Nicholas Stern

COVID-19 has underlined the fragility and dangers of the old growth path, according to Lord Nicholas Stern, Chair of the Grantham Research Institute on Climate Change and the Environment and Professor of Economics and Government at the London School of Economics and Political Science, who addressed a virtual gathering of German and international journalists at the 11th Petersberg Climate Dialogue today (April 27th).

Lord Stern was joined by Germany’s Federal Environment Minister, Svenja Schulze, and Sharan Burrow, General Secretary of the International Trade Union Confederation, a day ahead of video conference discussions on the current state of play in international climate negotiations which will be held by around 30 ministers with responsibilities for climate action. The dialogue’s high-level segment on Aprirl 28th will include addresses from UN Secretary-General António Guterres, Federal Chancellor Angela Merkel and a closing speech by Alok Sharma, UK Secretary of State for Business.

Lord Stern opened with a reminder that the world is still falling far short of what science tells us is needed to respond to the threat of climate change, which must therefore, continue to be treated as an urgent threat. He said that the pandemic has underscored the importance of resilience, and the dangers of ignoring the links between nature, pandemics and climate, and cautioned against any return to the ‘old normal’ when the world begins its recovery from COVID-19.

Lord Stern advised against a return to the austerity seen in many countries following the 2008 – 2009 financial crisis, comparing the current situation to that of post-WW II, in terms of dislocated economies and risks of mass unemployment.

“Recovery has to be driven by an expansion of demand but has to be part of a story of sustained investment, innovation and growth. The world has excess savings and is potentially at the beginning of a great depression. The only way out is sustained growth,” he said.

Lord Stern described the response to COVID-19 as having three phases with three different sets of priorities: rescue, recovery and the transformation to a new form of growth. He went on to recommend that recovery be much more than green.  He said it has to be a path to a better economy, to better health and well-being, to inclusion and a just transition, and one that respects planetary boundaries.

“The stimulus packages must be shaped by the scale and urgency of the challenge, and with a clear sense of direction. They must be anchored in the target of net zero emissions and greater resilience, with supporting plans for sustainable infrastructure, pricing and smart regulations. They can be built to exploit transformative opportunities in energy transition, sustainable transport, cities and investment in natural capital,” he said.

He stressed the need for governments to invest in the jobs and skills of the future, as the only real path to decent jobs and job security. Dirty investments, he warned, would bring stranded assets and stranded labour.

“As economies move from rescue to recovery, it will be important therefore to support companies that move forwards and not backwards. This includes energy and transport companies that are committed to the low-carbon transition.  We must accelerate the phase out of dirty and polluting capital, and ensure that we do not add to that stock through dirty fossil fuel investments such as coal,” he added.

Lord Stern talked of the importance of international collaboration in tackling the pandemic, including on the design and implementation of stimulus packages, particularly when it comes to helping developing countries respond to the adverse social and economic impacts, including through debt relief and the provision of finance.

“Tackling the debt burdens of developing countries and ensuring that both emerging markets and developing countries have access to finance for investment and transformation will require something similar to a Marshall Plan but of even greater ambition and scope,” he said.

He said that we must harness the power and potential of the private sector to finance a sustained recovery, and that development banks can play a vital role in helping to take programmes to scale and catalysing private finance. Lord Stern expressed his confidence that the world has the knowledge and the means to emerge out of this crisis stronger and better, but said that there are great risks that we can go the other way.

“There is a severe risk of a prolonged depression, which would be the most dangerous path of all. It could lead to a rise of extreme politics. It would not involve the new investment and innovation – in all types of capital – desperately needed for tackling climate and environment. It would lead to great deterioration of health and loss of life flowing from unemployment and poverty. And it would potentially undermine the social discipline that we will need to manage risks of second and third waves. Austerity and/or an attempt at a brown recovery would be very dangerous,” he said.

Finally, he spoke of the importance of international solidarity and urgency of action in tackling the COVID-19 crisis and ensuring a sustainable recovery, including a renewed commitment to the UN and the Sustainable Development Goals.

“Now is the time for the business sector to build on recent momentum to play a leadership role in driving the transition to a better growth path; for leadership and solidarity from world leaders, especially from the largest countries and the most important groupings; to strengthen and use coalitions of economic decision-makers such as the Coalition of Finance Ministers for Climate Action and the Network for the Greening the Financial system, and to foster coalitions of cities and local governments to accelerate ambition, learning and actions; and for global citizenry and civil society to exert their pressure for an adequate response that delivers a sustainable and inclusive future,” he said.

Read Lord Stern’s full commentary here:

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Notes for editors

You can follow the high-level segment on April 28th from 2.10 – 3.00pm GMT via live stream at (including English translation).

Information for TV and radio: If you have questions on how to access sound signals and pictures, please contact us this week at

About the Grantham Research Institute on Climate Change and the Environment

Established in 2008 at the London School of Economics and Political Science, the Institute brings together international expertise on economics, as well as finance, geography, the environment, international development and political economy to establish a world-leading centre for policy-relevant research, teaching and training in climate change and the environment. It is funded by the Grantham Foundation for the Protection of the Environment.

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