Supreme Court’s overturning of the Chevron doctrine muddies the regulatory climate for CEOs
A divided Supreme Court threw out a decades-old legal doctrine that empowered federal regulators to interpret unclear laws on June 28, 2024.
Good morning.
When it comes to assessing the business impact of climate change, one of the most pragmatic thinkers I know is Spencer Glendon of Probable Futures. He’s an economist and former head of research at Wellington Management who studies how climate instability is upending property insurance and other models that underpin commerce and civilization itself. If you don’t read his seasonal essays, you should. In his latest, he notes that 12,000 years of climate stability have “enabled a kind of climate illiteracy.”
That’s starting to change. As we head into what could be the hottest summer on record, climate deniers are in short supply. Climate change is altering travel preferences, weather patterns, tax policy and even the Olympics.
CEOs are worried. Gallagher CEO Pat Gallagher, a global leader in insurance brokerage and risk management, recently surveyed 1,000 middle-market clients. “What’s No. 1 on their minds? Weather,” he says. “Whether you’re in the Midwest or New York, you’ve got to be thinking about why the weather’s changing.”
But others view technology change, economic volatility, talent shortages and the regulatory environment as more immediate threats to their organizational health. In Russell Reynolds’ latest Global Leadership Monitor, climate change was the least of their concerns but also one of several threats that they felt less prepared to handle. As Russell Reynolds CEO Constantine Alexandrakis notes, “new issues keep getting layered in,” adding complexity and volatility to decision-making in the top job.
In that respect, the Supreme Court’s reversal of the 1984 Chevron doctrine could turn out to be a pyrrhic victory for business leaders and a boon for lobbyists and lawyers. The doctrine gave federal agencies the benefit of the doubt in deciding how ambiguous laws should be interpreted. Its rollback could change banking regulation, environmental policies, food safety and health care standards, and other agency actions. Expect to see plenty of lawsuits and regulatory instability.
Regulations rarely keep up with the speed of technology, transformation, and risk. That’s why business leaders often see the regulatory environment as an obstacle to innovation. But whether it’s a carbon tax, a vaping ban or consumer protections, rules can also provide the clarity and consistency needed to move forward.
Along with the cost of climate change, leaders may now have to deal with new costs and complexity as old rules are battled in court.
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Diane Brady
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This story was originally featured on Fortune.com