- The COVID-19 pandemic exacerbated inequities in our societies and economies – and the recovery is set to be unequal.
- At the same time, the crisis brought hope – and an opportunity to "build back better and broader".
- A new briefing paper outlines a three-step action programme for an equitable, inclusive and sustainable recovery that will build a better society and economy.
There is a widespread and profound realization that the COVID-19 crisis arrived on the back of forces and trends in our societies and economies that were becoming unsustainable — in terms of the environment, distribution and inclusion, and resilience. As the pandemic has exacerbated many of these trends, recovery is set to be unequal across countries primarily because of asymmetrical access to vaccines, as well as the fact that capacity to respond to the crisis has differed enormously across countries.
That the next decade will be decisive was already clear before COVID-19 – but the pandemic has brought home the immediacy of our vulnerability and highlighted the inequities in our system. At the same time, it has also brought hope, an appreciation of solidarity and government acting with strength and at scale.
“Building back better and broader” has become both more urgent and more feasible.
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The goal is to recover rapidly and achieve strong long-term growth that’s ecologically sustainable and economically and socially inclusive and resilient. The Sustainable Development Goals (SDGs) and the Paris Agreement provide guideposts, embodying values and principles for the new era. At a time of growing international division and threats to the global order, these themes can and should unify.
The new path doesn’t mean trading prosperity for abstract principles. The perception that the current generation would be asked to somehow pay for its sins has burdened the discussion and weighed down the psychology of change. Quite the contrary: charting a new course will enable more comprehensive use of all assets (human, natural, physical, social) within planetary and societal boundaries. Today’s inequality and market failures mean that capacity, talent and potential resources are wasted, while others are consumed in unsustainable excess. Sustainability, rooted in new technologies and practices, is driving a new industrial revolution.
To “build back better” we need a broad-based recovery that leaves no one behind. We need to build a more resilient, inclusive society. And we need to make our economy grow quickly and sustainably.
We have set out the key elements of this programme in a briefing paper to help frame the debate at the World Economic Forum’s 2021 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 programme for action includes:
- Completing the rescue and enabling a broad-based recovery.
- Building a better society by investing in people, promoting inclusion and building social capital.
- Building a better economy by combining economic growth, climate and biodiversity
Below, we outline the key elements.
1. Completing the rescue and enabling a broad-based recovery.
To achieve this, we must:
- Rebuild the health systems and deploy the COVID-19 vaccine globally with the aim of vaccinating at least 40% of every country’s population by the end of 2021, and 60% by the first half of 2022.
- Address human capital impact by bringing children back to school and mitigate disruptions in learning, and prevent the “scarring” of job seekers.
- Shift from economic rescue to recovery while maintaining job-rich, investment-driven economic stimulus until growth is robust and setting the framework for fiscal sustainability. The macroeconomic framework should enable a significant increase in investments, frontloading a public investment push on the order of 1–2% of GDP.
- Act jointly, internationally and in a coordinated manner to address the uneven recovery across countries.
2. Building a better society by investing in people, promoting inclusion and building social capital.
This includes acting along four dimensions:
- Tackle insecurity and share 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 availability, quality and distribution of education programmes, investing in accessible health and insurance, tackling wealth accumulation across generations, and creating technology-driven markets that empower.
- Reassess the distributional impact of public finance by strengthening the progressivity of fiscal revenue and expenditure, while fiscally balancing these and other reforms with carbon pricing schemes, reforms to the international corporate tax regime and the phasing out of subsidies for fossil fuels.
- Implement a stakeholder approach to business leveraging generational shifts in investor attitudes to widen the accountability of businesses towards their broader purpose and footprint, and towards longer-term results.
3. Building a better economy by combining economic growth, climate and biodiversity.
The programme requires we:
- Scale global investments above pre-pandemic levels by around 2% of GDP per year over this decade and beyond. Many of these investments can be implemented rapidly, can mobilise significant private finance, are labour-intensive in the short term and can drive 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 unabated coal power generation by 2030.
- Accelerate innovation in low-carbon technologies through incentives and public support. We need major efforts over the next 10 years to bring key new technologies to market in time, including advanced batteries, green hydrogen, sustainable bioenergy and carbon capture, utilisation and storage (CCUS).
- Align financial decisions to identify opportunities for returns arising from the transition to a net-zero economy, assess exposure to high-carbon assets and physical climate impacts, and account for climate-related risks in financial decisions.
- Manage the distributional impacts of climate change policies to ensure an equitable, just transition and build public support, ensuring the benefits and opportunities of the transition are shared widely, while helping those most affected by economic losses.
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These actions should form the basis for a comprehensive policy package that can harness the combined efforts of both the public and private sectors. Action should be coordinated globally, making finance and technology available and accessible to developing countries through international cooperation.