Businesses preemptively cut emissions to hedge against future climate policy uncertainty, boosting sustainability without regulation.
The article shows that uncertainty about future U.S. climate policies affects how businesses invest now. If companies expect future policies to raise the cost of carbon emissions, they can respond by investing more in eco-friendly technologies. This shift in investments towards cleaner options and overall reduction in investments would result in lower emissions, even without actual policies in place. Companies are thus motivated to lower emissions by anticipating future carbon costs, leading them to take action like setting up internal carbon prices.