This week, on a blistering, record-hot election day, Americans went to the polls and voted to put former President Donald Trump back in power. 

If a second Trump term is an epochal event for American democracy, so too is it for the global efforts to address climate change. Trump has a long history denying the science of climate, and will likely, once again, reverse U.S. climate efforts at home and abroad. It feels safe to say that the possibility of any sort of ambitious plot for the world to double down and keep the world to the Paris Agreement target of limiting warming to well below 2°C is firmly in the rearview mirror. But, as severe as the climate consequences of a second Trump presidency are, he does not represent a death knell to the decarbonization agenda. Both economic factors and political realities globally mean that climate efforts will continue.   

The question now is what we make of this new reality. Companies and investors will need to look past the day-to-day movements of the incoming Trump Administration to understand the long-term trends—and plan with both in mind. Keeping an eye on the longer-term trajectory is difficult, but it will pay dividends, not just for the climate but in terms of financial results also.

The first climate test of the second Trump presidency will likely come right out the gate. Many of the tax cuts he enacted in 2017 are due to expire next year, and the debt limit will return in January. All of that means that fiscal policy will take center stage in Washington, and the Inflation Reduction Act (IRA), President Joe Biden’s landmark climate law, will play a key role in the discussions. 

Some Republicans will try to eliminate it and use the money to fund tax cuts instead. Others are likely to take a more piecemeal approach, trying to strike the incentives they don’t like while maintaining the ones they do. Many Republican areas have benefited from the manufacturing incentives in the law, and the conventional wisdom across the aisle in Washington is that it would be hard to imagine an all-out repeal. In any event, we can expect the Trump Administration to tweak the way that the law is implemented, making it more favorable to his preferred companies and industries. 

An easier task for Trump will be to target the rules and regulations enacted under Biden. Separate from the IRA, the Environmental Protection Agency, for example, has issued rules on everything from power plants to passenger vehicles designed to accelerate the energy transition. Undoing these decisions takes time, but there’s no doubt that we can expect a deregulatory agenda. 

On the global stage it’s wise to expect a U.S. retreat, too. Trump pulled the U.S. out of the Paris Agreement, the 2015 deal designed to structure international efforts to tackle climate change, and he can easily do so again. An analysis from Carbon Brief argues that, taken together, Trump’s rollbacks would add 4 billion metric tons of carbon dioxide emissions by 2030 compared with a continuation of Biden policies. That’s equivalent to the annual emissions of Japan and the European Union combined. 

Reading all of that, it would be easy to conclude that the U.S. climate movement is about to come to a screeching halt. But the truth is that while Trump may slow decarbonization efforts he won’t be able to stop it fully. Data from the Rhodium Group and MIT tracks $493 billion in clean technology investment in the two years following the passage of the IRA, a 71% increase over the preceding two years. Companies may backtrack some of those investments in response to the new political climate, but many clean technology investments already have steel in the ground. And, in many cases, production on solar panels, electric vehicles, and other technologies has already begun.

The climate regulatory regime has become an important factor for global companies—not just in the U.S. but also in the European Union and in many Asian markets. And California, which would be the world’s fifth largest economy if it were a country, has its own climate rules, too. No matter where they are headquartered, major companies will need to comply with those standards. Eventually, smaller enterprises in their supply chains will, too.  

Companies and investors will need to decide how to thread that needle—and there are no easy answers. It might be tempting to some to take a Trump-friendly approach and toss out decarbonization priorities. But that approach carries major risks for global operations and for long-term growth prospects. 

So where does that leave us? The last time the U.S. elected Trump as president, many of the largest companies spoke out vocally that they would not retreat on their climate commitments. Indeed, many companies doubled down despite the Trump presidency. But the zeitgeist has changed since then. The focus on ESG concerns—short for environmental, social, and governance—has become toxic. And companies are wary of angering pro-Trump consumers—not to mention Trump himself, who is known for blasting companies on social media.

As I wrote last week, companies need to spend less time talking about the moral imperative of climate change and more about the financial imperative for their own firms. Decarbonization efforts often cut costs. Sustainable products resonate with a significant share of consumers. And adaptation efforts help prepare companies for extreme weather events. To keep climate momentum, it’s helpful to remind corporate stakeholders that climate action is a means to an end and not an end unto itself. 

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