05 February 2025 - Whatever the White House does, it won't change the market fundamentals driving the net zero transition, writes Beverley Cornaby, Director of the UK Corporate Leaders Group.
As we started 2025 witnessing flooding in Spain and the UK, and the devastating wildfires in the US, it's hard to be optimistic when these events underline that climate change is not a far-off future threat, but a present day reality.
And these weather extremes are due to get worse. In the UK, the number of people at risk of flooding is expected to rise by 61 per cent by 2050 under 2°C of warming and by 118 per cent under 4°C.
To avoid these worsening impacts we need all governments to double down on climate action, but instead we've seen some major policy reversals. For instance, in his first week as US President, Donald Trump, signed the order to pull the US out of the Paris Agreement, the most important global treaty for tackling climate change. While not a surprise, Trump's vow to "end Biden's policies of climate extremism" combined with a dramatic array of executive orders rolling back a range of US climate and nature policies obviously raises questions beyond US borders, on his influence on others.
All may not be lost though. Following Trump's order, 24 states immediately declared they remain committed to delivering the Paris Agreement. Additionally, over 5,000 US leaders, including businesses and investors, pledged to cut US carbon emissions in half by 2030 and put the country on track to reach net zero by 2050. As during the first Trump presidency there's hope state level commitments will maintain climate action in the US.
In contrast to the polarised politics of net zero in the US, public support for climate action in the UK is still high. Two-thirds of people think action on net zero should be a high or very high priority for the government.
The current government has taken steps to show it's serious in taking climate action. It had a strong presence at the global COP29 climate negotiations in November, where the UK was the first G7 nation to publish a new 2035 emissions reduction target, and has since relaunched the Net Zero Council and released plans for how it will deliver its 2035 target.
However, while the UK government clearly has some strong ambitions when it comes to climate action, some cracks have started to show as we've entered 2025. There's been much reporting of Rachel Reeves saying that growth trumps net zero, something she later qualified, maintaining that cutting emissions is good for economic growth.
Businesses have long understood the growth opportunity from net zero. The UK Corporate Leaders Group, which I run, started 20 years ago as a group of businesses who believe that pitting economic opportunity against the need to face up to the climate challenge is wrong-headed. Transforming our economy towards net zero not only aims to mitigate the worsening impacts of climate change, it also offers a path to innovation and new industries. This is not just theoretical – China has demonstrated the major competitive advantages open to those who are ‘winning' the race for clean energy and transport.
Clearly governments have to make trade-offs, and the UK is under pressure to improve its economy. But an economic strategy that neglects climate and the energy transition will ultimately fail. In hoping the government can square this circle, the UK's Invest 2035 industrial strategy is one to watch. It promises to be one not just for growth, but one that "will also seek to support net zero, regional growth, and economic security and resilience". The hope from business is that this strategy will unlock private investment in the UK in a comparable way the Inflation Reduction Act did for the US.
It's also worth keeping an eye on businesses who are accelerating implementation of their net zero targets. Recent positive news includes National Grid, who are to invest £35bn in the next five years from April 2026 to improve and expand the energy transmission network helping more renewables and energy storage come online. Similarly, Amazon, who recently placed the UK's biggest order ever for electric trucks taking the number of electric heavy goods vehicles in Amazon's UK transportation network from nine to more than 160.
Beyond the UK, there will be other indicators of climate ambition. One will be seeing which countries follow the UK in coming forward with strong 2035 emissions reduction targets in support of delivering the Paris Agreement. The US withdrawing presents an opportunity for countries and regions, such as China and Europe, to step forward. Africa could also take a lead in the clean energy transition, as it has vast renewable energy potential.
In the midst of an unstoppable energy transition and increasing climate impacts, we can see different countries taking different choices in response. From the government to the board room, investment and industrial strategies over the next few years will shape our future, and they aren't all following the orders of the US President, leaving us with reasons to be optimistic.
First published in BusinessGreen
