‘Drill, Baby, Drill’ – The future of sustainability / ESG in the USA especially from the perspective of German companies

​published on 5 May 2025 I reading time approx. 7 minutes

​“We are plunging a dagger into the heart of the climate change religion” - with these words, Lee Zeldin, head of the US Environmental Protection Agency (EPA), commented on the realignment of American environmental policy on March 12. At the same time, he announced 31 far-reaching measures to deregulate existing climate protection regulations. The political realignment of the Trump administration is having a profound impact on the economy. Global companies and their supply chains must therefore ask themselves what role sustainability management will play in the USA in the future. 

The second Trump administration is demonstratively staging its stance on sustainability. Since taking office in January 2025, a large number of decrees and measures with a significant impact on sustainability issues have been implemented. These include the renewed withdrawal from the Paris Climate Agreement - making the USA, as the second largest emitter, one of the few countries that have not signed up. Further weakening the EPA's responsibilities for climate and environmental protection issues, as well as discontinuing programs to promote diversity, equity and inclusion (DEI) in government and private sectors. In a speech to the UN General Assembly in early March 2025, the 2030 Agenda and the Sustainable Development Goals were called into question and further support for them was ruled out. This was followed shortly after by news of the US resignation from the leadership of the UN's climate change fund, along with a nationwide expansion of fossil fuel subsidies and a reversal of a ban imposed by predecessor Joe Biden on an area slightly larger than Bavaria: all in the name of the overarching goal of boosting American competitiveness. 

For German and European companies operating in several US states, the increasing polarization in the ESG debate poses a significant challenge. American legislation on ESG issues is highly decentralized and differs considerably between the states, each shaped by the individual party political majority. States such as California, New York and Minnesota have tightened their environmental legislation in recent years and introduced ESG measures such as mandatory greenhouse gas accounting. Such ambitions are made possible by applications to the EPA for exemptions. Once approved, stricter local standards and regulations can be applied. However, contrary developments can be observed, particularly in Republican-led states such as Florida and Texas. In Republican-led states such as Florida and Texas in particular, the consequences of the increasingly strong anti-ESG trend can be observed. Pleiades' anti-ESG tracker documents developments to the detriment of sustainability in every US state over the last five years in real time. This makes it clear how the anti-ESG stance is gaining momentum, from calls for comprehensive deregulation to bans on environmental regulations.

 

It is noteworthy that this dynamic is now also evident in some Democrat-led states. Whether and how the Trump administration will actually exert pressure on existing and planned progressive sustainability ambitions of individual states in order to stop them remains to be seen. It also remains to be seen whether action can be taken against such guidelines and bans by the federal states.

 

German companies with locations in the USA will increasingly face the task of balancing different regional and country-specific ESG requirements with location-based individual sustainability approaches in such a way that overarching ESG goals and strategies can still be successfully achieved. The anti-ESG tendency could, in line with many local companies, lead to a massive reduction or complete discontinuation of sustainability ambitions in the USA. Ultimately, there is a threat of local competitive disadvantages in the short term for companies that want or need to adhere to global sustainability strategies in order to comply with overarching ESG require­ments. However, the many good reasons for continuing to focus on sustainable business practices in the USA outweigh the disadvantages. The need to maintain local personnel and organizational capacities for sustainability management remains.  

A complete dismantling of existing strategies and structures is not advisable simply due to the existing political structure in the USA. Congressional elections will take place as early as November 2026. As a result of subsequently changing majorities in the House of Representatives and the Senate, the political situation may realign again and the above-mentioned deregulation may be gradually reversed. 

Regulatory pressure in the area of sustainability remains high globally, particularly in Europe. European companies that remain subject to the Corporate Sustainability Reporting Directive (CSRD) are obliged to provide comprehensive information on sustainability aspects. This also includes information on international locations and subsidiaries. This results in a clear minimum requirement for ESG resources, which must also be permanently secured at US locations in order to comply with European reporting obligations. 

With the Green New Deal, the European Union is pursuing the goal of climate neutrality by 2050 (Germany even has the more ambitious goal of 2045), which obliges companies to take long-term, strategic action on climate protection. Companies need to understand that responsible entrepreneurship does not just mean complying with reporting obligations. Rather, it is about establishing and implementing climate and resilience strategies that ensure long-term business viability. Elements such as climate transition plans and climate risk assessments, which are mandatory in the CSRD, form the basis of a comprehensive, sustainable approach and long-term competitive advantage. 

In addition, many stakeholders expect companies to be able to collect and disclose reliable sustainability data worldwide. Reduced regulatory support for ESG in the US increases the need for action on the corporate side to continue to meet European requirements and strategically allocate resources for this purpose. Even if ESG aspects are less of a focus in the US market or cause additional costs, they remain of central importance for internationally active companies. 

The need for initiative as part of resilience strategies is impressively underpinned by the Trump administration's latest protectionist measures. Recent announcements by the US government to introduce global import tariffs increase uncertainty and make international business more difficult. A potential escalation of trade conflicts has a significant impact on global value chains. For US locations, this development means growing uncertainty with regard to supply chains, production costs and market access. Accordingly, timely resilience analyses are of great importance in order to take sufficient and early account of political developments and consequences in one's own strategic planning. Despite the current challenges, the US market remains of key importance for many European companies. It will be crucial to increase their own resilience, react flexibly to changes in trade policy and develop sustainable business models that can withstand a more volatile environment. 

Deregulation and turning away from sustainability will not automatically bring more global success through the hoped-for increased competitiveness. An indifference to, or even denial of, the scientific findings on climate change and global trends towards sustainability harbors many dangers for companies. Many regions of the US are increasingly experiencing the direct and indirect negative effects of climate change: numerous natural hazards such as tornadoes, extreme weather, drought and devastating forest fires as well as soil degradation are leading to the destruction and transformation of entire regions. These effects demonstrate the need to rethink and act in terms of sustainability in order to guarantee the future of our own business model. “Business as usual” is simply no longer possible when taking a serious look at climate change and its long-term consequences. Companies can benefit in the long term from forward-looking, sustainable strategies and the associated strengthening of their resilience. With a global approach that can set different priorities and acute focus topics adapted to the respective local conditions, German and European companies can position themselves for the future, including in the USA.​