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By Samantha Fong
As we enter 2025, the environmental commitments made by businesses are being tested against current realities. Will companies uphold their pledges, or will we witness a reversal in progress?
In 2022, the Biden administration took a historic step in combating climate change by signing the Inflation Reduction Act into law, channeling billions into clean energy, electric vehicles, and environmental justice. This landmark legislation marked a turning point, introducing tax credits, clean electricity standards, and stimulus packages to spur climate action. It also coincided with a peak in the sustainability movement, when consumer demands for corporate transparency pressured businesses to address anti-environmental practices.
However, many corporations are now reneging on their sustainability commitments, a trend termed “corporate backsliding,” including the elimination of diversity roles and quiet withdrawal of climate pledges. For instance, Nike disproportionately laid off sustainability managers during cost-cutting measures, while oil giants like BP abandoned or delayed net-zero targets. Similarly, Microsoft's emissions surged by 20% due to its rapid expansion of energy-intensive AI tools and data centers, postponing significant action until 2030. These cases highlight a widening gap between corporate promises and tangible progress.
Key Drivers of Corporate Backsliding
Corporate backtracking on sustainability stems from three primary factors: underperforming ESG (Environmental, Social, and Governance) funds, anti-ESG political backlash, and overly ambitious environmental targets. These challenges have shifted businesses towards short-term economic gains, undermining long-term environmental goals.
The decline in ESG investments illustrates this trend. Harvard Law reports that the number of sustainable funds dropped by 2,500 between 2022 and 2023, returning the market to 2016 levels. This contraction is partly due to the SEC Names Rule Amendment, which mandates strict disclosure standards requiring at least 80% of assets to align with ESG goals. To avoid regulatory fines, many companies have consolidated or withdrawn ESG funds. With the full implementation of the amendment delayed until late 2025, further declines are likely.
Meanwhile, companies face mounting pressure from conservative investors and state lawmakers opposing ESG-aligned initiatives. In 2023, Florida Governor Ron Desantis signed legislation preventing financial institutions from considering non-financial factors, such as carbon footprints, in investment decisions. A Republican-controlled Congress is also poised to debate anti-ESG proposals in 2025.
Unrealistic corporate environmental targets further exacerbate the problem. Nike pledged to halve its environmental impact by 2030 while doubling its business – a contradiction that has left its carbon footprint unchanged, comparable to that of Amsterdam. Despite forming a Sustainable Innovation team and aligning with the Paris Climate Agreement, Nike’s case reflects how commitments are often just branding exercises shielding consumers from slow action.
As consumers focus more on economic stability than climate issues, it remains uncertain whether businesses will face enough regulatory or market pressure to fulfill their commitments in 2025.
Opportunities for Accountability and Progress
Political leadership and legislative action will play a pivotal role in maintaining or repealing environmental protection laws. As corporate backsliding grows, it’s crucial to hold companies accountable, ensuring consumers are informed about the hidden impact of their spending.
Despite these concerns, the success of companies like PUMA offers hope for genuine progress. In 2023, PUMA achieved an 85% reduction in direct emissions and a 65% reduction in supply chain emissions relative to sales. By addressing indirect emissions from transportation, product usage, and waste disposal through supplier audits, PUMA demonstrates that sustainability is possible, even beyond a company’s immediate control.
In this era of heightened environmental and political pressures, progress remains possible when businesses prioritize accountability and innovation. For consumers, this means using our voices and spending power to remind companies why we demanded change in the first place: to deliver genuine environmental progress and not the illusion of it.