The climate crisis is not a distant threat. It is here, shaping our markets and disrupting our economies in real time. Across the United States, manufacturers are facing droughts one month, floods the next, and wildfires in between. In California, for example, farmlands are operating at only half capacity because of water shortages, a reality that affects farmers, food processors, truck drivers, and consumers alike. These are not abstract “environmental issues.” They represent billions of dollars in material financial losses, happening right now across the country.
I have spent the last three decades urging companies and investors to treat sustainability not as a side initiative, but as a core strategy. The business case today has never been clearer: climate risk is a financial risk. If you are a board member or C-suite leader, your fiduciary duty demands that you understand these risks and respond to them, regardless of the shifting political winds.
Attorneys general and treasurers from multiple states have sent threatening letters to companies, warning that working together on climate action could be deemed a violation of antitrust laws.
In much of the world, the integration of environmental and social risks into business and investment strategy is not up for debate anymore. I’ve just returned from Singapore, where I met with sovereign wealth funds, investors from Asia, Australia, and Europe. There, the assumption is ingrained: climate change is a material factor that will shape our markets and our future. It is as undeniable as gravity.
From Europe’s corporate sustainability reporting to China’s rapid production of electric vehicles, the momentum is strong. You see it in the growing companies backing science-based targets, developing climate transition action plans, and producing sustainability and climate disclosures. The shift from theory to practice, from “we should think about climate” to “we must integrate climate into core business,” is well underway. And then there is the United States.
With the Inflation Reduction Act, which was signed into law by President Biden in August 2022, we had the most significant piece of climate and clean energy legislation in US history. In just two years, it spurred hundreds of billions of dollars in private-sector investments, created hundreds of thousands of new jobs, and catalyzed plans for clean energy manufacturing facilities across the country. The law’s tax credits and incentives accelerated the deployment of solar, wind, battery storage, and electric vehicles, while driving costs down and expanding domestic supply chains. Most of these provisions are under threat today and could be repealed or rolled back.
But well before the Trump administration took office, we’ve seen an orchestrated political campaign to undermine corporate climate action in the last two years. [Republican] state legislatures have introduced hundreds of bills targeting responsible investment and business practices. Attorneys general and treasurers from multiple states have sent threatening letters to companies, warning that working together on climate action could be deemed a violation of antitrust laws. Major asset managers have been thrown out of state pension systems for the offense of considering climate risk.
“If you are an automaker, the electric vehicle market is growing in Europe, in Asia, in China, at a pace faster than anyone expected, then you need to plan for that reality, regardless of regulatory uncertainty.”
Let’s set politics aside for a moment. If you are an insurance company and you are not pricing climate risk in your underwriting, you are failing your shareholders. If you are a manufacturer who depends on a steady water supply, you must account for drought risk. If you are an automaker, the electric vehicle market is growing in Europe, in Asia, in China, at a pace faster than anyone expected, then you need to plan for that reality, regardless of regulatory uncertainty.
Climate change is not a future problem. The $100bn in storm-related damages in the US last year alone is a reminder that the implications are clearly present today. Supply chain interruptions, workforce disruptions, and commodity price spikes are all core operational risks. Treating them as anything less than material financial risks is, quite simply, a breach of fiduciary duty.
Regulation and disclosure frameworks are evolving. In Europe, the Corporate Sustainability Reporting Directive (CSRD) remains rooted in the assumption that climate risk is a financial risk, even as details are being refined. California has passed strong climate disclosure laws, though we can expect these will face litigation. The International Sustainability Standards Board (ISSB) offers global alignment that reduces the burden of fragmented rules.
But for now, US federal climate disclosure rules have been rolled back. The threat this poses is real. While companies are still acting on climate, they’ve gone quiet about it. They are not making bold public commitments the way they did after the US withdrew from the Paris Agreement for the first time in 2017. To be sure, the lack of transparency has some hidden costs: it can sap internal momentum and stakeholder support.
Some companies will choose to continue to act and do so without fanfare. That is acceptable, as long as the substance remains. But the greater danger would be if companies stopped acting altogether.
My advice to them would be to set goals, integrate climate risk into the enterprise risk management approach, and embed it into board oversight. You don’t have to hold a press conference or sign onto every public initiative. What matters is that you know your risks, your opportunities, and you can act on them.
Even without policy support, markets are shifting. Solar energy is now the cheapest form of electricity in history. The economics of wind, especially onshore, are strong. In China, electric vehicles are rolling off assembly lines by the thousands each hour, pushing down prices and transforming markets. This is not ideology – it’s market logic.
Removing the tax credits will slow adoption in the US, that is certain, but it won’t stop it. As a consumer, I know that a $7,500 EV tax credit can determine whether I buy a new car now or delay the purchase, but given global competition, prices will come down one way or another. As a business leader, you should recognize that consumer demand and investor expectations are already driving long-term change and will continue to, even in the absence of supportive federal policy. You should recognize that global markets are hurtling towards clean energy.
In this environment, here’s what I believe every board and CEO should prioritize:
The United States can choose to lead or lag, but it cannot stop the global transition.
I am an optimist by necessity. Around the world, momentum is building toward a clean energy economy. Investors are committing capital. Governments are deploying resources. Jobs are being created. The United States can choose to lead or lag, but it cannot stop the global transition.
At COP30 in Belém, I hope to see continued commitments to build out clean energy infrastructure, especially in the Global South, where the potential for impact is greatest. We can bring new solar facilities online in two to three years, way faster than fossil fuel alternatives. We can meet growing energy demand sustainably, but only if we keep moving towards a decarbonized energy system.
The truth is simple: greenhouse gas emissions don’t care who the president is. The impacts of climate change on markets, communities, and companies are real and growing. As corporate leaders, your duty is to navigate risk, seize opportunity, and deliver value over the long term. That means integrating climate strategy into your core business.
Climate risk is financial risk. Treat it that way, and you will be prepared not just to survive, but to thrive in the economy we are building for our future.
The leaders who act now, those who innovate, invest, and adapt, will not only mitigate this risk. They will also define the next generation of corporate leadership.
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