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Even as the federal government rolls back environmental regulations, corporations are encountering persistent demands to enhance their environmental responsibility from diverse stakeholders including customers, investors, employees, local communities, lenders, insurance providers, international trade partners, and numerous states. These groups are increasingly aware of the escalating financial burdens associated with rising global temperatures and intensified extreme weather patterns if businesses fail to control their greenhouse gas emissions.
Many companies will discover that reverting to previous, more polluting operational methods is not advantageous. A survey by the consulting firm Kearney in December 2024 revealed that over 60% of chief financial officers from around the globe plan to allocate at least 2% of their company revenue to sustainability initiatives in 2025.
While some companies may maintain a discreet stance on climate change during periods of federal deregulation, compelling financial motivations exist for them to persistently lower their emissions and mitigate climate-related vulnerabilities.
Our research examines private environmental governance – the mechanisms by which corporations and organizations operate independently of government mandates to advance national sustainability and minimize ecological damage. Our findings indicate that in today’s polarized political landscape, tackling climate and sustainability challenges extends beyond governmental actions. Significant advancements in sustainability are being driven by the private sector.
Corporate Sustainability: A Key Factor in Financial Performance
For years, businesses have leveraged sustainability and climate initiatives to streamline their operations, optimize supply chains, and achieve long-term cost reductions.
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In the late 1980s, McDonald’s, responding to public concern over waste, collaborated with the Environmental Defense Fund to address the issue. This partnership enabled the company to decrease its waste output by 30% over the subsequent ten years, resulting in annual savings of $6 million. McDonald’s proactive approach paved the way for other environmental organizations to assist businesses in understanding how to diminish their environmental impact, including emissions, while simultaneously bolstering profitability.
Maersk, a leading logistics firm responsible for approximately a quarter of global shipping, has responded to pressure from its corporate clientele by implementing a strategy to cut carbon emissions by one-third between 2022 and 2030, aiming for net-zero emissions by 2045. The company anticipates that deploying low-emission vessels and developing a more efficient delivery network utilizing hubs and shuttle services will facilitate the achievement of its climate objectives while enhancing productivity.
Businesses have also been instrumental in propelling the growth of renewable energy, spurred by the economic competitiveness of renewables and emerging business opportunities. Meta, the parent company of Facebook, and Google, have collectively invested nearly $2 billion in renewable energy projects within the Tennessee Valley Authority service region, despite the absence of governmental mandates. Furthermore, major corporations continued to execute power purchase agreements for renewable energy in 2025.
Microsoft and Amazon are addressing substantial new power needs by seeking to establish data centers in proximity to existing nuclear power facilities to secure cleaner energy resources.
Widespread Corporate Emissions Reporting Through Private Systems
A further indicator of corporate dedication to sustainability is the substantial number of companies that voluntarily measure and disclose their greenhouse gas emissions, even absent governmental regulations.
Nearly 25,000 companies, representing two-thirds of global market capitalization and 85% of the S&P 500, report their emissions to the nonprofit CDP. Emission disclosure serves a function akin to maintaining a fitness log with a personal trainer, aiding companies in monitoring their progress and strategizing for future financial and environmental risks. In 2024, over 12,500 small and medium-sized enterprises also disclosed emissions to CDP.
Initially, numerous companies were motivated by advocacy from environmental groups or corporate clients. Currently, they have increased reasons to prioritize emissions management.
California has established its own formal reporting mandates designed to incentivize companies to curtail their greenhouse gas emissions. Other states are also contemplating the implementation of climate disclosure regulations. While the previous federal administration signaled intentions to challenge state regulations and announced plans to weaken federal greenhouse gas reporting standards, companies will likely continue to encounter reporting requirements in the future.
The European Union has also ratified reporting mandates, although the commencement date was postponed in April 2025 to afford companies additional preparation time.
Efficient Supply Chains Through Environmental Considerations
Implementing climate and environmental risk management within supply chains can also assist businesses in enhancing operational efficiency and diminishing the potential for climate change to disrupt their activities.
The supply chain represents the predominant source of emissions for the typical company and is particularly susceptible to climate-related disruptions. Storms can readily impede essential production or shipping, while droughts or heatwaves can compromise crops, halt operations, and inflate expenses. Companies estimate climate-linked supply chain risks at $162 billion, nearly triple the expense of mitigating these risks. Consequently, numerous companies possess strong incentives to lessen emissions and curtail their vulnerability to associated hazards.
As of 2023, almost 80% of the largest companies across seven major global economic sectors had implemented environmental standards for suppliers within their value chains. These standards encompass carbon emissions reporting, emissions reduction targets, and adoption of sustainable forestry practices.
Walmart, by sharing its expertise with suppliers and collaborating with them to decrease their emissions, eliminated one billion tons of carbon emissions from its supply chain in under seven years. Walmart’s global director of sustainable retail noted in 2024 that these endeavors also improved the efficiency of its suppliers.
Employee and Customer Satisfaction Through Sustainability
Companies are also subject to pressure from the general public, both as employees and consumers.
Over two-thirds of Americans advocate for measures to address climate change. Even businesses that are not directly consumer-facing depend on customer and employee support. Research indicates that pro-environmental actions enhance both employee engagement and customer loyalty.
Patagonia, an outdoor apparel company, was ranked third out of over 300 brands in a 2024 customer experience study, partly attributable to its established reputation for sustainable practices. Many of the more than 10,000 survey participants identified the company’s commitment to sustainability as a primary factor in their patronage.
Furthermore, companies face scrutiny from lenders and insurers aiming to minimize climate-related risks to their own financial stability. A significant number of insurers have pledged to terminate or limit underwriting for new fossil fuel ventures. Others employ incentives, such as reduced premiums for companies that lower emissions or invest in climate adaptation strategies.
According to projections from the insurer Swiss Re, climate change may accelerate the current 5% to 7% annual increase in insured losses. This has prompted some insurance industry leaders to advocate for more aggressive actions by insurance companies to cut emissions through their investment portfolios and policy underwriting practices.
Private Climate Governance: A Crucial Buffer
While media coverage and advocacy groups frequently concentrate on governmental actions, decisions within corporate boardrooms and initiatives undertaken with nonprofit organizations have fostered a significant form of private climate governance.
As companies respond to their individual economic risks and incentives, they contribute to gaining crucial time to mitigate the most severe repercussions of climate change until the political framework adequately acknowledges the financial threats posed to the entire nation.