1,875,402 — Total deaths: 108,278 — Total recoveries: 485,002 — Total tested: 18,680,529Map.
  3. Public health: Jailing practices contribute to spread.
  4. States: Cities are retooling public transit to lure riders back.
  5. Jobs: Unemployment rate falls to 13.3% in May — Explaining a surprise jobs report.
  6. Sports: How coronavirus could reshuffle the sports calendar.

Cities' budget woes worsen with increased social unrest

Illustration: Sarah Grillo/Axios

Cities were already furloughing workers and considering cutting back essential services — including public safety — because of the dramatic drops in the local tax revenue that funds them. Now they're also dealing with turmoil in their streets.

Why it matters: "Unfortunately, the increasing levels of social unrest across the country reallocated efforts and scarce resources away from the former focus of getting state, regional and local economies back to some semblance of normalcy," per Tom Kozlik, head of municipal strategy and credit at HilltopSecurities.

Better-than-expected jobs report boosts stock market

Data: Yahoo Finance; Chart: Axios

The S&P 500 jumped nearly 3% on Friday after a stronger-than-expected May jobs report showed that an economic recovery could be underway.

The state of play: Stocks have rallied since the worst of the coronavirus sell-off ended in late March and looked past a spate of ugly economic reports — not to mention civil unrest.