[SINGAPORE] Against the backdrop of economic and geopolitical uncertainty, the ability of governments and companies to undertake climate action has been hampered because they now have to contend with other priorities, said Ravi Menon, Singapore’s ambassador for climate action.
The ongoing escalating tariffs between the United States and its trading partners – chiefly China – would result in stagflationary pressures, which refers to a situation where an economy experiences high inflation and slow economic growth.
This means that governments would be increasingly strapped as they have to divert fiscal resources to support the economy, said Menon on Tuesday (May 6), who was speaking at a panel during a sustainability conference organised by GenZero, a Temasek-backed decarbonisation investment platform.
The current Russia-Ukraine war, as well as US potentially pulling its security blanket from the European Union, would mean governments stepping up their defence expenditures.
Cost-of-living considerations are also featuring strongly in elections across Europe and Asia, with business uncertainties weighing down sentiments.
“It’s not that people don’t care about the climate. It just has to compete with other very pressing priorities,” said Menon.
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However, governments and businesses will eventually have to respond to a disorderly transition to a low-carbon world, he added. This refers to how delayed climate action in a bid to address the effects of climate change is disruptive for businesses and communities.
“It’s better to be ahead of the game, better to start adjusting slowly but surely, step by step, so that when it comes, you are ready for a low-carbon world,” he noted.
“And I think more and more countries will start doing that. You need to fight the short-term battles – trade restrictions, economic slowdown, other pressing priorities. But there’s no alternative. You got to keep investing in the future.”
He also said that financial institutions and companies are not changing their long-term targets or their commitment to sustainability. But they are continuing their work with much less fanfare, by starting to zero in on the nuts and bolts of climate action.
