Trump’s Return Presents Opportunities as Well as Risks
Andy Garraway, Head of Climate Policy at Risilience, considers what Donald Trump’s second stint in the White House means for global sustainability efforts.
Week one of Donald Trump’s second stint as US President sees the world of climate diplomacy on tenterhooks. Will Trump derail hard-won progress that seeks to align global finance with net zero?
While sustainability is off the political menu for the President, global organisations already see the financial sense in making sustainability core to their business.
Direction of travel
There is no denying the US leadership that has been critical to advancing global climate negotiations is now lost. Trump is wasting no time in making his mark; day one saw the President signing a slew of executive orders. These included withdrawing the US from the Paris Climate Agreement – an order he signed live on stage during his inaugural rally, even throwing his used Sharpie pens as souvenirs to the cheering crowd.
Unlike his previous withdrawal, which took four years to come into force and was undone by Joe Biden on day one of his presidency, this time the process will be completed within a year, with an immediate effect on international climate negotiations.
More worryingly, there are suggestions of a potential withdrawal from the UN Framework Convention on Climate Change itself. Such an unprecedented move would mark a fundamental attack on the global scientific and political consensus that has been carefully built over decades of international cooperation.
Trump’s repeated: ‘Drill-baby-drill’ slogan makes his intent crystal clear.
While the full consequences of these changes remain to be seen, the shift in sentiment and absence of the US at the negotiating table gives greater potential for other, more reluctant, nations, such as India and Saudi Arabia, to stall efforts in increasing climate ambition.
That said, the change also presents opportunity for other nations to step up and lead the net zero charge.
The cost of ignoring climate change
The timing of Trump’s political ascendency is alarming, happening in a month marked by catastrophic wildfires that destroyed thousands of homes, businesses and communities across Los Angeles.
Simply put, the challenges of climate and nature cannot be ignored, despite Trump’s best efforts. Last year, the world exceeded the all-important 1.5°C threshold that increases the risks of extreme weather events that impact people, economies and nature. Even if this record is a temporary outlier, it aligns with the upward global temperature trend and demonstrates the need for more ambitious, decisive action to reduce emissions.
Rolling back existing policies and expanding fossil fuel production, as Trump has now committed to, makes no business sense. Global organisations are already feeling the impact of our changing climate and the expectation is for climate-and-nature-related disruptions to business to rise along with the associated costs to bottom lines.
A recent study projects that disruptions from climate-induced events could lead to net economic losses of up to US$25 trillion by the mid-century.
Environmental risk remains high on the business agenda
The World Economic Forum’s (WEF) Global Risks Report 2025, that sets the agenda for Davos, where leaders from around the globe gathered this week to discuss the driving forces shaping our world, further emphasises that extreme weather events are among the most pressing threats in the coming decade. These findings highlight the urgent need for companies to integrate climate resilience into their supply chain strategies to mitigate escalating costs and ensure operational continuity.
Despite the US now pursuing its own agenda, globally, environmental concerns remain the rule and not the exception. Global regulation acknowledges the financial risks and opportunities to business from climate and nature and increasing numbers of organisations are quantifying material risk and reporting on plans to manage risks within their business strategies.
Europe continues to drive momentum with the Corporate Sustainability Reporting Directive (CSRD) that has increasing global reach. In fact, we frequently hear from US companies with CSRD at the top of their agenda.
Consumers are also having their say. Data confirms increasing pressure on corporates from their customers to demonstrate environmental stewardship, with people flexing their purchasing power in support of sustainable products and services. PwC’s 2024 consumer survey reports that customers are willing to spend an average of 9.7% more on sustainably produced or sourced goods.
And cases of climate-and-nature-related litigation continue to rise as communities and individuals increasingly turn to court to hold companies to account. Litigation brings significant financial risks, including reduced company value, increased borrowing costs and damage to reputation. The London School of Economics’ Grantham Research Institute reports that climate-washing cases are the most rapidly expanding area of litigation.
Strategic sustainability
Astute business leaders know that strategic sustainability adds up to commercial success. According to an IBM study last year, 75% of executives surveyed agree that sustainability drives better business results. For employees too, it matters what companies are doing: 63% of employees take the view their employers are not doing enough to address climate change, according to a recent Deloitte global survey.
Capital markets and investors remain focused on climate and nature, demanding data to better understand the risks and opportunities to support long-term investments and climate and nature resilient portfolios that will outlive Trump’s presidency.
As reported this week at the WEF’s annual meeting at Davos, acting on nature and climate is now understood as a way to strengthen businesses and their value chain in the face of a changing planet.
While Trump’s first week in office provides distraction to global efforts towards sustainability, it makes financial sense to double down.
Investors and lenders are increasingly requiring quantifiable metrics to assess the sustainability performance of companies and related risks. Financial quantification will be required over 2025 and beyond as the preferred method for assessing the materiality of risks and ultimate value of a business prior to an acquisition or merger.
Firms that demonstrate strong financial returns and mitigate for nature-and-climate-related risks will distinguish themselves as leaders in their sector and be more attractive to future investors.
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