Firms Bet on Climate Tech Despite Looser Rules

The Trump administration has given corporations plenty of convenient excuses to retreat from their climate commitments, with its moves to withdraw from the Paris Agreement, roll back emissions regulations, and scale back clean energy incentives.

But will the world’s largest corporations follow its lead?

Some multinational companies have indeed scaled back. For instance, Wells Fargo dropped its goal for the companies the bank finances to reach net-zero emissions by 2050, saying the conditions necessary for meeting that goal, such as policy certainty, consumer behavior and the pace of clean technology development, hadn’t fully materialized. Oil giant BP told investors that earlier optimism about a fast transition to renewable energy was “misplaced” given the changing regulatory environment.

However, many others, including the world’s largest retailer, Walmart, aren’t trading their long-term risk planning for Washington’s focus on short-term cost savings. They are continuing their climate policies, but often doing so quietly to avoid scrutiny.

These companies still face ongoing pressure from state and local governments, the European Union, customers and other sources to reduce their impact on the climate. They also see ways to gain a competitive advantage from investing in a cleaner future.

For my new book, “Corporations at Climate Crossroads,” I interviewed executives and analyzed corporate climate actions and environmental performance of Global 500 and S&P 500 companies over the past decade.

These companies’ climate decisions are driven by a complex interplay of pressures from existing and future laws and the need to earn goodwill with employees, customers, investors, regulators, and others.

States wield influence, too

In the U.S., state climate regulations affect multinational corporations. That’s especially true in California – the world’s fourth largest economy and the state with the largest population.

While President Donald Trump dismantles U.S. climate policies and federal oversight, California and the European Union have moved in the opposite direction, becoming the de facto regulators for global businesses.

California’s newly enacted climate laws extend its cap-and-trade program, now called “cap and invest,” which is designed to ratchet down corporate emissions. They also lock in binding targets to reach net-zero greenhouse gas emissions by 2045. And they set clean-power levels that rival the Europe Union’s Green Deal and outpace most national governments.

Other states have joined California in committing to meet the goals of the international Paris climate agreement as part of the U.S. Climate Alliance. The bipartisan coalition of 24 governors, from Arizona’s to Vermont’s, represents over half of the U.S. population.

Several states have been considering “polluters pay” laws. These laws would require companies to pay for their contributions to climate change, with the money going into funds for…