Climate Leadership Confronts Policy Whiplash

Trump's policy reversal, though headline-grabbing, has failed to stall the growing consensus that the transition to a low-carbon economy is both necessary and economically advantageous. The European Union has pressed ahead with its legally binding Green Deal, including introducing a Carbon Border Adjustment Mechanism (CBAM) to apply a carbon price to imports from jurisdictions with weaker climate rules. This move effectively exports EU climate policy across global supply chains albeit the EU Omnibus Simplification package means that EU policy is not quite as hard hitting as originally planned. China, often portrayed as a climate laggard, has surged ahead in clean tech deployment. It installed more than 350 GW of new solar and wind capacity in 2024 alone, reaching its 2030 renewable energy targets six years early. India, Brazil, and ASEAN nations are simultaneously scaling their investments in renewable infrastructure and climate resilience.

Meanwhile, COP28 delivered a historic agreement to transition away from fossil fuels, with more than 120 countries signing on despite the geopolitical headwinds. The climate finance agenda—once stymied by inaction—is moving forward, with new capital commitments to the Loss and Damage Fund and developing economies setting ambitious national targets, recognising the economic opportunities of the green transition. Still, previous commitments have too often failed to materialise, and with Aid budgets being cut dramatically in the UK and US, some fear that the resources pledged may not be forthcoming.

What does this mean for business? The rationale for corporate climate action has never been stronger. Climate resilience is now integral to financial resilience. Asset managers, institutional investors, and pension funds are embedding climate risk into valuations, pushing firms to deliver science-based targets and credible transition plans. These fundamentals tend not to be impacted by sentiment and political trends. 

Another accelerating driver for the transition is energy security. The last few years have shown painfully that dependency on oil and gas-rich states can leave economies vulnerable to geopolitical leverage. Many of the world's leading hydrocarbon exporters have shown a readiness to use energy access as a geopolitical tool, sometimes in ways that run counter to the values or interests of their trading partners. In this context, investment in renewables is not just about emissions—it's about autonomy. Clean energy systems reduce exposure to price shocks, supply disruption, and foreign policy risk. From an economic sovereignty standpoint, renewable energy is now the only credible alternative to a model that leaves nations beholden to unfriendly, unstable or hostile regimes.

And there is another consequence of failure that rarely receives the attention it deserves: the risk of mass displacement. If we do not meet our climate goals, the world will face a surge in forced migration as rising sea levels, drought, crop failure, and extreme weather events make vast regions uninhabitable. Hundreds of millions could be uprooted in the coming decades. And unlike the migration flows we've seen—already challenging for governments and societies—this next wave would be more significant, faster, and destabilising. Without coordinated climate mitigation, we will see borders strained and social cohesion, political stability, and global economic systems tested in unprecedented ways. Migration will become one of the defining geopolitical pressures of the 21st century—and one that businesses, investors, and policymakers are vastly underprepared to confront.

The greatest threat to climate progress today is not resistance but inconsistency. Businesses are not paralysed by change, but they are slowed by uncertainty. Shifting policy frameworks discourage long-term investment and introduce regulatory risk. What is needed now is policy durability—a cross-party, multi-cycle commitment to decarbonisation that enables markets to do what they do best: price risk, allocate capital, and drive innovation.