The Recent Supreme Court Rulings and Climate Change

The last two weeks of June left us all reeling with the dramatic releases of several Supreme Court decisions. So much change! So fast! 

But, after a long weekend, here’s how we think the rulings impact the business of solving climate change.

Uncertainty up

The Supreme Court threw away precedent. Going forward, who can predict when they will use it and when they will not? And the Court debuted “the major questions” doctrine, which was used to limit EPA’s regulatory authority. This all adds up to more regulatory uncertainty.

And if there is one thing businesses hate even more than inflation, it is uncertainty. Expect more uncertain futures in regulated industries such as energy, pharmaceuticals and healthcare. And a drag on economic growth because more uncertainty is costly to planning and operations.

Costs up

By limiting the federal government’s role in leading and enforcing emissions reductions, the Supreme Court made it much more likely that the planet will suffer more climate change and more physical damage from climate change. The number of incidents and the damage from each event will rise.

The rational person will close their front gates, tighten up their homes and businesses, and invest to survive heat, floods, wildfires and so on. The total cost of these individual actions is certainly at least 10X larger than the collective cost of reducing emissions. So our joint future just got more costly.

Trust down

Looking across all of the decisions, it is clear that our digital data can be used to track our actions and possibly lead to criminal charges. Not only did trust in the Court fall, but now there is good reason not to trust other institutions too. Every business will want their data extra secure and super private.

Full-steam ahead

But for the business and financing of climate solutions, the Supreme Court rulings will have a much smaller impact than might be expected.

First, the particular set of EPA regulations being argued before the Court had already been superseded by business realities: Utilities have been closing coal plants and switching to cheaper solar and wind power. As long as clean energy remains cheaper than alternatives, regulations have less impact.

Second, the business and finance of climate solutions is already on solid economic footing, with Blackrock, Brookfield, Wellington, SAP, EY, PwC, Salesforce and others announcing their intent to deliver revenues, profits and investor returns from the transition to a new climate reality.

And third, the U.S. has been the laggard on emissions reporting regulations, with reporting requirements already in place and demand for emissions data racing forward in the EU, Australia, and SE Asia with a fast-follow in the Middle East and Latin America. Reporting standards are being harmonized, and even if the SEC is forced to walk back its regulatory proposal, most US corporations will be filling the same data anyhow, just somewhere else.