Insight | Corporate climate action and geopolitics: navigating turbulent times 

The world is in flux. Geopolitical tensions, shifting policy landscapes, and the escalating realities of climate change are creating a complex environment for businesses. For board directors, this presents a significant challenge: navigating the current shifts creating uncertainty whilst ensuring long-term resilience and success. In this context, maintaining a steadfast commitment to the business case for climate and nature action – which is a strategic necessity – is rubbing up against political ideology at odds with long-term value creation. 

In this thought leadership article from our newly launched “Insight” series, the Climate Governance Initiative team looks at how corporate climate action can survive and eventually thrive in a challenging political landscape.

Shifting policies, escalating impacts

The first 50 days of the new US administration have already signalled a significant shift in climate and sustainability policy. The potential unravelling of mandatory corporate climate and sustainability disclosure requirements, alongside changes in national climate commitments, represent a sudden and significant sea change for the world’s largest economy. Such political shifts, coupled with the ongoing conflicts in Ukraine and between Israel and Palestine, which continue to disrupt supply chains and destabilise global energy markets, compound a strikingly volatile backdrop for business planning. 

Adding to this complexity are the escalating impacts of climate change itself. The devastating wildfires in Los Angeles earlier this year (total estimated cost: $250bn), fatal flooding incidents from Indonesia to Argentina, and the record-breaking warmth of January 2025, serve as stark reminders of the growing urgency of the issue. For further context, the World Meteorological Organisation recorded 151 unprecedented extreme weather events in 2024 alone. These events underscore the critical need for boards to proactively manage climate and nature-related risks, ensuring their business models remain resilient and competitive. Supporting this leadership approach, a recent report from the University of Cambridge and Boston Consulting Group (BCG) lays out the economic case for climate action and the importance of transparency on the costs of inaction. 

Globally, the environmental, social and governance (ESG) landscape is also undergoing significant transformation – in some cases this may be helpful in addressing the increasingly complicated “alphabet soup” of requirements being placed on companies. The EU’s recent “Omnibus” initiative is aimed at simplifying the Corporate Sustainability Reporting Directive (CSRD) which includes raising key thresholds whilst simultaneously delaying reporting timelines. The proposals are “conservatively estimated to bring total savings in annual administrative costs of around €6.3 billion”. Whilst this is likely to be well received by many businesses, there has been some pushback from leading businesses in sustainability with concerns over erosion of long-term competitiveness and resilience. The key is to ensure that the Omnibus package stimulates increased clarity and transparency of material impacts and is not simply an excuse to slow the pace and reduce ambition of corporate sustainability action and reporting. 

Continuity of action, resilience of leadership

Alongside the maturing requirements for assessing and disclosing the financial risks of climate change to businesses, the recent conclusion of the extended COP16 negotiations in February yielded a landmark deal to mobilise finance for biodiversity protection. The agreement, outlining a roadmap to deliver $200 billion annually by 2030, with significant contributions from developed to developing nations, signals a growing global commitment to addressing nature loss. For boards and business leaders, the message is clear: maintaining a strong focus on climate and nature action is more critical than ever. Emily Farnworth, Director of the Climate Governance Initiative and a leading voice in corporate sustainability, notes:

This resilience requires bold leadership. As the World Economic Forum’s Global Risks Report 2025 affirms, environmental risks, alongside geopolitical tensions, are among the most pressing challenges facing businesses today. Far from “green hushing” (the practice of downplaying sustainability efforts due to fear of scrutiny or backlash), boards must integrate these risks into their strategic decision-making processes, ensuring that climate and nature considerations are embedded across all aspects of their operations. To do otherwise is to simply ignore the needs of value chain resilience, one of the cornerstones of good business practice. 

Rewards and opportunities

The challenges in 2025 are significant, and so are the stakes. As outlined in KPMG’s recent report on board leadership challenges, proactive risk management and long-term strategic planning are essential for survival – a statement as true for individual businesses as it is for humanity as a whole. By embracing bold leadership and maintaining a steadfast commitment to climate and nature action, businesses can navigate these turbulent times and embrace the opportunity therein: building a more resilient and sustainable future.  

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