Climate policy is no longer a fringe concern; it’s a rapidly evolving force shaping global markets and corporate strategy. Businesses that stay ahead of the curve, understanding the nuances of new regulations and international agreements, will not only mitigate risks but unlock significant competitive advantages.
The Paris Agreement’s Enduring Influence & Evolving NDCs
The Paris Agreement, adopted in 2015, remains the cornerstone of global climate action. Its “bottom-up” approach, where each country submits Nationally Determined Contributions (NDCs) outlining their climate targets, has fostered near-universal participation. For businesses, this translates to an undeniable global commitment towards a low-carbon economy. As of mid-2025, we are witnessing a critical phase:
- Heightened Ambition in NDCs: Nations are preparing for the next cycle of NDCs ahead of COP30 in November 2025. The pressure is on for countries to submit more ambitious targets aligned with the 1.5°C warming goal. This will translate into stronger domestic policies and increased incentives for businesses to decarbonize. Companies that have already set science-based targets (SBTs) aligned with the Paris Agreement are finding themselves well-positioned for these upcoming shifts.
- The Power of Article 6: Negotiations around Article 6 of the Paris Agreement, which establishes mechanisms for international carbon trading, are solidifying. This is creating a more standardized and transparent global carbon market. For businesses, this means potential new opportunities for offsetting emissions through high-quality carbon credits and new avenues for cross-border collaboration on climate projects.
A Tsunami of Disclosure Regulations: Transparency is the New Mandate
Perhaps the most significant recent development for corporations is the global surge in mandatory climate-related disclosure rules. What was once voluntary reporting is now rapidly becoming compulsory, fundamentally changing corporate accountability:
- Global Harmonization (and Divergence): Frameworks like the International Sustainability Standards Board (ISSB) are providing a global baseline for climate-related financial disclosures. However, regional variations exist. The EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) are particularly stringent, requiring comprehensive reporting on environmental and social impacts, including Scope 3 emissions.
- US Landscape Evolves: While the U.S. Securities and Exchange Commission (SEC) introduced its own climate disclosure rules in March 2024 (initially less ambitious than proposed and without mandatory Scope 3 disclosure), states like California have enacted their own, more robust laws (e.g., California’s Corporate Climate Data Act requiring Scope 1, 2, and 3 disclosure). This patchwork necessitates a nuanced approach for businesses operating across multiple jurisdictions.
- Materiality Matters: These regulations are cementing the idea that climate risks can be financially “material.” Companies must now assess and report on physical risks (e.g., extreme weather impacts on operations) and transition risks (e.g., policy changes, market shifts towards low-carbon alternatives).
Beyond Compliance: Anticipating the Next Wave
Savvy businesses are looking beyond mere compliance. The trends point towards:
- Increased Carbon Pricing: More nations and regions are implementing or expanding carbon taxes and cap-and-trade schemes, making emissions a direct cost for businesses.
- Nature-Positive Policies: Expect a growing focus on biodiversity and nature-based solutions. Regulations encouraging forest protection, ecosystem restoration, and sustainable land management will become more prevalent, impacting supply chains in agriculture, forestry, and other sectors. The ISO’s forthcoming Net-Zero Standard (launching at COP30) will further emphasize circular economy practices and comprehensive emissions reductions.
Staying informed about these policy developments isn’t just about avoiding penalties; it’s about identifying opportunities for innovation, building resilience, and securing a future-proof business model in a rapidly decarbonizing world.
