- Domestic law: Countries are introducing laws to combat climate change in order to meet their commitments in the Paris Agreement.
Foundational climate agreements (namely, the United Nations Framework Convention on Climate Change (UNFCCC), the Kyoto Protocol and the Paris Agreement) bind countries to certain obligations to address climate change via mitigate and adaptation strategies. Consequently, regulatory changes to decarbonize domestic economies are now the norm, including, obligations to transition to renewable energy, prioritize electric transportation, and mitigation incentives (markets, taxes, and subsidies).
- Progressive implementation: The Paris Agreement requires that the states periodically communicate new climate targets.
In 2025, new targets ending in 2030 and 2035 were announced. Organizations can ascertain which new domestic laws will be forthcoming based upon the contents of these targets (called Nationally Determined Contributions). In order to meet NDCs countries will need to decarbonize their economies by regulating high emission industries and activities.
Moreover, because the commitments in the Paris Agreement are progressive missed targets may draw particular attention to industries unable to reduce emissions. Even where targets are met, the future targets will be more ambitious in order to meet the 1.5 and 2 degree objective. Accordingly, high emission industries will always have a target on their back.
- Increased reporting: Many countries have introduced transparency and reporting obligations on companies, in order to satisfy transparency reporting obligations contained in the Paris Agreement.
Companies or their suppliers may find that their environmental performance is publicly available, or even scrutinized. Likewise, since the performance of suppliers may likewise become publicly available, data included in Sustainability Report, ESG Ratings, and progress communications risks being contradicted.