The Ground Has Shifted

Europe chose regulation. China chose manufacturing. America chose extraction. What should you choose now?

Grüezi!

I’m speaking to some Chief Sustainability Officers in Paris today and although it’s not a speech, I thought I’d write up some of the notes I made. So here they are – paywall free!

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📷 | Anders J

The world for which today’s sustainability strategies were designed no longer exists.

The assumptions that underpinned corporate environmental action for two decades – progressive tightening of global standards, market-driven solutions replacing regulation, willing capital flowing to green leaders, broad political consensus on climate action – are collapsing around us.

The question now? What to do about it?

We are meeting in Paris at a moment of acute contradiction. France has revised its National Low-Carbon Strategy to cut emissions in half by 2030 compared to 1990 levels. Yet even with that reduction the government warns climate disaster costs could double by 2050, and insurance premiums may rise over a third. And policy implementation also has to duck and weave through political instability.

We are operating in a country – and a continent – simultaneously leading on climate policy and buckling under its own ambition.

This is the fracture I want to address today: not the abstract geopolitical one, but the concrete operational one you are living with every day.

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1 Policy Versus Production Versus Power

📷 | Darmau

Let me state plainly what everyone understands but rarely articulates:

• Europe has led on policy, not on technology.

• China has manufactured the transition Europe regulated for.

• And the United States has doubled down on extraction whilst eyeing northern territories for the resources climate adaptation will demand.

These are not three paths to the same destination. They are three fundamentally different strategies with profoundly different implications for power.

Europe chose regulation.

The EU has reduced emissions since 1990 through policy commitment and industrial transformation. This is a genuine achievement. But consider the cost? The Corporate Sustainability Reporting Directive alone includes 1,052 data points. Compliance costs range from €150,000 for non-listed companies to €1m for listed ones. Over half of EU companies say regulation obstructs investment.

Meanwhile, Europe’s share of global solar manufacturing collapsed from 60% in the late 2000s to nearly zero today. When Germany and Spain lifted solar subsidies after the financial crisis, the market collapsed. Europe built beautiful regulatory manuals for abandoned factory floors.

China chose manufacturing.

The numbers are staggering. It now controls 80% of global solar panel production – and that understates its dominance. At every production stage, China’s share is over 80%: 94% of polysilicon, 96% of wafers, 90% of cells, 81% of panels. In batteries, it’s 75% of global lithium-ion production. In wind turbines, 70%. In electric vehicles, over 50%.

By June 2025, China’s solar capacity crossed 1,100 gigawatts. In the first half of 2025 alone, China added 267 gigawatts – nearly triple what the rest of the world combined installed.

China produces more solar panels than global demand requires. This isn’t overcapacity – it’s strategic dominance. Solar module costs have plummeted 90% since 2010, and China is responsible for three-quarters of cumulative solar manufacturing in that period.

Europe created demand through regulation. China created supply through industrial policy. Guess which confers more geopolitical leverage?

The United States chose extraction.

US crude oil production hit 13.2m barrels per day in 2024 – a new record. Production is forecast to reach 13.5m barrels daily in 2025. The Permian Basin alone now produces nearly half of total US crude oil production. Even with fewer drilling rigs, productivity is rising through electronic hydraulic fracturing, automated drilling processes and even artificial intelligence.

And now Trump is pursuing Greenland and pressuring Canada – not out of madness, but resource logic. Canada will have vast new swathes of arable land by the end of the century, Greenland contains rare earth minerals and uranium critical for everything from smartphones to missile defence systems. As climate change melts Arctic ice, vast deposits of minerals, gold and diamonds become accessible. New shipping routes open.

Trump stated publicly: “We need Greenland for international safety and security.” Translation: we need its resources for the energy transition we refused to plan for.

This is anticipatory resource nationalism. Whilst Europe writes sustainability reports, the United States is positioning itself to control the physical inputs climate adaptation will require.

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2 Three Paths: The Good, The Bad, And The Ugly

Let’s be blunt about what these divergent strategies mean:

• Policy without manufacturing capacity is dependency. When France needs solar panels or batteries for its energy transition, it buys from Chinese manufacturers. Europe’s 37% emissions reduction is real, but its capacity to accelerate the transition is held back by supply chains it doesn’t control.

• You can write the world’s most sophisticated sustainability regulation, but if you can’t make the tech it demands, you’re dependent on those who can.

