Surviving Trump's Second Term: A Green Business Playbook

It’s been a wild year already. The return of Donald Trump to the White House has sent shockwaves through the business community, and there are early signs that the economy is faltering. Trump’s policies are especially concerning for sustainability-focused businesses, and leaders in this sector are understandably wondering just how concerned they should be right now. As leaders rush to adapt and decipher what is even happening, sustainability-focused companies should be prioritizing their strategy to succeed under the new Trump administration. While we face this shift in the political landscape, understanding the challenges and opportunities it presents is crucial.

Trump's campaign promises and Project 2025 plans signal a departure from the Biden administration's environmental policies. However, his first month in office has brought more aggressive policy change focused on diversity, equity, and inclusion (DEI) rather than climate change and green businesses. Regardless, we're likely looking at potential rollbacks of clean energy initiatives, increased investment in fossil fuels, and less climate action. But there's still room for green businesses to thrive, and that is where we should devote our energies as leaders.

Let's explore what Trump's second term might mean for sustainable enterprises and how they can adapt. This includes strategies to stay resilient and even flourish.

Understanding the New Landscape

The Trump administration's approach to environmental policy is likely to contrast with advancements made by the Biden administration such as the Inflation Reduction Act (IRA), which led to significant growth in the renewable energy sector. Policy changes will inevitably reshape the playing field for green businesses.

Potential Policy Shifts

Trump has made clear his intentions to support traditional energy sources. His administration is expected to provide blanket support for fossil fuels, with oil and gas advocates in key government positions. This could mean reduced incentives for clean tech and renewable energy projects, and disproportionate support for fossil fuels and related businesses.

One significant change is the potential dismantling of the Inflation Reduction Act (IRA). Trump plans to terminate the IRA, a cornerstone of climate action and clean energy expansion, which led to an unprecedented renaissance in U.S. manufacturing. If he can't fully terminate it, he'll try to rescind unspent funds.

A significant portion of IRA funds have already been spent or committed. Nearly half of the $105 billion allocated for climate grant programs has already been invested. Even with policy changes, some momentum from the IRA may continue, and that is one of many things that business leaders should continue to leverage even if the federal support wanes.

The Impact on Green Energy

The renewable energy sector might face headwinds from the new administration. Trump's call for "no more windmills" and the potential end of electric vehicle tax breaks, should the IRA be terminated, could slow growth. However, the economics of renewable energy have improved, making them competitive even without federal support. New wind and solar farms are undercutting new coal and gas plants on production cost in almost every global market, which makes them more attractive regardless of government subsidies or incentives.

Trade and Tariffs

Trump's trade policies will affect green businesses reliant on global supply chains. The administration plans to impose 25% tariffs on products from Mexico and Canada, and potentially 10-20% on goods from other countries. These tariffs could increase costs for green technologies using imported components, impacting the overall business case for some projects. However, those tariffs will impact all manufacturing in the U.S., so green businesses will not be uniquely affected.

Strategy for Green Businesses During the New Trump Administration

Despite these challenges, green businesses can make strategic moves to continue to be competitive and even grow. Here's how to position your company for success:

1. Focus on Economic Benefits

The Trump Administration isn't opposed to cleaner, greener technology when there's an obvious business case, especially one that promises to be lucrative, and there’s plenty of data to support continued growth in the clean energy and other green business sectors.

2. Leverage State and Local Support

While federal policy may shift, many states and cities remain committed to sustainability goals. Shrinking federal funding will have downstream impacts on state and local governments, but that doesn’t preclude them from making policy decisions that their constituents care about. Look for opportunities to partner with local governments and take advantage of state-level incentives. This could also create a path towards greater environmental justice and greater stakeholder involvement and investment.

3. Innovate and Diversify

If necessity is the mother of invention, then adversity may be the mother of innovation. Now's the time to double down on innovation. Develop new technologies and business models that thrive regardless of federal policy. Consider diversifying your product lines or services to reduce reliance on any single policy or revenue stream.

4. Build Strong Stakeholder Relationships

Engage with your customers, employees, and investors. A study from Penn State/ROKK Solutions shows the U.S. population is more supportive of ESG and sustainability efforts than political rhetoric suggests. Strengthen these relationships to create a buffer against policy headwinds, potentially bolstering your sustainability policies and long-term goals.

5. Explore International Opportunities

With potential domestic market challenges, consider expanding internationally. Many countries are doubling down on climate commitments, offering opportunities for green businesses. You might find favorable conditions and incentives for renewable energy projects in these international markets.

Adapting Your Business Model

 Now may be a good time to do a SWOT analysis and adapt your business model accordingly. Here is a non-exhaustive list of things to consider as you examine your business:

Supply Chain Resilience

With increased tariffs, review your supply chain. Look for ways to diversify suppliers or bring production closer to home. This can insulate your business from trade disruptions.

Energy Efficiency

Even if federal support for renewables wanes, energy efficiency is a smart move. Invest in technologies that reduce energy consumption. This cuts costs and makes your business more resilient to energy price fluctuations.

Circular Economy Initiatives

Embrace circular economy principles to reduce waste and improve resource efficiency. This can lead to cost savings and new revenue streams while appealing to environmentally conscious consumers. Promoting circular economy initiatives aligns with global standards and broader sustainability efforts.

