The U.S. administration's plan to strip away a 2009 formal finding that tied carbon dioxide emissions to health dangers is prompting warnings from investors and shareholder advocates that the change will create confusion for businesses and could increase costs across corporate operations.
The finding, which has guided pollution standards for more than 15 years, is set to be formally rescinded. The rollback is the most expansive climate policy move by the current Republican administration to date and follows several regulatory changes aimed at easing restrictions on fossil fuel production and slowing the expansion of clean energy programs.
Asset managers and shareholder activists say the immediate effect will be regulatory uncertainty that leaves companies unsure whether they should pause, slow or reverse investments they have already made in emissions reduction and reporting systems. Those reversals, they argue, may be costly and leave firms vulnerable if future administrations restore stricter rules.
"This rollback creates profound uncertainty for companies that have already invested billions in emissions reduction," said Marcela Pinilla, director of sustainable investing at Zevin Asset Management. "Were interrupting a trajectory toward a low-carbon economy just as companies have committed substantial capital to that transition ... Those reversing course face stranded asset risk if policies change again."
Stop-start planning and supply-chain effects
Portfolio managers and shareholder advocates say the repeal will introduce "stop-start" planning that pushes volatility upstream into supply chains. Beth Williamson, head of sustainable equity research at Calamos Investments and an associate portfolio manager, said the regulatory shift "adds another layer of regulatory uncertainty for carbon-intensive industries" and can move risk to suppliers of components such as semiconductors, power electronics and industrial equipment.
Andrea Ranger, director of shareholder advocacy at Trillium Asset Management, echoed that concern, saying the rollback could hamper investors' ability to identify which firms will successfully navigate a transition to lower emissions. The risk to investors, she said, is a whiplash effect if a subsequent administration reinstates stricter rules.
Jonathan Pragel, executive director at Calvert Research and Management, part of Morgan Stanley Investment Management, noted the practical cost implications for corporate boards. "The cost of eliminating this infrastructure, and then needing to rebuild it if there is kind of another change in the reporting regime, thats a really expensive proposition," he said.
Global standards and investor pressure
Despite the domestic regulatory reversal, many observers say large multinational companies are unlikely to alter their global emissions management because they remain subject to tougher requirements abroad. For example, automakers based in or operating under European Union rules will still have to comply with disclosure and emissions standards there. A spokesperson for BMW noted that, as a company headquartered in the EU, it remains bound by those rules and suggested U.S. changes might not materially affect its global policies.
Investors are also expected to continue pressing firms for climate-related disclosure and risk management. "Investors will keep making clear that managing climate risk is essential to protecting both shareholders and the bottom line," said Giovanna Eichner, shareholder advocate at Green Century Capital Management. "Losing this finding weakens accountability, but not investor resolve. Climate risk still threatens shareholder value and company profits alike."
The interplay between domestic deregulation and persistent international standards leaves firms with multinational operations that must satisfy multiple, sometimes conflicting, regulatory expectations. That split can limit the immediate impact of the U.S. rollback for global players while increasing complexity for companies that operate primarily under U.S. rules.
Corporate commitments and the energy transition
Despite the policy shift, many U.S. companies continue to pursue emissions reductions and other preparations for a lower-carbon economy. Data from the non-profit Net Zero Tracker show commitments by U.S. companies to achieve net-zero emissions across their businesses by 2050 grew 9% in 2025, with 304 firms in the Forbes Global 2000 index committing to such targets, up from 279 in the prior year.
Rachel Delacour, CEO of the sustainability data management platform Sweep, said companies that integrate environmental, social and governance (ESG) data into operational decisions rather than treating it solely as reporting are gaining competitive advantage. "We know from the companies we work with, that those who are pulling ahead are integrating ESG data into how they run their business, not just how they report on it. Thats the competitive advantage," she said.
Mark Wade, head of sustainability research and stewardship at Allianz Global Investors, pointed out that many large U.S. companies rely on international investors who demand climate data, and losing that investor base would be a problem for valuations. "These U.S companies are now so big they need non-U.S. investors. If you start to remove that incremental buyer of risk, thats a problem for (share price) valuations," Wade said.
Legal exposure
The repeal also faces legal vulnerabilities. A federal court in January found that the Department of Energy had violated the law when it formed a climate science advisory group and that the group's report, which was used to support the repeal attempt, was produced under improper procedures. That ruling introduces another potential layer of uncertainty about the durability of the administration's action.
Operational and market implications
Shareholder advocates and asset managers warn that the administrations decision could prompt companies to reassess their public reporting and capital allocation plans, especially in carbon-intensive sectors. Some boards may be reluctant to absorb the additional costs of dismantling or pausing emissions-related infrastructure, given the possibility that rules could be reimposed.
At the same time, industry participants point out that commercial incentives for participating in the energy transition remain. Mark Wade observed that despite policy moves to slow federal action, many corporations are still positioned to seek opportunity from new energy technologies. "If you find the next nuclear fusion or hydrogen solution, youre the next billionaire," he said, underscoring ongoing private-sector appetite for innovation even amid regulatory retrenchment.
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