Climate change and sustainability - Lessons learned from COVID-19 and resolving disputes by arbitration

Posted in COVID-19 Environmental, social and governance (ESG)


Prior to COVID-19, few people would have found an obvious practical connection between a pandemic and climate change. But with hindsight, the connections are manifold – as discussed below, some are obvious, some more subtle, while others are still playing out. What is however becoming clear is that climate change related disputes are unlikely to abate in the wake of the pandemic. Indeed all signs point to a possible surge in cases as political and economic positions harden and all sides seek to take advantage of the compounding pressures on companies, individuals and governments in the wake of the pandemic. International arbitration and ADR have important roles to play in resolving such disputes.

COVID-19 and climate change

The most obvious impact of COVID-19 has been the reduction of greenhouse gas emissions (and other pollutants) globally as the restrictions imposed by public bodies severely curtailed industry and transport. In the face of this disruption to businesses and supply chains globally, the pandemic has served to shine a spotlight on the resilience and sustainability of business practices and supply chains across many sectors. While other sectors – technology and innovation notably – have consolidated their position as drivers of the future for many industries. Science too, is having its moment (albeit, not without some challengers). The pandemic has also given tangible shape to the potential wide scale commercial, economic and societal disruption (global and domestic) that scientists and economists have been warning will follow if global warming is not limited to manageable levels. This may result in added impetus for climate change and sustainability measures. In a similar vein, the combined impact on the oil and gas sector of the oil price crash, COVID-19 and other pre-pandemic pressures including the energy transition and digitalisation has, for some, increased the attractiveness of investment in green or sustainable energy assets.

Conversely, however, the pandemic is having a negative impact on the energy transition (at least in the short term) – for example, renewable energy projects have faced supply chain issues, and with economic pressures there is likely to be less ambitious investment in green or sustainable projects and research and development at least from some quarters. (Few may be aware that the currently beleaguered oil and gas industry is one of the larger investors in this area.) Meanwhile, governments and societies faced with serious economic downturn are grappling with questions such as how to fund a post-pandemic recovery, including whether to tie bail-out or stimulus measures to green or sustainable targets, or whether in fact short term economic recovery should be prioritised over climate change commitments and ambitions.

Extensive lobbying from both camps is ongoing. These complicate already difficult questions as to when and how to finance a global wide scale transition to a more sustainable future.

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