thoughts for corporates + investors: heading into Trump era #2
published 11.20.24
As a Director at qb., I provide strategic advice on reporting and navigating this ever-changing regulatory landscape—helping companies define and operationalize material sustainability strategies, with a specialty in consumer products.
With over a decade of experience in the ESG space at companies like Grove Collaborative and Williams & Sonoma—here are my insights and advice for navigating the next US presidential administration.
Big picture, there is, unfortunately, no doubt that a former oil and gas executive cosplaying as the head of the EPA will roll back any form of regulation they can get their hands on. Whether it’s opening federal land for drilling, reducing fines for polluters, regulating safe chemical use, overseeing toxic substances such as PFAS or generally safeguarding clean air and water, the federal government will not be focused on any form of environmental protection. Go long on filtration investments (this is not financial advice)! The US will likely also take a symbolically isolationist stance on any global climate treaties (including the Paris Climate Accords, which was a global commitment to curb emissions and keep the planet livable — and even the UN Compact on Climate, which is a 30+ year old commitment). Corporates do have an opportunity to step in to keep at least a fraction of US industry on track, the same way they did in 2016 when nearly 2,000 companies and investors pledged to stay the course via the “We Are Still In” commitment. This time around, support might be less public, out of fear of poking the bear, but global expectations have set a clear requirement for accountability around decarbonization.
That said, in my experience, most companies aim to be good corporate citizens and have made significant strides towards measuring and reducing their carbon emissions (where they can). These efforts have required significant corporate resources, attention, and investment, and they are not short-term initiatives, with most goals focusing on halving emissions by 2030 and aiming to reach net zero emissions by 2050. These efforts were not a waste of time and resources and are unlikely to be abandoned, especially in a macro environment trending towards increasing ESG oversight and disclosure — even if the US has some short-term pushback.
Across the spectrum of progress, these companies are wondering whether an incoming administration will impact their efforts — if updated policies should mandate less rigorous climate action.
Having seen this pendulum swing a few ways in my 10+ years in sustainability leadership, my thoughts and advice are as follows.
Stay. The. Course.
1. US Federal Policy has Never Driven Climate Action
Companies have not been asked to decarbonize or report on their emissions by the US Federal Government. While I consider the Biden administration to have achieved the greatest gains on climate over any other with the Inflation Reduction Act (IRA), remember that their focus has been on infrastructure, bringing renewable energy online and systemic progress towards a lower-carbon future. There are no current mandates requiring reduced corporate emissions or disclosures. The SEC has spent years debating whether to mandate Scope 1 and 2 emissions (unlikely at this point). Put bluntly, no climate action has resulted from existing US policy. Action has been prompted by leadership, investors, supplier requirements or business imperatives. This suggests that while companies haven’t been led by the government, they also shouldn’t be hindered by it.
2. European ESG Compliance is Unchanged
CSRD/CSRDDD will require companies that meet the threshold with EU investors to report in-depth on climate-related issues as well as social and community impacts. Europe has always held the bar on climate and ESG disclosures and would have continued to do so under a theoretical Harris administration. Any US-required corporate disclosures would have fallen under the CSRD umbrella (including CA legislation).
3. The Golden State Leads
California Climate Bills CA SB 253 and CA SB 261 (now official state law as SB 219) require disclosures of carbon emissions, and climate-related financial risks require disclosures as of 2026 using 2025 data. This is truly around the corner. Companies can hold out on compliance in the hopes that the incoming administration sues to delay or restrict these bills. However, there are penalties (not prohibitive); these disclosures fall into CSRD, and are requested through large retailers such as Walmart, Target or Amazon. Publishing carbon emissions has been an investor focus area extending before 2016 as a proxy for good materials governance and management, with shareholder resolutions commonly filed targeting non disclosers.
Smart companies (looking at you, leading ESG at your organization) will realize that carbon accounting disclosure is:
Not that hard
Not that expensive
Helpful for other reasons in terms of efficiency
May save you money
Required by most large suppliers.
There may be some delays in compliance, but this is the direction we are heading in.
4. Climate-Related Financial Risks = Financial Risks
Hopefully, we’ve passed the point where leadership understands that climate-related financial risks can also be referred to simply as financial risks. Multinational companies are years into this process as a supply chain exercise and have an in-depth understanding of supply chain vulnerabilities and redundancies for exactly these scenarios. I don’t think there is great self-awareness about this, as the term “climate-related financial risk” strikes fear,but it’s an exercise that risk and supply chain teams are well-versed in even if they don’t know what it’s called. There will be new dimensions and tools needed, but these will prove an extension of current robust risk management practices.