• Manufacturing capacity is geopolitical leverage. China didn’t just make solar panels cheap – it made the world dependent on Chinese supply chains. Solar costs below 10 cents per watt and batteries under $70 per kilowatt-hour aren’t just economic wins; they’re strategic positioning. When Europe needs to accelerate its transition, it negotiates with China. That’s leverage.

• Resource control equals future optionality. The US strategy is cruder but devastatingly effective for a climate-changed world. If you control oil today and position yourself to control rare earths, lithium and Arctic resources tomorrow, you maintain power regardless of which way the energy transition goes. You can sell fossil fuels now and critical minerals later.

Europe bet on being right. China bet on being necessary. The US bet on being powerful. These are not the same wager.

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3 Silence: The New “S” in ESG

📷 | Mika Baumeister

In 2025 just 6% of S&P 100 companies used “ESG” in their report titles. Two years ago it was 40%. Yet over three-quarters of them maintained or increased their climate targets through 2024.

Climate change hasn’t retreated, but climate rhetoric has. Companies are achieving sustainability goals in silence rather than announcing them, because speaking up has become a political and legal liability.

Consider what happened this summer. HSBC, which had been a founding member of the Net-Zero Banking Alliance, withdrew in July, citing “greenwashing exposure amid geopolitical uncertainty.” They joined every major Wall Street bank (Goldman Sachs, JPMorgan, Citi, Morgan Stanley, Bank of America, Wells Fargo), all six major Canadian banks and Japanese institutions like Nomura and Sumitomo Mitsui. The NZBA has dropped from 145 members at its peak to 127. Those quitting aren’t fringe players – they collectively manage tens of trillions in assets.

Why are they fleeing? Because in the United States, Republican politicians have threatened financial institutions in climate alliances with antitrust lawsuits, claiming they constitute illegal collusion against fossil fuel companies. Being in a public climate alliance became a legal liability.

Now here’s the perverse part: each departing bank insists it remains “committed to net zero by 2050.” They’re just pursuing those goals privately, without external oversight or accountability frameworks.

HSBC did face some backlash for quitting. A British green energy firm moved £600m away in protest, and investors representing $1.6trn demanded that the bank restate its commitments. But HSBC calculated that avoiding political and legal risk was worth disappointing some climate-concerned clients.

The incentive system is broken. Nearly two-thirds of companies that missed emissions targets simply made them disappear with no consequences. But three companies that honestly admitted to falling short – FedEx, Kraft Heinz and Gildan Activewear – faced stock declines and negative press.

We’ve created a system where public commitments mean legal and political exposure, admitting failure brings market punishment, and quietly dropping targets has no consequences.

Silence has become safer than transparency. That’s not a failure of corporate character – it’s a failure of system design.

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4 The European Paradox: Leading and Losing

📷 | Chris Gallagher

Europeans know all about climate impacts. At the beginning of October, Storm Amy cut power to tens of thousands of homes from Scotland to Sweden and Norway to Normandy. This time last year catastrophic flooding claimed lives and property in Valencia.

So far this year, wildfires have burned more of Europe than in the past two decades. Flames have torn across Spain, Portugal, the Balkans and southern France destroying over a million hectares. Over the last three years, Europe has paid out billions in climate damages, and nearly half a million of its people were affected by climate disasters.

If Europe – the fastest-warming continent with the most sophisticated climate policy – is experiencing accelerating destruction despite leading on global emissions reductions, what does that tell us about the adequacy of our strategy?

It tells us we’re no longer in the prevention business. We’re in the adaptation business. But we’re still funding, staffing and strategising as if it’s 2010 as if we’re just one Climate Accord away from preventing the worst. The planet has moved on. Have our strategies?

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5 Draghi’s Dilemma: Competitive vs Sustainable

📷 | EU Commission

Back in September 2024, Mario Draghi delivered a report to the European Commission that has fundamentally reframed the sustainability debate. His diagnosis is sobering. Europe needs €800bn in additional annual investment to remain competitive. Since 2019, the EU has introduced over 13,000 new regulations – far exceeding its major competitors.

Draghi warns that Europe risks terminal decline without dramatic reindustrialisation. The sustainability architecture Europe has built – CSRD, green taxonomies, supply chain due diligence – creates competitive disadvantages when trading partners don’t reciprocate.

Draghi’s report doesn’t frame sustainability as central to European revival. It frames the red tape and paperwork as a barrier to competitiveness.

This matters because Draghi isn’t some far right climate sceptic, he’s Mr “Whatever it takes” – the technocrat who saved the euro. When he says European regulation has become counterproductive, European policymakers listen.

