Climate Action in a Changing Geopolitical Context
The world is changing. Geopolitical tensions, shifting political landscapes, and increasingly urgent climate change are creating a complex environment for businesses. For board directors, this presents a significant challenge: navigating current disruptions that create uncertainty, while ensuring long-term resilience and success. In this context, maintaining a strong commitment to the business case for climate and nature action – as a strategic imperative – often stands in contrast to political ideologies that oppose long-term value creation.
Shifting Policies, Growing Impacts
The first 50 days of the new US administration have already signaled a significant shift in climate and sustainability policy. The potential rollback of mandatory corporate climate and sustainability disclosure requirements, along with changes to national climate commitments, represents a sudden and major shift for the world’s largest economy. These political changes, combined with ongoing conflicts in Ukraine and between Israel and Palestine (disrupting supply chains and destabilizing global energy markets) create a strikingly unstable backdrop for business planning.
Adding to this complexity are the intensifying impacts of climate change. Devastating wildfires in Los Angeles earlier this year (with total estimated costs of $250 billion), deadly floods from Indonesia to Argentina, and a record-warm January in 2025 all serve as stark reminders of the growing urgency of this issue. The World Meteorological Organization recorded 151 unprecedented extreme weather events in 2024 alone. These events underscore the critical need for board directors to proactively manage climate- and nature-related risks, ensuring that their business models remain resilient and competitive. A recent report by the University of Cambridge and Boston Consulting Group supports this approach, highlighting the economic rationale for climate action and the importance of transparency around the costs of inaction.
Globally, ESG is also undergoing significant changes, which in some cases may help address the increasingly complex “alphabet soup” of regulatory demands placed on businesses. The EU’s recent “Omnibus” initiative aims to streamline the Corporate Sustainability Reporting Directive (CSRD), including raising key thresholds while delaying reporting deadlines. Conservative estimates suggest these proposals could deliver total annual administrative cost savings of approximately €6.3 billion. While likely to be welcomed by many, leading sustainability-driven companies have pushed back slightly, expressing concern that such changes could undermine long-term competitiveness and resilience. It is essential that the Omnibus promotes greater clarity and transparency of material impacts and is not simply an excuse to slow down or weaken the ambition of sustainability actions and reporting.
Operational Continuity, Leadership Resilience
Beyond the increasing regulatory requirements for assessing and disclosing financial climate risks, February also marked the close of the expanded COP16 conference, which resulted in a landmark agreement on mobilizing biodiversity finance. The agreement sets out a plan to secure $200 billion annually by 2030, with developed nations making significant contributions to developing countries, a clear sign of growing global commitment to tackling nature loss. For board directors, the message is clear: maintaining a strong focus on climate and nature action is more important than ever.
This resilience demands courageous leadership. As the World Economic Forum’s Global Risks Report 2025 confirms, environmental risks (alongside geopolitical tensions) are among the most pressing challenges businesses face today. Board directors must integrate these risks into their strategic decision-making processes and ensure that climate and nature considerations are embedded across all aspects of operations. Green hushing – the practice of downplaying sustainability efforts for fear of scrutiny or opposition – must be avoided. Otherwise, we risk ignoring the resilience needs of the value chain, which is a cornerstone of sound business practice.
Rewards and Opportunities
The challenges of 2025 are significant, and so are the stakes. As noted in a recent KPMG report on leadership challenges, proactive risk management and long-term strategic planning are essential for survival, both for companies and humanity as a whole. With bold leadership and a strong commitment to climate and nature action, businesses can weather these turbulent times and seize the opportunity they offer: to build a more resilient and sustainable future.