Why Stock Market Jitters Should Worry the Climate Concerned

By Justin Worland

Want more from TIME in your inbox? Explore our other newsletters here.

After months of steady growth, stocks plunged on Monday following evidence that the economy may be weaker than previously understood and amid growing concern that AI-driven growth in tech stocks may be overblown. By Thursday, stocks had made up some of their losses, but fear of a broader decline remains.

Anyone concerned about climate change should be paying attention. In the short term, a decline in economic activity is likely to lead to a decline in emissions, but the prospect of further economic turmoil is nothing to cheer—for the climate or otherwise. Economic challenges threaten to slow decarbonization efforts across government and in the private sector even as the case to continue working on climate change promises to pay dividends in the long run.

The reason for the climate backtracking during periods of economic uncertainty are fairly straightforward. When stock prices decline and executives fear the possibility of losses, they tend to cut programs that aren’t perceived as essential to their immediate bottom line—and that includes climate. Fulfilling a long-term net zero commitment requires surviving the next six months. Moreover, customers are also likely to deprioritize climate concerns. A 2011 study linked economic down cycles with declining consumer interest in climate. For all those reasons, it’s no surprise that study after study has shown that companies backtracked on environmental commitments amid the 2008 financial crisis and subsequent recession.

Similarly, in government, recessions make it harder for politicians to justify spending their limited time on climate change when voters are concerned about the economy. Over the past decade, many have used the prospect of an economic slowdown to call for government to spend on a climate-linked jobs program that would grow the economy while creating jobs in clean technology. But since the passage of the Inflation Reduction Act, a climate spending bill with a price tag totaling in the hundreds of billions of dollars, it’s unlikely that such a program would be repeated.

Still, there are good reasons for businesses to continue with climate efforts amid challenging market conditions. For one, many decarbonization efforts actually save money. Think of energy efficiency programs that can cut costs for building operators as they switch to higher efficiency light bulbs or electrify equipment with high fuel costs.

Read more: How the U.S. Plans to Reduce the Carbon Footprint of Its Buildings

And then there’s the government imperative. While governments may no longer be likely to spend big on climate investment programs, many of the regulatory efforts are likely to continue, recession or not. That’s especially the case in the Europe Union, whose rules apply to U.S. firms that do a lot of business in the bloc. Obviously, companies will need to do the bare minimum to comply. But it’s also worth considering the possibility that these regulatory efforts will tighten—and companies that continue to their climate programs will be best-positioned to meet them.

But perhaps the best reason to continue is the historical evidence that climate programs improve financial performance. A highly-cited paper from a leading Harvard Business School sustainability professor shows that companies that prioritize and maintain their sustainability programs “significantly outperform their counterparts over the long-term.”

Last year I asked Tom Steyer, the hedge fund manager turned politician who now runs a climate-focused investment platform, whether a recession would change the numbers for investors and companies. He didn’t hesitate to make the case for continuing climate investment. “You have a gigantic tailwind of something that is going to pervade virtually every part of the economy,” he said. “That means you have an opportunity if you’re just a straight up financial investor: to outperform.”

Must-read stories from TIME:

• How to Avoid A Climate Backlash
• U.S. Government Asks For Consumer Help on Solar Scams
• Tim Walz Knows How to Talk About Climate Change