Digital Transformation

Leverage digital technologies to improve efficiency and reduce your environmental footprint. This could include smart energy management systems or AI-driven optimization. Digital tools can also enhance your sustainability work by providing data-driven insights.

Target Markets

Diversifying the target markets your business sells into could help mitigate some of the risks of relying directly or indirectly on government funding through contracts or tax incentives. Expanding into more or broader markets can diversify revenue streams.

Communicating Your Value Proposition

What is valued in the marketplace is possibly a moving target right now, but one thing is clear, business culture is changing in response to the shifting political climate. How you communicate your value proposition is critical. While many companies are alarmed and even wonder if they should pivot, reposition, or rebrand, getting clear about your value proposition is a good place to start. Here are some tips:

Focus on Multiple Benefits

Don't just talk about environmental benefits. Highlight how your products or services contribute to job creation, economic growth, and national security. For instance, domestic clean energy can reduce dependence on foreign oil, aligning with broader energy policy goals.

Use Data-Driven Storytelling

Back up your claims with data. Show how your green initiatives have led to cost savings or other benefits. This resonates with a wide range of stakeholders, appealing to those focused on financial performance.

Align with Consumer Values

Consumer preferences continue to shift towards sustainability despite what is happening in Washington. Many consumers, especially younger generations, are committed to sustainability and are far less likely to view the environment and climate change as partisan topics. Align your messaging with these values, emphasizing your commitment to addressing climate change and reducing carbon emissions. 

Regardless of generation, most Americans are increasingly price sensitive, and consumer confidence is decreasing. Leaning into the positive economic impacts of cleaner, greener technologies and products will be compelling to consumers and align with their current concerns.

Preparing for Regulatory Changes

Regulatory changes are inevitable. Between what we can learn from the previous Trump administration and what Trump and his team promised on the campaign trail, it’s reasonable to assume that some significant changes in addition to the executive orders are coming soon. While we can't definitively predict regulatory changes, we can prepare. Here's how:

Stay Informed

Keep an eye on policy developments from the federal government. Consider joining industry associations or working with environmental policy consultants. Groups like the Brookings Institution offer valuable insights. Also, consider setting up Google alerts for key topics that will significantly impact your business so you’ll know right away when something new is on the horizon.

Scenario Planning

Given that change is inevitable, plan for it. Develop multiple scenarios based on potential policy shifts. Create playbooks for the most likely scenarios and think about how you’ll implement and communicate those tactics effectively to internal and external stakeholders.

Compliance Flexibility

Build flexibility into your compliance strategies. Wherever possible, maintain higher standards than required to prepare for future changes. Anticipate adjustments in permitting reform and regulations requiring higher compliance costs.

Leveraging Technology and Innovation

Government isn’t the only thing that is changing at breakneck speed. We’re also in one of the most rapid periods of technological growth and expansion, in large part thanks to AI, blockchain, and advanced materials. Ignoring emerging and maturing technologies could be just as harmful as bad policy.

Artificial Intelligence and Machine Learning

AI is getting increasingly good at performing complex tasks, which will have exponential impacts for the businesses that have already adopted AI, so don’t be late to the party or you will be left behind. The future of work is going to be unrecognizable to the past in a very short time. Immediate impacts can be found in resource management, product development, supply chain, and even waste management. AI adoption and integration is unmistakably a competitive advantage.  

Blockchain for Transparency

Blockchain isn’t just for crypto bros and drug dealers. Consider using blockchain for transparent information about your supply chain and environmental impact. This builds trust with consumers and investors. Blockchain can also support compliance with international ESG standards.

Advanced Materials

Invest in research and development of advanced materials that will help increase the efficiency, sustainability, or effectiveness of your products, or simply source them as components of your products. It’s no secret that intellectual property is a key differentiating factor for any business. Not only does developing or sourcing better, greener materials lead to cost savings and efficiency, but it also paves the way for long-term cost stability. There also is the potential for better regulatory compliance and risk mitigation. At the end of the day, building better products is always a way to get ahead in business, and there is no time like the present to double down.

Building Resilience Through Partnerships

Business has always been about relationships at its core, and now more than ever those relationships are going to make or break many businesses. Beyond your existing network, take care to invest in these valuable partnerships:

Industry Collaborations

Work with other companies or industry organizations to share best practices and lobby for policies. Collaborate on sustainability initiatives to meet consumer expectations. Worried about the ethics of some engagements? Consider engaging with law firms experienced in antitrust law for guidance on collaborations.

Academic Partnerships

Collaborate with universities and research institutions. These partnerships can drive innovation and provide access to research, talent, and technologies. Many universities have specific initiatives purpose-built for collaboration and co-creation with businesses.

Community Engagement

Build strong relationships with the communities where you operate. This creates local support, even if national policies become less favorable. Community engagement can enhance your company's social responsibility profile and improve government relations.

What is the Best Path Forward?

Building successful strategies for green businesses during the new Trump administration will require adaptability, innovation, and a focus on delivering value beyond environmental benefits. The landscape may be challenging, but it also presents opportunities.

By focusing on economic benefits, leveraging new supports, innovating, building relationships, and exploring opportunities, green businesses can thrive despite the potential regulatory challenges this administration may bring. The global trend towards sustainability is driven by more than government policy – it includes consumer preferences, technological advancements, and economic realities.

Stay agile, keep innovating, and communicate the value of your initiatives. With the right approach, your business can emerge stronger, more resilient, and well-positioned for success, regardless of the political climate.