Predicted increase in tax revenues for the United States following corporate norm resurgence, according to the League of International Monetary Experts' cautionary notice
In the realm of corporate sustainability, the current trend among US corporations regarding decarbonization targets is mixed and somewhat cautious, influenced heavily by recent US policy shifts and evolving ESG standards.
A significant portion of large US and multinational companies are recalibrating their ESG strategies in 2025, with about 80% having adjusted plans due to policy changes, particularly following shifts since the Trump administration. Many ESG executives believe these changes have slowed down corporate decarbonization efforts and weakened momentum on the domestic energy transition.
Despite these challenges, the Science Based Targets initiative (SBTi) remains influential, pushing for more rigorous and transparent net-zero commitments. However, companies are expressing concern about the new, more stringent SBTi draft standards released recently, which require clearer scope definitions and emphasize moving from ambition to measurable progress.
Firms like Lombard Odier Investment Management are likely to be influenced by these evolving dynamics. Lombard Odier, known for integrating sustainability into investment decisions, would pay close attention to the credibility and progress of corporate decarbonization targets. The tightening of standards (like SBTi’s revised Corporate Net-Zero Standard) likely pushes investors to favor companies demonstrating genuine reduction efforts with validated targets, rather than broad or vague ESG claims.
The reality in the broader market shows that while emissions disclosure rates are increasing (especially for Scope 1 and 2), the setting of robust interim net-zero targets among major US companies remains stagnant or has even declined in some cases. For example, fewer S&P 500 companies set interim net-zero targets in 2023 compared to prior years, and Scope 3 emissions reporting, though improving, is still inconsistent.
This environment encourages investors to scrutinize corporate ESG claims more critically and to prioritize partnerships with companies demonstrating credible and measurable emissions reductions aligned with evolving global standards. Lombard Odier, for instance, is planning to increase allocations to transition-ready firms within regions, rather than revising the geographic breakdown of its portfolio. The managers at Lombard Odier have issued a note to investors regarding their evaluation of the potential consequences of US companies reverting to a business-as-usual approach.
In the baseline scenario, Implied Temperature Rise (ITR) scores in the US would stand at 2.7°C, while globally, the average ITR would be at 2.5°C. This underscores the importance of corporate decarbonization efforts not just for individual companies but for the planet as a whole. As such, investors like Lombard Odier are likely to remain vigilant and proactive in their approach to climate-conscious investing.
Sources: [1] https://www.esgclarity.com/blog/esg-executives-express-concern-over-slowing-corporate-decarbonization-efforts [2] https://www.sbti.org/resources/science-based-targets-corporate-net-zero-standard/ [3] https://www.cdp.net/en/news/headlines/new-cdp-report-highlights-the-urgent-need-for-companies-to-step-up-their-climate-action [4] https://www.cdp.net/en/news/headlines/cdp-reveals-esg-data-from-over-7000-companies-showing-increasing-emissions-disclosure-rates-but-stagnant-progress-on-net-zero-targets
- The Science Based Targets initiative (SBTi) continues to push for stricter net-zero commitments from companies, even as many express concern about the new, more stringent SBTi draft standards.
- In the realm of climate-conscious investing, Lombard Odier is likely to favor companies demonstrating genuine reduction efforts with validated targets, prioritizingCredible and measurable emissions reductions aligned with evolving global standards.
