UNEP FactsheetMay 2020

Greening Fiscal Stimulus and FinancePackages to Achieve the SDGs
“A recovery from the coronavirus crisis must not take us just back towhere we were last summer. It is an opportunity to build moresustainable and inclusive economies and societies — a more
resilient and prosperous world.”
UN Secretary General, António Guterres, April 30, 2020
• “The performance and resilience of our socioeconomic systems depend on the health of thenatural environment and ecosystems. Once theCOVID-19 crisis is over, we cannot return tobusiness-as-usual practices that increaseemissions and put pressure on wildlife andbiodiversity.
• While the immediate priority is on emergency
measures to address the health crisis and its
economic fall-out; green framing for relief andrecovery stimulus measures is critical to build
resilience and support public health efforts. It will
also help reduce the probability of future
pandemics and broader environmental andclimate change risks.

• Preliminary analysis of recently announced
stimulus measures by major economies shows asignificant lack of consideration for medium andlong-term environmental sustainability. 1• Not all stimulus packages are created equal or
have equal job effects. For example, research
estimates that “$1 million invested in the oil andgas in the United States creates just five jobs,
compared to 17 jobs per million dollars invested
in energy-saving building retrofits, 22 jobs formass transit, 13 for wind, and 14 for solar”. 2

COVID 19 and Green Stimulus and FinancePackages.
• The evidence is clear: the “great lockdown” haspushed hudreds of millions from their jobs,
decreased economic activity precipitously, andcreated turmoil on equity and commodity
markets. Its impact can be also felt on supply
chains and food security around the world.

1

Green Stimulus Index An assessment of the orientation of COVID-19
stimulus in relation to climate change, biodiversity and otherenvironmental impacts, VIVID Economics, April 2020.(
https://www.vivideconomics.com/wpcontent/uploads/2020/04/2004249-Stimulus-Green-Index-summaryreport.pdf)

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The Guardian,
https://www.theguardian.com/commentisfree/2020/apr/20/climatecrisis-will-deepen-the-pandemic-a-green-stimulus-plan-cantackle-both.Accessed on April 21, 2020.
2• Nor do all countries have the financial capacity tocreate fiscal stimulus packages. Due to a
combination of high existing fiscal deficits andinflationary pressures, both the fiscal monetary
policy space is constrained in most developing
and low-incomes economies.3 4 5• Green fiscal policy can be an important element
in a government’s response to COVID-19 relief
and sustainable recovery stimulus measures.
Such approaches support countries in removing
inefficiencies in expenditures such asenvironmentally harmful subsidies, to create
fiscal space and reallocate scarce public financeresources to immediate COVID-19 relief
measures and medium- to long-term sustainable
recovery planning.
• Innovative financing solutions and blended
public-private approaches that share the costs
and benefits of investing in sustainable andresilient infrastructure will be needed to ensurethat infrastructure is more resilient toenvironmental and climate change andsustainable at the landscape and ecosystemscale.

However, the current stock and use of theworld’s infrastructure is also associated withover 60% of global greenhouse gas emissions 6.
Investing in infrastructure that promotes
economic stability and jobs in ways that areconsistent with the Paris Agreement and theSDGs will reduce this figure and help avoid
future interconnected crises.
• UNEP will work with partners in the
Sustainable Infrastructure Partnership to1) develop and disseminate normative andtechnical guidance and tools for integrating
sustainability into infrastructuredevelopment; and 2) support countries
directly in strategic sustainable infrastructure
planning at the national and sub-nationallevels.
b. Ensuring cities and infrastructure areplanned with strategic density and aredesigned and built sustainably. This willallow for mixed use of spaces, for shortdistances that can be covered by walking andcycling and for effective public transport.
• UNEP will work with other UN Agencies,
to reimagine sustainable cities, taking asystems approach, with greater integration
between grey (healthy, efficient and liveablebuildings, modern energy services, andpublic transportation), green (nature andnatural systems) and blue (water)
infrastructure systems that build resilience toclimate and covid threats, and respond to the
new reality of social distancing, creating
spaces for livelihoods and wellbeing underhigh densities and peri-urban areas.

