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Businesses Can’t Afford to Wait in a Sustainability Policy Limbo
November 2025
For more than a decade, business leaders have been steadily embracing sustainability. From setting ambitious net-zero targets to publishing detailed sustainability reports, companies have positioned themselves as major players in the global transition towards a low-carbon economy.
Such actions have been supported by the argument that businesses do well in the long run if they also do good. Conversely, a failure to account for climate risks or safeguard employee welfare can result in financial harms.
This year, however, has made it clear that the best of corporate intentions do not always translate into action without government support.
The Net-Zero Banking Alliance (NZBA), an initiative sponsored by the United Nations (UN) dedicated to encouraging financial institutions to limit their environmental footprints, announced in August that it is pausing its activities to allow for a possible change in its operating model.
Energy group BP abandoned plans to pivot from fossil fuels to renewables and is increasing its annual spend on oil and gas.
Automakers Volvo, GM, Ford and Volkswagen have all pulled back on their electric vehicle strategies – moving towards slower rollouts, hybrids and even internal combustion engines.
In a June report published by the World Business Council for Sustainable Development, 94% of corporate leaders said supportive transition policies and clear net-zero policies from governments drive their investment decisions.
From a business perspective, a stable regulatory landscape supports a strong mandate for sustainability action. Clear policies help de-risk large investments into green technologies or other strategies that may not deliver immediate returns.
When policies stall or even reverse, corporates find themselves in a policy limbo. Yet, stalling or reversing on action isn’t necessarily the best way to deal with such a situation.
The Role of Strong Domestic Policy Making
This year, we have seen several examples of governments dialling back on their sustainability ambitions.
In February, the EU introduced an omnibus package that weakened requirements for several key pieces of sustainability legislation that had initially positioned Europe as a leader in the sustainability agenda.
In October, the International Maritime Organization was forced to postpone the adoption of a net zero framework for fear that the US would “retaliate or explore remedies”.
These shifts create uncertainty, which can cause companies to hesitate and even halt their sustainability commitments.
A report, jointly produced by Schneider Electric and UN Global Compact Network Singapore (UNGCNS) and published earlier this year, showed 94% of business leaders have seen their organisations’ sustainability strategy influenced by international, geopolitical developments.
At the same time, the report suggests that domestic policies can make a difference. In Singapore, where the national commitment to decarbonisation has been unwavering, 83% of executives say their organisations have increased their engagement with the Singapore government’s framework for sustainability targets.
As policies continue to bifurcate around the world, governments and companies that demonstrate courage and conviction could well begin to eke out an edge.
Climate change isn’t reversing, after all, and may even be accelerating. This past summer saw deadly wildfires in Europe and the US, severe floods across Asia, and record-breaking global heatwaves. Delaying climate action means increasing exposure to supply chain disruptions, operational risks and financial losses.
Companies that act decisively have the chance to shape industry standards and practices. Those that wait forfeit the chance to create a favourable environment for themselves and their stakeholders.
Communications as Competitive Advantage
Schneider Electric’s research shows the percentage of companies that are publicly announcing their sustainability targets and commitments has fallen from 58% in 2023 to 33% this year.
Meanwhile, stakeholders are paying closer attention to corporate communications, and companies that are seen as idle or as appearing to be backtracking on their sustainability commitments risk losing the trust of their stakeholders.
One example is asset manager BlackRock, which recently lost a US$17 billion mandate from a Dutch pension fund after it retreated from the NZBA.
Investors, employees, customers and the public continue to value corporate sustainability performance. Even companies that are only quietly advancing their sustainability efforts may see their credibility slip if they don’t actively share what they are doing and why.
Sustainability communication represents a strategic opportunity for businesses to demonstrate agency, resilience and leadership. Companies should view sustainability disclosures not as compliance exercises but as strategic tools to demonstrate good faith and to build their reputation capital.
Higher quality can be developed over time, and incremental improvements and transparency matter more than perfection. Proactive communications on sustainability progress build trust far more effectively than silence, and can help build resilience against regulatory shifts.
By signalling intent, defining priorities and setting expectations, businesses can even influence industry peers and policymakers. They become agenda-setters rather than policy-takers, creating the norms and narratives that regulators may eventually formalise.
Sustainability policy limbo does not have to lead to corporate paralysis. Companies that embrace transparent, proactive communications will not only safeguard stakeholder trust but also strengthen their credibility and their brand.
Regardless of how government policies evolve, companies that seize this communications opportunity are positioned to reap reputational and strategic benefits – demonstrating leadership even in an uncertain environment.
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