5. AI has a Role to Play in Carbon Accounting
We are only beginning to see the extent to which AI can streamline and simplify carbon accounting, decarbonization, scenario planning, and climate-related financial risk. Expensive software tools and subscription models are well-established in today’s sustainability market, but it’s a matter of time before less expensive and free alternatives enter the market. There is no question that the tools we have today are well equipped to meet corporate carbon accounting needs. The question is, will the incumbent GHG accounting firms be successful in gatekeeping their tools?
6. Sorry, Coal. The Inflection Point is Back There
Well put by Ann Carlson, Professor of Environmental Law at UCLA School of Law:
“The Trump administration cannot derail the transition to clean energy. To be sure, it can slow it down. However, the renewable energy sector is booming — 40% of our electricity generation now comes from renewable sources. Solar and wind energy are cheap. Globally, 80% of new energy generation comes from resources like solar and wind (Source: NREL). The transportation sector is electrifying, with automakers offering 117 new electric vehicle models to consumers, making massive investments in transitioning to EVs and making those investments in the United States. The global push is even bigger, especially in Europe and China. Again, Trump can slow things down, but we aren’t returning to the days of fossil fuel dominance.” (Source)
The only thing I would add is the IRA is overwhelmingly oriented around red states, with 85% of investments and 68% of jobs in Republican congressional districts (Source). The intention was to protect this legislation amidst a change of administration, so it remains to be seen if the Trump administration prefers the symbolic win of rolling back the IRA despite its benefits to their voters, or what I would call “cutting off the nose to spite the face.”
7. Corporate Strategy Doesn’t/Shouldn’t Rotate Every Four Years
A swinging pendulum isn’t helpful to corporate strategy. Car manufacturers, utilities and others don’t benefit from a change in policy landscapes as they derail strategic initiatives, so they are advised to stay the course knowing the legislation is likely to change back to climate compliance with the Paris Accords in 2028 (in the hopes of a return of the Democrats to power), at which point adherence will be extremely difficult and expensive on a short timeline. Any company with global consumers and investors will be subject to continued pressure to align with emissions trajectories that suggest a liveable planet. (Emitting as much carbon as you can for the next four years isn’t a long-term solution — but it does help some.)
8. Disasters + Lawsuits are on the Rise
Polluters will be less regulated and less incentivized to hide it. Cue outrage, boycotts and more environmental disasters, such as the train derailment in East Palestine. Blue states may try to get more rigorous, and there will be lots of litigation across the board on a state and federal level, especially by environmental groups who are likely going to be in court non-stop during this administration (including my favorite ferocious defenders of nature: the NRDC, and of humans: the EWG) trying to hold back the floodgates of environmental ransacking. Opportunities exist for companies with strong governance and leadership to retain and attract new customers by staying out of the fray on these topics, as there is already growing concern from human-related impacts of environmental health.
9. Consumers Still Care About What’s in Their Bodies
Climate change should not be a polarizing issue, and recent data shows that the public is increasingly concerned about it regardless of political party. Apparently, 90% of Floridians now believe in climate change! This is especially true of consumer products and plastic. Appealing to customers as “better for you” seems a trend unlikely to fall out of favor in that the benefits are directly impacting the consumer. My hope is that brands will continue to improve their offerings around clean, safe and third-party certified products and that consumer sentiment can provide some safeguards for continued progress. It is hard to imagine a world where brands tout that products are less safe, less certified, and contain more toxins and plastics. (To be safe, I’ll continue to check every personal care product on EWG’s Skin Deep database.)
10. Be Wary of Silver-bullet Solutions
If successful and scalable, direct air capture (DAC), chemical recycling, and even solar geoengineering provide a license to continue business as usual. Why would we stop burning fossil fuels or making single-use plastic — if a magic solution is right around the corner? Unfortunately, these technologies are a long way out from either scale or proven success. While they are certainly an important part of ensuring that our planet remains livable, the focus needs to be on existing technologies and transitioning away from fossil fuels, with moonshots reserved for truly impossible-to-abate emissions and sectors.
11. Keep Calm + Carry On
The anti-ESG backlash is loud, disruptive, and nonsensical. Investors and leaders are trying to avoid the spectacle made around various, but primarily social, impact initiatives. I suspect that these tantrums will get more emboldened, which means that the work needs to be done effectively and sometimes quietly. DEI goals are unlikely to be announced externally; however, look at any research on the topic to find that financial performance improves with more diverse leadership. HR leaders will need to work harder to ensure better representation at the peril of progress. We need new acronyms to throw off the scent for this critical work. In all seriousness, I think labeling social impact work with another name and continuing to do it is the best strategy I can recommend at this point.
12. Seek Solutions from the Political Trenches
We’ve seen the authors of public sector climate plans and reporting developing euphemisms for climate action in politically divided places for a while now. Especially any purple cities in states with mandated planning. Their work will be helpful guidance on developing a new shared language for ESG and DEI actions that can drive greater support for climate amongst a broader range of communities.
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by Danielle Jezienicki
Director
