Prioritizing Climate Action Benefits America's Well-Being and Future
In the midst of a seismic shift in climate change policy, the current administration is dismantling science-based environmental initiatives in favor of what it calls "America's energy potential." This drastic change has put the U.S. at odds with the international community, as it becomes the sole country to withdraw from climate action agreements like the Paris Climate Accord. The removal of climate change references from government websites, the scrapping of clean energy grants, and the rolling back of environmental regulations have been relentless.
The U.S. Environmental Protection Agency (EPA) is no exception, with Administrator Zeldin characterizing the move towards deregulation as "stabbing a dagger into the very heart of climate change." Key EPA initiatives, such as the Clean Power Plan 2.0 and the endangerment finding that recognizes greenhouse gases as pollutants under the Clean Air Act, are now on the chopping block. In essence, the EPA's mission has been reduced to eliminating the very regulations necessary to fulfill its original charter of ensuring clean air, land, and water for Americans.
Business on the Fence: Adapt or Stagnate?
In this tumultuous landscape, where the mantra is "drill, baby, drill," businesses face a daunting question: Should they abandon their climate-focused initiatives in response to policy changes, or should they stay the course?
Some have opted for the former, with companies across the technology, energy, and food sectors quietly reneging on their climate pledges. However, should you join them?
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The Economic and Security Risks of Climate Inaction
The scientific consensus is clear: unchecked climate change poses a grave threat to economic growth and national security. Over a decade ago, the Department of Defense warned that climate change would exacerbate natural disasters, refugee crises, and resource conflicts[1]. A 2024 assessment report from the World Economic Forum highlights climate risks to business profitability due to damages to fixed assets, and disruptions to supply chains[2]. These warnings are manifesting in reality. Zurich Insurance Group reports that in 2023 alone, global natural disasters caused $380 billion in economic losses[3]. Data from the National Centers for Environmental Information (NCEI) shows that since 1980, the U.S. has suffered 403 weather-related disasters, each causing over $1 billion in damage[4]. It's worth noting that before 1980, there were only three such events.
Ironically, the NCEI, whose role is to provide up-to-date data for businesses to make informed, sustainable decisions, is now at risk of closure under the Department of Government Efficiency (DOGE), with many of its employees being let go[5].
Climate Action Amid Deregulation
In this evolving landscape, businesses must make tough decisions. How to remain committed to tackling climate change without the regulatory pressure essential for collective action against climate change. Others will struggle with staying true to their climate pledges while navigating the continuously changing regulatory landscape.
While the current landscape presents challenges, it offers an unexpected benefit. It provides businesses with a window of time free from stakeholder expectations, such as customers demanding sustainable products, activist shareholders pushing for rapid decarbonization, and legislators demanding mandatory disclosures. This breathing space offers an opportunity to transition beyond symbolic gestures and commit to meaningful climate action.
The Perils of Greenwashing
Greenwashing – the practice of deceiving consumers about environmental efforts – was coined by environmentalist Jay Westerveld nearly 40 years ago[6]. Since then, greenwashing has been enthusiastically adopted by businesses. A European Commission study found that over half of corporate sustainability claims are vague or misleading, while 40% completely lack supporting evidence[7].
This practice is no longer only unethical; it's financially risky. Increasing consumer protection laws worldwide subject businesses to scrutiny and potential legal repercussions for misleading claims. Additionally, social media magnifies reputational risks, making it easier for stakeholders to expose and publicize corporate hypocrisy. Research suggests that the resulting brand damage can have long-lasting consequences. Now is the time to eradicate greenwashing from your business model and mitigate the risk of alienating stakeholders.
Forging a Path: Thoughtful, Strategic Climate Action
Businesses worldwide have pledged bold climate action commitments, but many struggle to develop concrete plans. In the UK, while over 80% of FTSE 100 companies have promised net-zero emissions by 2050, only 5% have publicly disclosed their transition strategies[8]. A survey of 400 business leaders indicates that despite good intentions, there is a genuine struggle to align priorities. Balancing short-term financial pressures with long-term climate goals requires strategic thinking. Moreover, companies lack necessary competencies and metrics for measuring progress[9].
Developing sustainability competencies extends beyond technical expertise; it demands a mindset shift – one that values understanding the risks and opportunities presented by climate change and a willingness to address them.
Integrity and Transparency: The New Corporate Norms
In this era of unprecedented change, a slow, systematic approach might seem counter-intuitive. However, due to the turbulent policy climate, stakeholders may be less likely to hold businesses accountable for a planned reset of climate strategies. Knee-jerk actions aimed at appeasing stakeholders could backfire, raising doubts about the authenticity of initiatives that may appear superficial or merely for show.
According to PwC's 2024 study, a new generation of investors – set to inherit an intergenerational transfer of wealth worth $68 trillion over the next decade – prioritize brands that stand at the intersection of disruptive technology and climate action[10]. Integrity and transparency are no longer mere buzzwords; they are essential business principles.
Climate change cannot be ignored or denied. Business leaders must recognize that their actions – or inactions – will determine the severity of its impact in the years to come. Economic prosperity and climate action are not mutually exclusive; businesses can thrive when we – the people and the environment – thrive together.
- In the face of climate denialism and deregulation under the current administration, businesses are left to question whether they should abandon their climate-focused initiatives or stay committed.
- As the US Environmental Protection Agency (EPA) moves towards deregulation, Administrator Zeldin has characterized it as effectively sabotaging climate change efforts, with key initiatives like the Clean Power Plan 2.0 and the endangerment finding under threat.
- In 2023, businesses find themselves in a challenging position, as they navigate a regulatory landscape that undermines climate action, offering a brief reprieve from stakeholder expectations but also raising questions about the authenticity of their claims and actions towards climate change.
