Climate and Politics: Turning Up the Heat on Business

Climate policy has moved from the periphery to the center of business strategy all around the globe. Governments are increasingly integrating climate into political decisions (or not), and the ripple effects are being felt across industries. As businesses adapt to this new reality, it’s not just regulations that need attention—misinformation is complicating the landscape. For companies, the ability to navigate political pressures, regulations, perceptions, and unexpected changes, with an informed and decisive approach will be critical to thriving as a business.

In this issue of the Impact Brief, we explore how political decisions on climate are reshaping business, and why staying ahead of misinformation matters more than ever.

Deep Dive: Politics, Climate, and Business—An Evolving Dynamic

The fast pace at which political forces are shaping and impacting climate action can be destabilizing and daunting for a lot of businesses. In the European Union, the Green Deal and the new Carbon Border Adjustment Mechanism (CBAM) are driving companies to rethink their supply chains, while the U.S.’s Inflation Reduction Act is boosting investments in clean energy, and the looming US election could have unpredictable impact on climate decisions.

But these shifts come with uncertainties. U.S. federal climate policies, for example, are vulnerable to the political cycle, where changes in leadership can quickly alter the direction of climate action. The polarizing US election, could have completely different impacts depending on which candidate takes office. This unpredictability isn’t just a regulatory challenge; it impacts how businesses make long-term investments in sustainability.

Misinformation adds another layer of complexity. Climate skepticism, often fueled by misinformation campaigns, can shift public sentiment and disrupt the path forward. Hurriance Helene response, and the full blown conspiracy machine that followed was a massive wake up call to recognizing the size of the misinformation machine - from death threats to meteorologists, to eroding trust in FEMA, and most interestingly linking the events to political play in the upcoming election.

Hurricane Milton and especially Helene are good cautionary tales of how major climate events, can significantly influence public perception and an organizations ability to function. Now companies need not only manage regulatory demands but also combat false narratives that could erode trust with customers, communities, and even investors.

The takeaway? Political climates shift, and misinformation can spread quickly. Businesses need to stay informed, agile, and proactive in shaping their climate strategies, ensuring they remain grounded in facts and transparency, and proactive in their value system, and remembering that although they may need to manage political relationships they are not politicians.

A Marsh report highlights that businesses face mounting challenges from geopolitical shifts, economic transitions, and rising protectionist policies. With 60+ elections worldwide and increasing trade barriers, businesses must adapt to regionalized economies and manage evolving risks in 2024. The report emphasizes the importance of tracking voter turnout, electoral violence, and misinformation risks, along with the need for resilience in navigating policy and macroeconomic uncertainties. Organizations that proactively manage these shifts can find growth opportunities amidst the volatility.

For more details, check the full report.

Recent Headlines: The Intersection of Climate and Business

COP29: High Stakes for Climate Finance As global leaders prepare for COP29, all eyes are on whether wealthier nations will meet their climate finance pledges. For businesses with global supply chains, this will affect everything from carbon pricing to trade policies. Staying on top of these developments will be essential for businesses that rely on international markets.
U.S. Climate Policy: Federal Action vs. State-Level Momentum While the federal climate agenda remains in flux due to political gridlock, states like California and New York are moving ahead with ambitious policies. Businesses operating across multiple states, and within the US will need to navigate these differing regulations and consider the impact on their operations.
Australia's Clean Energy Pivot Australia's shift toward renewable energy is opening new markets, particularly in clean tech. However, misinformation about the economic impact of climate action continues to create a challenging environment. Companies must stay ahead of these narratives to maintain credibility and capitalize on new opportunities.
EU’s CBAM Takes Effect The EU's CBAM, designed to address the carbon intensity of imports, is creating waves in global trade. Export-dependent businesses must adapt to new compliance requirements or face significant tariffs. Ensuring transparency around carbon reporting is becoming a competitive necessity.

Climate and politics are increasingly intertwined, and businesses need to be ready for both the opportunities and challenges this brings. Misinformation can muddy the waters, but companies that focus on clear communication, solid facts, and a proactive climate strategy will be better equipped to thrive in this new reality. Companies can focus not only futureproofing their operations but really positioning themselves to 'futureseize' in the new climate. Those who lean into this approach—balancing action with clarity—will be better positioned to thrive in an environment where both political and climate pressures continue to intensify. If you want to get started in understanding what to pay attention to understand climate and business and its pressures in 2024.

How are you safeguarding your business against political fluctuations?