Interface, the carpet-tile company, got there more than two years early. On April 30, 2024, it retired its Carbon Neutral Floors program, a label that had rested on a familiar arrangement: cut emissions where possible, then buy offsets, from forest projects in places like Kenya and Cambodia, to cover the rest. From 2025, the company said, that money would go into cutting emissions directly and storing carbon in its own operations and supply chain, toward a goal of becoming carbon negative "without offsets" by 2040. Trellis put the offset budget at roughly $2 million a year.

Ray Anderson, the founder who turned Interface toward eliminating its environmental harm in 1994, died in 2011. The decision to leave offsets behind came thirteen years after his death, from people who had inherited his commitment and chose to take it further.

Most sustainability commitments fare worse when their champions leave. They tend to be attachments: an offset contract, a reduction target, a grant budget, a chapter in the annual report. Each makes a company somewhat less harmful, and the next person in charge can detach any of them with a memo. Healing asks more of a business. It means leaving soil, water, workers and towns healthier for the company's presence, and it holds only when the healing is part of how the company earns its money.

Every change of owner or chief executive brings a renovation. Commitments come through it when they hold up the building. Four questions show whether yours do.

Where the healing lives

A commitment written into a report or a budget can be ended by whoever writes the next one. Write it into the product specification and the supplier contracts, and ending it means redesigning the product, which takes years and shows up on the shelf. Interface's exit from offsets moved its climate work from the first kind of document to the second. The business model has to work, too. The company's 1990s experiment with leasing carpet ran into trouble with the tax rules for leases, as Gregory Unruh recounted here in 2019. Find the document a successor would have to rewrite to end each of your commitments, and make sure it is one that runs the operation.

What pays for it

Patagonia's giving comes from two sources, and they behave differently. By late 2025, Fast Company reported, Patagonia had given about $180 million to the Holdfast Collective, the nonprofit that holds its nonvoting stock, since changing its ownership in 2022. It also still gives $10 million to $15 million a year through 1% for the Planet. The 1% is a share of sales, so it arrives in a thin year as reliably as a fat one. The Holdfast money is a share of profit, as much as 98 percent of it after the company sets aside what the business needs to reinvest, and a bad year shrinks it as it would any dividend.

Commitments paid from whatever is left at year's end compete with everything else for the remainder. Tie yours to units sold, or build them into the cost of goods as a per-unit premium to regenerative suppliers, and they are paid before that argument starts.

Who can change it

The Body Shop earned B Corp certification in 2019, while Natura owned it. In late 2023 Natura sold it to a private equity firm, and in February 2024 its UK business went into administration; B Lab opened a review of its certification soon after. A certificate describes a company as it stands on the day of the audit, and it has no say over who owns the company next.

Map who has the authority to amend each commitment that matters, and raise the price of amending it. Benefit corporation status, where the law allows it, writes a purpose into the charter, and a required board vote with public disclosure slows any change to it. Patagonia went furthest and placed its voting shares in a purpose trust. Each step raises the cost of reversal and drags it into public view, which is often protection enough.

Who can enforce it

When Unilever bought Ben & Jerry's in 2000, the deal left an independent board in charge of the brand's social mission. On August 21, 2026, a federal judge in New York dismissed most of the lawsuit the independent directors had brought against the brand's owners. The board's powers, the court held, "do not include the right to sue on behalf of Ben & Jerry's." By then Magnum, the Unilever spin-off that now owns the brand, had removed the three independent directors under new eligibility rules, which the former directors are still challenging, and three new independent directors have since joined the board. Through all of it, Ben & Jerry's has remained a certified B Corp. The board held responsibility for the mission without the power to defend it in court, and a promise nobody can take to court is closer to a preference.

Put the commitments you care about into contracts with parties who can hold you to them: a multiyear supplier agreement, say, or the covenants of a sustainability-linked loan. Then publish results against a baseline, so that customers and employees can see when a promise slips.

None of this makes a commitment permanent. A future owner of Interface could still decide that storing carbon in its products costs too much. Acting on that would mean redesigning products its customers already buy, and new owners rarely take a sledgehammer to a load-bearing wall. Build the healing into the structure, and it will still be standing after everyone who championed it, you included, has moved on.

Think about mobile phones: in little more than a decade, global supply chains took us from brick-sized handsets to a computer in every pocket. mRNA vaccines went from lab to billions of arms at a speed that looked impossible a year earlier. And IRENA reports that the cost of electricity from utility-scale solar fell 85 percent between 2010 and 2020, driven by scale, technology and competitive supply chains.

The science in each case was hard. Yet the supply chains did what they are designed to do. They sent clear commercial signals down the tiers, spread know-how and removed bottlenecks one by one.

However, when the subject turns to carbon, we stop seeing supply chains as the means to a solution and see them as the problem.

Why Scope 3 is seen as the problem

For most companies, 65 to 95 percent of emissions sit in Scope 3, the majority of which is upstream. Scope 3 is the largest, least controllable and worst-measured part of the footprint. Most executives now openly doubt they will hit their 2030 targets.