If Europe chooses competitiveness over sustainability ambition, what happens to the frameworks that depend on European leadership? If the CBAM gets weakened, or CSRD implementation delayed, or green taxonomy simplified for political convenience, does the entire edifice crumble?

You need to plan for a world where Europe dilutes its climate catastrophe mitigation not because it stopped believing in the science, but because its economic survival demanded it.

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6 What American Rollback Actually Means

📷 | Rana Motor Works

Let’s address the elephant in the room: what happens if the United States systematically dismantles federal climate policy?

The second Trump administration is pursuing exactly this. Within days of taking office, Trump withdrew the US from the Paris Agreement (again), halted new offshore wind leasing, ended the EV tax credit and paused new LNG export approvals whilst reviewing climate policies across federal agencies.

But here’s what matters for your operations: the federal rollback is real, but state and corporate momentum isn’t reversing at the same pace.

California, which would be the world’s fifth-largest economy as an independent country, maintains its own climate regulations. The state’s Advanced Clean Cars II rule requires 100% zero-emission vehicle sales by 2035. Nine other states have adopted California’s standards. Together they represent 36% of the US vehicle market.

New York’s Climate Leadership and Community Protection Act mandates 70% renewable electricity by 2030 and 100% carbon-free electricity by 2040. Washington State has a cap-and-trade system covering 75% of emissions. Massachusetts, Maryland, New Jersey – all maintaining climate programmes regardless of federal policy.

At the corporate level, Amazon is investing $150bn in renewable energy projects through 2040. Microsoft committed $10bn to a climate innovation fund. Apple’s entire supply chain is transitioning to renewable energy – not because federal policy requires it, but because corporate strategy demands it.

The American situation isn’t binary. It’s jurisdictionally fragmented. You’re managing federal hostility, state ambition and corporate momentum simultaneously. This requires different compliance architectures for different markets, not wholesale strategy abandonment.

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7 China: Climate Panda, Competitive Dragon?

📷 | Jony Y

Every sustainability strategy now confronts an uncomfortable question: can Europe achieve its climate goals without Chinese technology? And can it do so securely with China’s ally Russia waging war at its borders? If the answer is no, what does dependency on Chinese supply chains mean for European sovereignty?

Because China controls the manufacturing base for virtually every clean energy technology. Europe’s energy transition requires Chinese solar panels, Chinese batteries, Chinese wind turbines and Chinese electric vehicles.

Ursula von der Leyen called for “de-risking” – reducing dangerous dependencies without full decoupling. But what does de-risking actually mean when you need to triple renewable capacity and electrify transport, and China manufactures the equipment?

The EU’s response has been the Anti-Coercion Instrument, the Net-Zero Industry Act and the Critical Raw Materials Act – all attempting to rebuild European manufacturing capacity. But these are 10-year strategies confronting immediate needs.

Here’s the operational reality: you’re being asked to accelerate transition whilst reducing reliance on the suppliers who make that transition affordable. You’re being told to “de-risk” supply chains that are functionally irreplaceable in the short term. You’re being directed to support European manufacturing that doesn’t yet exist at commercial scale.

This isn’t a policy problem you can wait for governments to solve. This is a strategic planning problem you need to address now.

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8 The Collapse of Global Coordination

📷 | Harrison Moody

The mechanisms that were supposed to coordinate global climate action are failing.

The Paris Agreement is increasingly a symbol of a distant age. In December 2024, COP29 in Baku produced a climate finance deal so inadequate that developing countries walked out in protest. The commitment to triple renewable energy capacity by 2030 – agreed at COP28 – lacks implementation mechanisms or accountability.

The Net-Zero Banking Alliance, as I mentioned, has lost its largest members. The Glasgow Financial Alliance for Net Zero, which at its peak represented $130trn in assets, is fragmenting as members flee political and legal risk.

The Science Based Targets initiative (SBTi) – which provided the methodology behind corporate net-zero commitments – is being contested. Companies are discovering that “science-based” targets depend on assumptions about carbon offsets, technological development and political cooperation that may not hold.

Even the terminology is fracturing. “Net zero” means different things in different jurisdictions. “Carbon neutrality” has become whatever companies define it to be. “Science-based” loses meaning when the science assumes cooperation that isn’t happening.

This isn’t just rhetorical confusion.

It’s the collapse of the coordination mechanisms that were supposed to solve the collective action problem.

