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A New Era of Climate Leadership

A New Era of Climate Leadership

Tim Mohin
May 02, 2025

In just 100 days, the new Administration has reversed US climate leadership
China is moving quickly to fill the green power vacuum
Mark Carney’s election spurs hopes of Canadian climate action
US fires 400 authors of key climate report
EFRAG approves standards simplification plan
Sustainability funds see record outflows
ISSB eases emissions reporting for finance
Did renewable energy cause Spain’s record-breaking blackout?
Survey to assess the sustainability recession

This week marked the 100th day of the new Trump administration. Over the last three months, the reversal in climate and sustainability policy exceeded what most expected.

The Administration has expanded the traditional powers of the executive branch by withholding funds for climate-related initiatives that had been approved by Congress, terminating staff from agencies authorized by Congress, and issuing 20 executive orders aimed at dismantling US leadership for the transition to a low-carbon economy.

The US Environmental Protection Agency (EPA) has been transformed under its new mission to “lower the cost of buying a car, heating a home and running a business.” This turnaround from environmental protection to lowering costs had former Obama EPA Administrator Gina McCarthy saying, “This is worse than any previous administration. He (Trump) can do a lot of damage to the agency, and when he leaves, he will have left devastation in his wake.”

On the other side of the Atlantic, the EU is struggling to transform its sustainability leadership role from a rule-based system to an incentive-based system. This transformation is taking time and, arguably, has slowed the pace of sustainability progress in Europe.

The magnitude and velocity of these changes cannot be overstated: When two of the largest economies on the planet make such a sudden and drastic reversal on climate and sustainability policy, it leaves a “green power vacuum.”

China, the world’s second largest economy, is racing to fill the vacuum and extend its leadership in the energy transition. For years, China has supported its cleantech sector with substantial subsidies, resulting in a “green growth” rate that is three times the pace of the rest of its economy and a cleantech sector that makes up more than a quarter of the country’s GDP growth. For example, China leads in electric vehicles (60% of global sales), lithium-ion batteries (70% global share), and solar panels (80% global share). All of these industries have double-digit growth rates, and China not only dominates in sales, but also in the supply chain for these products.

So it should not be a surprise that, as other economic superpowers retreat, China recently reaffirmed its commitment to climate action, announcing that it will release an ambitious economy-wide emissions reduction target for 2035 ahead of COP30.

The commitment came in an inaugural UN virtual summit for climate action and a just transition, where Chinese President Xi Jinping said, “Although some major country’s persistent pursuit of unilateralism and protectionism has seriously impacted international rules… as long as we enhance confidence, solidarity and cooperation, we will steadily move forward global climate governance.” Notably, the US was not invited to the event.

Carney to Lead Canada

New Canadian Prime Minister Mark Carney

On Monday, Canada elected Mark Carney to a full term as Prime Minister. While Carney avoided discussing climate change in a race dominated by Trump and tariffs, he has a long record of achievement in driving climate action and has put forward a raft of common-sense climate and energy policies to reduce the country's emissions. Since succeeding PM Justin Trudeau, Carney has implemented climate-focused policies aimed at incentives to help Canada compete in the energy transition:

Transition from Carbon Tax to Incentives: Carney repealed the national carbon tax, which had become politically divisive, and introduced incentives for green technologies, such as subsidies for electric vehicles and energy-efficient appliances.
Clean Energy and Infrastructure: His administration is working to decarbonize federal buildings by 2030 and streamline approvals for clean energy projects, aiming to bolster Canada’s renewable energy sector.
Balanced Energy Strategy: While promoting clean energy, Carney also supports domestic oil production to reduce reliance on U.S. energy imports, reflecting a pragmatic approach to energy security.

During his acceptance speech, he said, “It’s time to build an industrial strategy that makes Canada more competitive while fighting climate change.”

Authors of Key US Climate Report Axed

This week, the US Government fired a 400-person team working on the National Climate Assessment. The scientists working on the sixth version of the Congressionally mandated report were due to complete it in 2028. Until an email stated that the report “is currently being re-evaluated,” and all authors would be dismissed.

The continued failure to gather, preserve, and acknowledge environmental data in this administration will make the US less prepared for the inevitable upcoming climate risks. One science writer said, “Ignoring these realities will not cool the air, lighten the winds, or weaken the hurricanes.”

Plan Approved to Simplify European Standards

After being initially rejected, the Sustainability Standards Board (part of the European Financial Reporting Advisory Group (EFRAG)) voted overwhelmingly to support a plan to simplify the European Sustainability Reporting Standards (ESRS). The European Commission mandated the group simplify its reporting standards - required for use by thousands of companies covered by the Corporate Sustainability Reporting Directive (CSRD) - by the end of October this year. The tight deadline left board members concerned that there would not be time for adequate public review - leading to the initial rejection.

