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How the Paris Agreement will impact American businesses

Incoming President Joe Biden is set to radically overhaul the US Government's attitude towards the environment. Chief among his proposed goals is a return to the Paris Agreement, which the US controversially quit as of November 2020. Signatories of the agreement are required to adopt a framework that regularly reports on emissions, submit nationally determined contribution plans (NDCs) limiting emissions, and outline implementation efforts, with the goal of keeping global temperature increase below 2C.


The US government is therefore set to implement environmental policy into legislation. When the UK joined the Paris Agreement, it lead to the adoption of the SECR reporting standard. Mandatory reporting currently includes:

Electricity Consumption

Gas Consumption


Energy use

GHG Emissions


Biden will seek to implement similar reporting standards in the US, especially across the sectors most responsible for emissions, including the power and energy sectors. The ‘Biden Plan for a Clean Energy Revolution’, outlines his planned legislation. Most notable are his intentions to:

Require public companies to disclose climate risks and greenhouse gas emissions in their operations and supply chain;

Increase enforcement of environmental laws and regulation and pursue cases “to the fullest extent permitted by law” and “seek additional legislation as needed to hold corporate executives personally accountable”;

Work with Congress to enact legislation to establish an “enforcement mechanism” to achieve economy-wide net-zero emissions by no later than 2050 and to invest US$400,000 billion over 10 years in energy and climate research and innovation.




How Must American Businesses React?

It is clear that businesses will have to dramatically improve how they collect and report on environmental data, with the threat of fines looming for non-compliance. Accurate environmental disclosure requires systems to gather, monitor data and proactively report on performance. This is doubly true regarding Scope 3 reporting and supply chain management.


The business landscape in the US is primed for change. The Trump administration had a disregard for environmental policy, and Biden intends to reverse this, marked by a return to the Paris Agreement on his first day in office. The time for businesses to prepare is now. Creating the building blocks for environmental performance improvement takes time and investment, but is rewarded financially and morally in the current sustainability oriented landscape. Businesses who fail to adapt with the times risk falling behind.


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Anja Hysi
Posted by Anja Hysi on 16-Dec-2020 10:46:07

Topics: News, Industry Trends

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