And collective action problems don’t solve themselves through individual virtue.

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9 Planning Ahead: Three Futures, One Strategy

📷 | Markus Spiske

Given this landscape, how should you be thinking about the next three to five years?

I’ll sketch three possible scenarios – not exactly predictions, but strategic planning tools.

Regulatory Retrenchment

What it looks like: US climate policy dismantled. European regulations delayed or simplified due to competitiveness concerns. China pursues its own path. Corporate climate commitments become liability risks. Disclosure requirements softened.

Your response:

• Focus sustainability on clear business case (cost reduction, risk mitigation, market access)

• Maintain internal accounting but reduce public disclosure

• Invest in efficiency and resilience rather than ambitious voluntary targets

• Keep capabilities ready for when the pendulum swings back

Fragmented Progress

What it looks like: EU maintains ambition but implementation fragments across member states. US state-level requirements diverge. China pursues its own path. You’re managing incompatible obligations simultaneously.

Your response:

• Develop modular compliance systems configurable by jurisdiction

• Strengthen EU operations to world-class standards, use as template

• Build bridges between regulatory frameworks where possible

• Accept that you’ll disappoint someone in every jurisdiction

Climate-Driven Acceleration

What it looks like: Major climate event(s) shift political consensus. Insurance markets collapse in vulnerable regions. Physical climate risks force adaptation spending. Draghi’s €800bn investment target gets funded.

Your response:

• Companies maintaining capability and legitimacy are positioned to benefit

• Adaptation becomes commercially viable, not just compliance

• First-movers in resilience infrastructure gain advantage

• Your documented efforts during difficult years provide legitimacy

The point isn’t to predict which scenario unfolds. The point is to build strategies that can flex across all three.

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10 What Tomorrow Morning Looks Like

📷 | Chris LeBoutillier

You’re operating in a fragmenting world where energy security trumps climate goals, industrial policy trumps market mechanisms, supply chain nationalism constrains your leverage, global coordination is failing, and even Europe is wavering under economic pressure.

This doesn’t mean surrender. It means adaptation.

Immediate Actions:

• Map geopolitical vulnerabilities, not just sustainability metrics

• Stress-test strategies against regulatory rollback, not just progression

• What could be regionalised to reduce import dependence?

• What percentage of team capacity is administration versus strategy?

• Create learning frameworks for what works and what doesn’t – but keep them internal

Medium-Term:

• European supply chain development where viable (Draghi’s industrial strategy)

• Circular economy investments (reduces imports and builds resilience)

• Government engagement: a strategic partner in economic security

• Build coalitions with industry players for workable regional approaches

• Keep measurement capabilities even if not publicly reporting

Long-Term:

• Business model resilience to geopolitical shocks

• Technology independence for critical processes

• Document institutional knowledge about what was attempted and learned

• Retain capability for when cooperation returns (and it will, eventually)

The ground has shifted beneath the sustainability profession. Those who pretend it hasn’t will stumble. Those who acknowledge the new terrain and adapt their approach might navigate through to whatever lies beyond this fractured moment.

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11 A Final Word: Why This Still Matters

Some of you might be wondering: if the frameworks are collapsing, the alliances are disintegrating and the political consensus is fragmenting, why persist?

Because the physics doesn’t care about political cycles or regulatory complexity or geopolitical tensions.

Your companies will face costs whether you have a sustainability strategy or not. The question is whether you’ll face them with resilience built through strategy, or with vulnerability born of neglect.

The French government’s climate adaptation plan acknowledges preparation for 4°C warming. That’s where we’re headed. You can pursue mitigation and prepare for impacts simultaneously. In fact, you must.

The companies that maintain sustainability capabilities through this difficult period – that keep measurement systems functional, that preserve technical expertise, that document their efforts and learnings internally – will be positioned when conditions shift.

And conditions will shift. Maybe not on your timeline. Maybe not in your preferred direction. But the pressures that created the sustainability movement haven’t disappeared; they’ve intensified.

So the ultimate question isn’t whether to abandon sustainability in the face of these constraints. The question is: given these constraints, what will you actually do?

Not what you’ll report publicly. Not what you’ll commit to in press releases. Not what you hope policy will enable someday. What specific actions will you take in the next quarter that acknowledge the world as it is rather than as we wish it were?

That’s the question worth answering.

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Thanks for reading!

Best

Adrian

Adrian Monck is a former Managing Director at the World Economic Forum and writes the newsletter “7 Things.” These remarks represent his personal views.