The new work plan provides a detailed timeline for the revisions and public review. The timeline is as follows:

April to mid-May 2025: Establishing a vision for substantial simplification (to be confirmed following the stakeholders’ feedback, ending May 6th)
Second half of May to July 2025: Gathering evidence from stakeholders, analysis of the CSRD-aligned reports already published, and other sources. Drafting and approving the amended ESRS Exposure Drafts.
August and September 2025: Publishing the Exposure Drafts, receiving and analyzing feedback (including from a public consultation) from stakeholders.
October 2025: Finalizing and delivering the technical advice to the European Commission.

Record Divestments from Sustainability Funds

Investments in sustainability-labeled funds have been declining since their peak in Q4 2022. However, in Q1 2025, driven by the Trump Administration's reversal of all things sustainability related, they reached a new record low. Hortense Bioy, at Morningstar Sustainalytics, said, “The ESG backlash coming out of the US is affecting managers and influencing the way they are talking about products and selling them outside of the US.”

While US sustainable funds saw sustainable fund withdrawals for the tenth consecutive quarter, the surprise was in the EU, which experienced its first outflows since 2018. However, that is not the whole story - the EU’s outflows accounted for just 0.04% of overall capital in EU sustainable funds. Other key markets, such as Canada, Australia, and South Korea, had increases in sustainable investments.

ISSB Eases Financial Sector Climate Reporting

The International Sustainability Standards Board (ISSB) released an Exposure Draft proposing a series of changes to its climate-related disclosure standard (S2), aimed at simplifying the requirements for emissions reporting, particularly for financial institutions.

The most notable change was for Scope 3 emissions (value chain emissions) for financial institutions. These are often referred to as “financed emissions” - the greenhouse gas (GHG) emissions associated with investments, loans, or underwriting activities of a financial institution.

Under the draft, financial institutions would not be required to report on more complex derivatives, facilitated emissions (emissions associated with capital markets activities, such as underwriting stocks and bonds or arranging financing on behalf of clients), or other insurance-associated emissions. Public comment is open until June 27th.

In other ISSB news, the International Financial Reporting Standards (IFRS) group, which established the ISSB, has partnered with the Inter-American Development Bank (IDB) to accelerate the adoption of its sustainability reporting standards in Latin America.

Spain’s Blackout: Was Clean Energy the Cause?

This week, a mysterious 18-hour blackout - the biggest in European history - plunged most of Spain and parts of Portugal into darkness.

Spain now gets around 50% of their energy from renewable sources. Analysts suggest that the fluctuating nature of wind and solar energy may have contributed to a drop in power, potentially leading to a total grid collapse.

While it may be tempting to blame the unprecedented power outage on the rapid growth of wind and solar power in Spain, reliance on renewables is not to blame. Rather, the issue appears to be the management of renewables in the modern grid. Over the long term, power systems will need to invest heavily in battery capacity to store electricity, as well as in technologies for synchronizing the grid.

Sustainability Recession?

John Elkington, a pioneering figure in sustainability and the originator of the “Triple Bottom Line” concept, has - sadly - introduced a new term, the “sustainability recession.” The term refers to this period of time marked by a noticeable slowdown in corporate sustainability efforts.

Along with some partners, John is sponsoring a survey to get a pulse check on where we are and where we should go next - access the survey here.

The views expressed on this website/weblog are mine alone and do not necessarily reflect the views of my employer.

Other Notable News:

Sustainability Research

Climate Regulations

The UK’s Financial Conduct Authority halted plans this week to introduce sustainability disclosure and fund labeling requirements for portfolio managers. They will reevaluate the requirements based on industry feedback before re-releasing them.

Trump 2.0

Global Weirding

India and Pakistan are sweltering under life-threatening ‘new normal’ heat waves.

Climate Finance

Climate Tech

China’s clean technology exports to emerging markets surged last year, and are expected to rise even further this year in light of US tariffs.

Notable Podcasts:

In this week’s episode of Bloomberg’s Zero podcast, they look at the upcoming Australian election. The main question at hand is whether this election will be a climate election. Bloomberg’s Australian podcast team answers this question by looking at the energy policies of each party.
The most recent episode of The Harvard Business Review’s "The Climate Rising" podcast features a conversation about the circular economy with Fabian Barthel, Co-Founder of Vytal, a company specializing in circular economy packaging. The discussion explores the innovations, behavioral science, and evolving regulations that are shaping the market for circular products.

Notable Jobs:

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