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The Risks of Backtracking on Sustainability

The Risks of Backtracking on Sustainability

Tim Mohin
April 25, 2025

What’s in this week’s newsletter:

Pension funds, shareholders, and the public demand climate action
The clean energy transition is inevitable despite the political headwinds
Earth Day 2025: Our Planet, Our Power
Pope Francis died this week, leaving a faith-based legacy of climate action
The EU’s Deforestation Rule gets simplified
Canada goes to the polls in a pivotal election, and it pauses climate disclosure rules

In all my years working in sustainability, never have I seen the pendulum swing so far, so fast. Not long ago, companies and financial institutions were signing up in droves for new climate and sustainability goals. Fast forward to today, and many of those companies have ditched these goals. There are many reasons for the abrupt turn, but the politicization of these topics in the US and the rush to simplify regulations in Europe are common themes behind the reversal.

The organizations that flip-flopped are now finding themselves in an unenviable position: suffering reputational damage for backing away from sustainability while still facing potential political retribution from the right.

Sustainability champion and former Unilever CEO Paul Polman, writes, “The worst signal a leader can send is silence, or an abandonment of their principles altogether… By avoiding confrontation with a volatile White House, many CEOs are betting that they can safeguard quarterly earnings and regulatory goodwill—a strategy that has already proven to be futile. In the process, they are risking something far greater.”

We are seeing the consequences of sustainability reversals play out in real time - this week, the ~$284B New York Pension Fund issued an ultimatum that they would start firing asset managers that fail to meet the fund's climate goals.

New York Comptroller Brad Lander said, “Asset managers like BlackRock have forsaken even the symbolic forms of climate action they have taken, such as joining the net zero asset managers group, which BlackRock left in January.” The comptroller, who is the custodian of five major New York retirement funds, has given asset managers until June 30th to develop credible climate transition plans.

This pattern was repeated across the Atlantic when a top UK pension fund pulled £28bn from State Street over its ESG retreat.

Shareholders are also pressuring companies that have backed away from their green goals. BP faced its biggest shareholder revolt in five years, as major investors expressed “deep concern” over the company’s pivot away from renewables.

In addition to investors, recent research has shown that the majority of the public wants more action on climate and sustainability. In the US, a flash poll from GlobeScan taken last month found that 71% of Americans believe companies should not only address climate change but also speak out about the need for meaningful change. It also found that over half of Republicans support climate commitments, indicating that it is a bipartisan issue. On a global scale, the number is even greater, with new research finding a global consensus of up to 89% of people wanting more to be done.

To activate this silent majority into action, this week, The Guardian, along with dozens of other newsrooms worldwide, launched “The 89 Percent Project.” The project aims to help the 89% of people who want climate action realize that they are in the majority, thereby breaking the “spiral of silence.”

Again, the pendulum seems to be swinging wildly, yet these results show that the sustainability expectations of consumers and investors have remained steady and even grown. Companies must be mindful that trust and reputation take a long time to build, but can be broken quickly.

Green Energy Moving Ahead Despite Politics

One sustainability trend that shows no signs of backtracking is the energy transition. A recent survey of 1,500 global medium to large companies found that more than 50% plan to relocate to areas with better access to renewable energy sources within the next five years, and more than 75% support transitioning to renewable electricity by 2035 or sooner.

Even the world’s largest oil exporter is now embracing solar energy, as the Saudi Arabian government reduces subsidies, making solar the most cost-effective form of energy. Gonzalo Sáenz de Miera of Iberdrola stated, “A rapid shift from fossil fuels to renewable power and electrification makes strong business sense and ensures energy security and resilience.”

However, with the Trump administration planning to impose an unfathomably large 3,521% tariff on imports of solar panels from four south-east Asian countries, this may change the calculus for some.

Earth Day 2025

This week marked the 55th Earth Day. The theme this year is “Our Power, Our Planet,” intended as a rallying call for global companies and governments to accelerate the adoption of clean energy and meet the goal of tripling renewable capacity by 2030.

The White House celebrated by issuing a press release highlighting the positive impact the Trump administration was having on the planet. However, elsewhere, the day was marked by widespread protests as hundreds marched against the Trump administration’s “war on the planet.” Yet, probably the most impactful thing was what the Trump administration did not do - rumours that the Administration would remove the tax-exempt status of green NGOs were denied.

Faith and Climate Action

Pope Francis

This week marked the death of Pope Francis. Pope Francis was the first pontiff to link climate action to faith. In 2023, his seminal work, “Laudate Deum,” was a global call to action for Catholics to be more committed and ambitious in addressing climate change. He leaves a powerful legacy and will be sorely missed at a time when strong global leadership is needed on environmental action.

His advocacy and vocal support for climate action sparked a broader conversation about the role of faith in addressing climate change and promoting sustainability. Renowned Christian climate scientist Katherine Hayhoe, in a recent edition of her Talking Climate newsletter: “More than 'thoughts & prayers',” shares the good and bad of what religion is currently doing on climate change and closes by saying, “At their core, every major world religion teaches its adherents to be responsible for all the living things that share our home and to care for those less fortunate than ourselves. Those values give us everything we need to care about and advocate for climate action!”

EU Simplifies Deforestation Rule

The EU’s Deforestation Rule (EUDR) has already been postponed for a year. Now the EU Commission has taken action to simplify the rule. The frequency of compliance statements has been reduced, and due diligence can now be done collectively on behalf of multiple companies. According to the Commission, this will reduce administrative costs and burden by 30%.

With compliance required in just over 6 months, companies in some regions are scrambling to prepare. This article does a good job of spelling out why it is a lighter load than many think, especially SMEs.

Canada Votes, Pulls Back Climate Rules

On Monday, Canada’s election will be dominated by Trump and tariffs. While the front-runner, Mark Carney, has a history of leading climate initiatives, he has distanced himself from his past sustainability efforts as the climate agenda has become increasingly polarizing.

However, a Carbon Brief analysis of party manifestos estimated that a win for Carney’s Liberal Party would mean 800 million fewer tons of carbon emitted than if the Conservatives won.

None-the-less, the Canadian Securities Administrators (CSA), paused their climate-related disclosure rule, in light of EU and US slowdowns and backtracking. Chair of the CSA Stan Magidson, said: “In recent months, the global economic and geopolitical landscape has rapidly and significantly changed, resulting in increased uncertainty and rising competitiveness concerns for Canadian issuers. In response, the CSA is focusing on initiatives to make Canadian markets more competitive, efficient and resilient.”

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