Global climate collaboration is shifting, and the implications for business are real. The US withdrawal from key global climate bodies introduces new uncertainty for organisations navigating sustainability, investment and supply chain risk.
In our latest Sustainability Explainer, Sophie Schlachter, Sustainability Advisor, explores what this shift means in practice for business.
Uncertain times: climate collaboration no exception
Global collaboration on the transition to a low-carbon economy has faced renewed disruption in the opening months of 2026. Perhaps unsurprisingly, much of this originates from the current administration of the United States of America.
Two major announcements from the US government relating to its withdrawal from global efforts to tackle climate change came in short succession. The first came in January 2026, though it had been initiated twelve months earlier. The USA confirmed it would withdraw from the Paris Agreement once again, having previously exited in 2017 before rejoining under President Biden.
The second announcement came a month later in February 2026, when the same administration announced it would be withdrawing from the 1992 UN Framework Convention on Climate Change (UNFCCC) – the world’s core international treaty for climate policy and a foundational body of the Paris Agreement. In the same announcement, the US pulled out of the Intergovernmental Panel on Climate Change (IPCC), which produces highly trusted consensus on climate science and distils it into invaluable guidance for policymakers and businesses around the world.
What has the global reaction been?
The Paris Agreement is the primary mechanism through which UN member states coordinate their ambitions and efforts to mitigate climate change risk and fund adaptation. Naturally, therefore, when the world’s second-largest emitter of greenhouse gases withdraws from international efforts to reduce emissions, the decision is met with widespread dismay.
What’s notable, however, is the difference between the reaction that the announcement received the first time it happened in 2017 and the second time around, in January 2025/26.
In 2017, corporate America came out in coordinated protest against the decision, with 30 CEOs of large, well-known firms signing a joint letter urging the administration to change its mind.
By contrast, there was no comparable response in 2025/26. Indeed, the business community was eerily silent about the announcement.
Pessimists interpret this silence as a general unwillingness to criticise the current administration, for fear of retribution. Optimists suggest that in the years between the two announcements, climate action has become such a feature in the corporate landscape that long-term goals and plans are already well-established, and investment in emissions reduction is less susceptible to the vagaries of US Federal sentiment.
On America’s withdrawal from the UNFCCC, its Executive Secretary Simon Stiell has declared “a colossal own goal”, citing multiple negative impacts on the American economy which will flow from slowing down the global transition to a low-carbon economy. (Read his statement in full).
In a similar vein, American scientists involved with the IPCC have noted that US withdrawal from the group equates to “shooting ourselves in the foot”, as American political voices will now be absent whenthe highly influential IPCC “Summary for Policymakers” document is being collated. (Read more: What top climate scientists think of Trump’s treaty withdrawals.)
Concerns linger also over the financial impact of America’s withdrawal. Historically, it has been a significant contributor of funding to the IPCC, and commentators fear that budget cuts will make it harder to meet their already tight reporting timelines, and could impact the editing, translating and sharing of their reports. (Read more: Funding gap threatens next round of IPCC climate science reports, chair warns.)
How might Australian businesses anticipate the impacts of the withdrawals?
The full impact of the USA pulling out of these critical climate bodies remains uncertain, so a pragmatic ‘plan for the worst, hope for the best’ approach is advisable.
Strong alignment between national governments in their approach to climate change and emissions reduction increases security for investors, and provides a more conducive environment for businesses to plan and act.
Noting the lack of alignment post-US withdrawal, Australian businesses with close partners in the US should anticipate a potential cooling of ambition and certainty around climate-related products and services, or collaboration on emissions reduction.
Partner firms who have already embedded emissions reductions into their business models and capital investment plans, or produced climate action plans through the Science-based Targets Initiative, are less likely to falter.
The greatest impact for business is likely to be on supply chain risk.
Reduced funding for developing nations to mitigate and adapt to climate change risk has real potential to destabilise sustainability-related plans, at both a government and enterprise level.
Australian firms with supply chain nodes in the developing world should reassess supply chain risk, and consider opportunities to support key value chain partners facing challenging conditions.
Thankfully, despite being announced over twelve months ago, the US withdrawal from the Paris Agreement did not, as some feared, trigger a wave of withdrawals from other nations. It is hoped that its withdrawal from the UNFCCC and the IPCC will have a similarly limited effect on other governments’ willingness to participate.
Planning for sustainability
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- Sustainable Business Planning – Our Solutions
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About the author – Sophie Schlachter, Sustainability Advisor
Sophie holds a Master of Sustainability from the University of Sydney and has worked across regenerative agriculture and waste management sectors, including for OzHarvest and the Taronga Zoo Conservation Society. Sophie is experienced in business and sustainability analytics, and is passionate about enabling sustainable business that balances profit with positive environmental and social outcomes.
Better Planning. Better Planet.