The Paris Climate Accord and Small Business

An introduction to the Paris Climate Accord

The Paris Climate Accord, signed in April of 2016, was heralded as a revolutionary document- this agreement united almost 200 countries across the globe for the purpose of advocating green development in business and government. Although the document did not force any particular regulations upon nations, it brought high-pollution countries like India, China, and The United State to the table to discuss how they could improve their bad track record. When the agreement came into action in November of 2016, the world optimistically believed that even the nations known for damaging the environment the most would be pushing hard for a better tomorrow.


This agreement was signed during the second term of President Barack Obama, who was known for being far more concerned with the environment than current President Donald Trump. As is characteristic of him, Donald Trump is far more worried about American business than global climate change, and he believes that the Paris Agreement is going to cause energy industry jobs to leave America as we move further from fossil fuels and more towards sources of renewable energy. But while keeping jobs is one of the most important factors of sustaining a high degree of productivity in the American economy, there are other things that must also be considered – for example, what will be leaving the Paris Climate Accord’s effect on small businesses?


The effects of leaving the Paris Climate Accord on American employment

Clearly, President Trump believes that The Paris Climate Accord’s effect on American jobs would have been very negative – after all, this was his primary reason for leaving, and bringing back jobs was one of the main promises of his campaign. Many pundits speculate that he has made a grave mistake in leaving the Accord, however. The fact that the president is going to focus on continuing the use of fossil fuels instead of renewable energy may end up having a catastrophic effect on the American job market, especially in the small business sector. A significant percentage of jobs in the renewable energy sector stem from small green energy businesses in America that will now be harmed by Trump’s blockage of growth in environmental energy solutions. In addition, America leaving the PCA will make it impossible for the United States to become one of the long-term leaders of the global green energy movement, which will mean that leaving the Paris Climate Accord will hurt small businesses by creating opportunities in other nations for leadership and renewable energy development jobs – the very thing that Trump is trying to avoid. But the American energy industry will not only suffer losses of potential gain. It will also be damaged by the fact that large natural gas companies are going to be able to profit immensely from the lack of regulation that will stem from this revocation of the PCA. In fact, renewable energy companies as well as coal companies, whom were supposed to be the beneficiaries of Trump’s decision, may suffer revenue losses as natural gas companies are allowed to work with less rules and therefore make more money. This could cause natural gas companies to take over more of the market, minimizing the potential for profit AND job growth in coal companies as well as small green energy businesses in America.


Furthermore, the fact that the clean energy sector will suffer losses is not going to be just a blip in America’s job growth trend. 880,000 Americans are employed in the clean energy industry, whereas 1.1 million, only a little more than 200,000 more, are employed by fossil fuel businesses. If the 2.2 million Americans employed in the design, installation, and manufacturing of clean energy products  are added to this number, the true gravity of a decision to prevent growth in green development is clear. The Paris Climate Accord’s effect on American jobs could have been an positive one, and would also have avoided some of the monopolization of the energy industry that might now develop as a result of an exit.


How American industries will change due to leaving the Paris Climate Accord

Although many large natural gas companies are pleased with President Trump’s decision to leave the PCA, quite a few major corporations are horrified by the prospect of abandoning this landmark agreement. The directors of companies like Goldman Sachs (a multinational investment bank, General Electric, and The Walt Disney Company came together to write a request to Donald Trump that he not leave the agreement, citing the fact that it would make America’s efforts to remain a global leader of the energy market. Unfortunately, however, reducing the influence of the U.S.A in the global energy sector may not even be the most devastating effect of this decision on American industry. The largest effect of leaving the Paris Climate Accord on businesses will likely result from the unfavorable opinion that other nations will develop regarding the actions of the United States. Not only could other nations block/tariff energy exports from the United States, but the American government might be seen as self-absorbed and inconsiderate of global needs, making countries around the world close their minds to negotiating and trading with the U.S. The relationship between the Paris Accord and small business in America would seemingly have been a mutually beneficial one, and the potential for damage that hangs in the air as a result of our leaving looms large.


The environmental impact of leaving the Paris Climate Accord

Regardless of how one looks at the Paris Climate Accord regarding its impact on the economy of the United States, many hoped that it would create a more green energy-oriented global culture that would help to improve the outlook on future environmental change. It is also important to note that the Paris Climate Accord did not force any countries to undergo industrial changes, but rather included a nonbinding agreement that hoped to push nations in the right direction. It seems as if the United States’ choice to leave this agreement will, not surprisingly, have some very adverse effects on the environment. Studies show that the current global trajectory for climate change will cause a drop in income as large as ¼ by 2100, and that the already daunting separation between the rich and the poor will only increase in size. The GDP of the United States might even drop by as much as 36% by the time the new century rolls around. Climate change’s effect on business is going to be quite negative, and even though this date remains over 80 years away, those hoping to create a positive future for their children and grandchildren must consider how global warming will effect small business.


What to do going forward

Fortunately for the Paris Accord and american businesses, all hope is not lost; not only could future presidents decide to re-enter the PCA, but companies around the nation are making the decision to implement greener policies for their individual business practices regardless of whether or not the government is encouraging them to. For a list of ways to create a more environmentally friendly company culture, check out our list of ways to make your business more green.

If you are interested in creating changes in your business that will utilize clean energy and other forms of green development but do not have the cash on hand to do so, call Factor Finders today. Through invoice factoring, we can help you acquire the money that you need to achieve your green energy goals.