UNEP’s Response
UNEP is committed to supporting countries inrecovering from Covid-19 by placing green stimulus
packages, fiscal policy and a just transition at thecore of it offering. This includes:a. Supporting sustainable infrastructure, incoordination with multilateral developmentbanks and financial institutions, to ensure thenext wave of infrastructure lending andinvestment is pandemic and climate proof. This
will involve strengthening ecological andsocial/health as well as economic infrastructure,and priorities which drive countries towards
achieving the 2030 Agenda, using needsbased, integrated approaches across theentire infrastructure life cycle, from strategicplanning, to financing, delivery, operations, anddecommissioning.

c. Working with the financial sector to develop
norms and targets for investing insustainable infrastructure and othereconomic recovery measures. As comparedto the last global financial crisis, the financial
system is more resilient today and able to playa key role both in keeping companies solvent in
the short term, and building back better basedon new impact focused economic, technologicaland behavioural approaches.

4“The Covid-19 Shock to Developing Countries: Towards a“whatever it takes” programme for the two-thirds of the world’s
population being left behind”, UNCTAD, March 2020
(https://unctad.org/en/PublicationsLibrary/gds_tdr2019_covid2_en.pdf)
3

Capital Flows Report: Sudden Stop in Emerging Markets, IIF, April 09,
2020. (https://www.iif.com/Publications/ID/3841/Capital-FlowsReport-Sudden-Stop-in-Emerging-Markets)
5
April 2020 Global Debt Monitor: COVID-19 Lights a Fuse, IIF, April 07,
2020 (https://www.iif.com/Publications/ID/3839/April-2020-GlobalDebt-Monitor-COVID-19-Lights-a-Fuse)
The New Climate Economy. (2016). The sustainable infrastructure
imperative. https://newclimateeconomy.report/2016/6www.unep.org

•UNEP will work with the financial sector to
set ambitious targets for financing
sustainability action as integral componentsof economic recovery and renewal, throughthe Principles for Responsible Banking
and Positive Impact Finance.

d. Supporting countries in reallocating scarcepublic finance resources and reforming
fiscal policy to find additional revenues forresourcing necessary COVID-19 relief andrecovery stimulus. With an anticipated drop in
tax revenues from economic slowdown
precipitated by COVID-19 containment
measures, improving the efficiency of public
expenditure will be crucial in mobilizing required
resources for the those who need it the mostand invest in essential stimulus measures andinfrastructure to enhance future socio-economicresilience.
e. Providing advice on green fiscal policy
instruments like carbon taxation and fossil
fuel subsidy reform that can be especiallyeffective in the current low oil priceenvironment. For example, the IMF estimatesthat a carbon tax of $75 per ton would raisepump prices by less than the recent decline inoil prices.7 This should be combined with othermeasures like feebates to incentivise greener
transport solutions and energy efficiency
improvements and accompanied by smart
communication and necessary assistance forlow-income and vulnerable households andcommunities.
f.

• UNEP will continue providing support tocountries on green fiscal policy reform through
PAGE, working with partner agencies, fora green recovery from COVID-19, and throughthe Green Fiscal Policy Network, a collaborationbetween UNEP, the IMF and GIZ for knowledge
exchange and country dialogue on green fiscal
policy experiences and best practices. 8

Way Forward
UNEP is committed to using its expertise and global
platforms and networks to provide immediate
support to countries in greening their fiscal stimulus
and financing response packages to the COVID-19
crises; and will continuously evaluate opportunities
with UN agencies, multilateral development banks
and other partners to support countries towards
greening the recovery and developing green anddecent jobs as the situations evolves.
Contacts:
Steven Stone (steven.stone@un.org)
Fulai Sheng (fulai.sheng@un.org)
Eric Usher (eric.usher@un.org)

Supporting green budgeting can also be avaluable tool to increase the efficiency andeffectiveness of budgetary processes andalign them with environmental sustainability
objectives. Not only would green budgetingallow governments to identify misalignments ofspending and objectives and help identify
possible resources which could be re-directed
to COVID-19 relief measures, but also allow
long-term integration of environmental andclimate sustainability into budgetary processes
and infrastructure planning.

7

IMF Special Series on COVID 19 – Greening the recovery, April 2020.
(https://www.imf.org/~/media/Files/Publications/covid19-specialnotes/en-special-series-on-covid-19-greening-the-recovery.ashx?la=en)

www.unep.org

8

http://www.greenfiscalpolicy.org/