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At President Donald Trump’s inauguration on Monday, leaders from some of the world’s most powerful companies looked on from the dome of the Capitol Building as he promised, among other things, to cancel the “Green New Deal” and “drill baby drill.”
Here in Davos, where the annual meeting of the World Economic Forum (WEF) wrapped up on Friday, the world’s biggest companies are singing a different tune about climate change. Big banks talked about new opportunities for financing clean energy in emerging markets. Manufacturers warned of the climate risks facing their supply chains. And energy companies touted investments in renewables.
The takeaway from these conversations to me is that companies will continue to pursue profitable climate initiatives in face of Trump, even if some of them no longer frame them as climate initiatives. “The leading companies of the world are going through a couple of transformations—the tech transformation and the climate transformation,” says Jesper Brodin, the CEO of the Ingka Group (IKEA). “The train has left the station. The benefits are clear.”
The continued climate work isn’t an altruistic act. Many companies have embedded these programs into their multi-year planning process, investing billions on initiatives that can’t be easily reversed. Think of clean technology manufacturing projects that have already broken ground or office energy efficiency retrofits underway. To backtrack would be to waste valuable capital before it realizes a return.
Many of the economics that made investments in things like clean power or electric vehicles smart a few years ago will only continue to improve. “There is a lot of noise, but the market fundamentals still stand,” says María Mendiluce, CEO of the We Mean Business Coalition, a business group that pushes for climate action.
And then there are the programs aimed at addressing climate risk. All the headline-grabbing climate-linked extreme weather that the world has experienced in recent months—and years—have hit supply chains and led companies to worry. Indeed, a WEF report released last December found that unprepared companies could face an up to 25% hit to their earnings by 2050 without adequate measures to adapt to the effects of climate change. That’s a long way away for CEOs focused on quarterly earnings, but companies are already seeing the early warning signs as fires, droughts, and flooding twist up supply chains.
“I think the time of sustainability strategy is over,” says Torsten Lichtenau, who leads the Carbon Transition practice at Bain & Company. “It’s about business strategy with sustainability embedded in it.”
I’ll be the first to acknowledge the counter arguments. There are areas where the Trump presidency is bound to slow things down. Companies will be less likely to invest in nascent sectors that rely on supportive government dollars or policy, meaning that technologies like hydrogen and biofuels may take a hit.
And then there’s the selection bias problem. At conferences like this, different rooms have different mixes of attendees with different view points. In the meetings I attend, executives are much less likely to share their plans to backtrack. More importantly, European businesses are overrepresented in the halls of Davos—and more likely to have climate-friendly views than the American counterparts who aren’t here and remain skeptical of the climate agenda.
That’s all the more reason to share the stories of companies that have made climate programs profitable. In a presentation in Davos, Brodin put the company’s financials side by side with its emissions performance. Since 2015, the company has cut its climate footprint by 30% while growing the company’s revenue by nearly 24%. “There is a very strong myth in society today that climate smart comes at a premium,” he told me afterward. “Now, it’s quite easy to dismantle that myth.”
How does the continued support for climate initiatives square with the apparent private sector enthusiasm for Trump? For one, it’s worth noting that not everyone is over the moon. The applause for Trump when he spoke virtually to the crowd gathered in Davos was far from overly enthusiastic. But many others actively touting Trump either see no contradiction or don’t care. Even as their CEOs attended Trump’s inauguration, companies like Amazon, Google, and Meta have continued engaging in a breakneck race to buy clean electricity to power their growing data center footprint. Both moves, they might say, are just good business.
