ABSTRACT
This study attempts to address how recent governments’ COVID-19 stimulus announcements affect business sustainability transition in Europe, emerging countries (including China and Brazil), Asia-Pacific developed region (in particular, Japan, South Korea and Singapore) and North America (Canada and the United States). We carry out an event study to assess differences in abnormal returns of the leading 20 percent of the largest 600 companies in Europe, North America and Asia-Pacific developed economies, and the top 10 percent of the largest 800 companies in emerging markets in terms of sustainability. Our results suggest that the stimulus announcements dedicated to green investments positively (moderately or insignificantly) contribute to sustainability transition in Europe and North America (emerging and Asia-Pacific countries, with the exception of South Korea). Investors trading on European exchanges display a more favorable perception about profitability of green recovery. Emerging economies most dependent on environmentally intensive sectors and without strong regulatory oversight have the biggest task to turn their stimulus green, and have so far failed to step up in the current situation of emergency. Even though Asia-Pacific governments are unleashing massive stimulus measures, the overall COVID-19 recovery packages can hardly be depicted as “Green” as the measures they do include seem insufficient to combat climate change and its devastating impacts. These countries would need to better hardwire environmental actions into their public spending and regulatory measures. © 2022 CEPII (Centre d'Etudes Prospectives et d'Informations Internationales), a center for research and expertise on the world economy
ABSTRACT
Market participants and public policy makers around the world are working hard, attempting to move the world away from the use of carbon-intensive fossil fuels and towards the adoption of viable renewable energy sources. The Trump energy plan supports the production of fossil fuels by reversing this progress. The COVID-19 and the resulting lockdown measures come to worsen the situation by causing a noticeable disruption across the fossil fuel and renewable energy industries. Given these developments, this study seeks to address how and to what extent the Trump energy agenda is rolling back the plans for advancing renewable energy, and how the pandemic is changing the pace of energy transition. For this purpose, we compare the performances of renewable energy and fossil fuels in terms of volatility, efficiency and diversifications benefits for three different periods with varying-uncertainty levels, namely the pre- and the post- Trump's inauguration periods and the period of rising anxiety over COVID-19. Our results reveal that in the period after the Trump inauguration, coal and oil (renewable energy) have become less (more) volatile but are relatively more (less) responsive to good news. The conditions however became worse with the onslaught of the coronavirus pandemic. COVID-19 adversely affects investment in oil, coal and renewable energy stock markets, though with varying levels. This virus persists to strongly hit fossil fuels demand because of the stringent containment measures. It also poses a huge threat to the timely deployment of renewables and their contributions to the renewable energy progress. These findings have relevant implications for risk management and policy designs. © 2020 CEPII (Centre d'Etudes Prospectives et d'Informations Internationales), a center for research and expertise on the world economy