The usual diagnosis is that Scope 3 is simply too hard. I think that is wrong. Compared with smartphones and vaccines, most of what we need for 2030 is not rocket science. Upstream Scope 3 is the sum of thousands of suppliers' Scope 1 and 2 decisions: renewables, efficiency, electrification, process heat. These are engineering solutions we largely understand already. In 2025, more than 90 percent of new utility-scale renewable power was cheaper than the cheapest new fossil-fuel alternative (IRENA, 2026), and the World Economic Forum's report "The Cost of Inaction," published in 2024 finds most industries can cut 10 to 60 percent of emissions at no extra cost. (Inaction is not free either: warming is projected to add up to 1.2 points to headline inflation a year by 2035. And for agriculture and food the impact is greater still, between 0.92 and 3.23%. In corporate financial calculations, comparisons are generally not being made against this future cost of inaction.)

The facts tell us that Scope 3 reductions are achievable. Scope 3 feels impossible because we have made three fundamental mistakes.

Mistake one: we have been using reporting data to manage reductions

Scope 3 grew up as a disclosure challenge. CSRD, ISSB and a wave of US state rules told companies to measure and report, so companies built small, central sustainability teams to do just that. But reporting data, while valuable for other reasons, is next to useless for managing supplier performance. It is generally spend-based, built on industry averages and calculated at enterprise level. It tells you roughly what a supplier's whole company emits, but almost nothing about the emissions associated with the product or service you actually buy. A supplier's holding company might have a larger-than-average footprint for its sector, while the facility you buy from might be its most modern and efficient, or vice versa.

If we are going to use data to drive emissions down fast, it needs to be specific to what we are buying: the footprint of the facility we buy from, and ideally of the actual product or service.

Mistake two: the wrong people are managing supplier reductions

So first we collected data that is unsuitable for driving reductions. Then we left responsibility for Scope 3 with under-resourced, overworked central sustainability teams who have no leverage with suppliers. Wrong data and wrong people.

If Scope 3 stays in the sustainability team, progress will be glacial. It belongs with the people who already manage cost, quality, risk and capacity, and who have considerable commercial leverage over suppliers. As Nicole Anderson Brodin, Sustainable Procurement Manager at Essity, says, "Give these guys responsibility for one more parameter, in the right way, and they will get it done."

Mistake three: we never made carbon reduction commercially powered

This is the critical fault line. We can collect the right data and give responsibility to the right people, but we will make no material progress if decarbonization is not treated as commercial. Historically, we have treated carbon as compliance, and as David Croft, former CSO of Reckitt, told me, compliance "is always a race to the bottom... once you've met the requirement, the next question is 'can you do it cheaper next year?' Not can it be used to create value?"

Smartphones and vaccines moved fast because the reward for suppliers to solve the problem dwarfed the cost. In most companies today, action on carbon reduction offers suppliers almost no material reward, and there is almost never any material sanction for inaction.

Tip the seesaw

Picture a seesaw. On one side sits the effort a supplier must make: investment, risk, learning, disruption. On the other sits the value they receive if they reduce emissions: margin, revenue, resilience, licence to operate, career reward.

For most suppliers, the Scope 3 seesaw is stuck firmly on the ground on the effort side. They are asked to measure, set targets, re-engineer and sometimes absorb cost, in exchange for a tick in a scorecard and a vague promise of "preferred status," a featherweight on the value side. Rational suppliers therefore do the minimum.

You can tip the seesaw two ways. The first is to take weight off the effort side. Schneider Electric, for example, gave suppliers free tools, training and hands-on regional workshops. In some regions, average supplier carbon reduction targets doubled in ambition within a few months because suppliers were supported and shown what was possible.

The second, and the bigger prize, is to add weight to the value side.

Haleon: carbon as part of total cost of ownership

Haleon shows what adding value looks like. In tenders for high-emitting categories, such as raw materials, suppliers provide the carbon footprint of what they are selling alongside the usual commercial factors of cost and quality. Haleon converts the carbon footprint into money using the EU ETS carbon price and adds it to the unit price. Buyers then compare total cost of ownership, including the cost of the carbon.

Suppliers without decent data do not get a free pass. Haleon applies the industry average plus 50 percent. Do nothing, and you are priced as worse than average. Invest in data and decarbonization, and you lower your relative cost and probably win the business.

This is no pilot. According to the Sustainable Procurement Pledge's coverage of the program, Haleon has tendered more than $800 million of business with carbon pricing since January 2024. The company estimates this approach alone can unlock nearly half of the abatement levers it needs for its 2030 goal. Buyers were given room for a very small amount of price inflation. In practice, inflation was close to zero.

Read that again: supplier decarbonization at near-zero cost. As Anderson Brodin puts it: "Carbon pricing embedded in total cost of ownership is the clearest way to signal commercial materiality to suppliers."

Beyond the carbon price

A market carbon price should be the floor, not the ceiling, of your ambition to commercialize carbon. The full value of decarbonizing a category is far larger once you layer up the different ways value can be released: avoided regulatory and border-tax costs, lower energy bills, supply security, predictable costs, resilience to climate shocks and preferred access to customers.

That is the idea behind an approach I call the Total Value of Decarbonization (TVD): a category-specific business case, built by procurement, finance and product together, that tells buyers how far they can go to incentivize change without destroying value. Is a two-point price premium justified? Is it worth moving payment terms from 90 days to 45 if a supplier halves its process-heat emissions? TVD gives the answer and turns carbon reduction from an ask into something commercial you can trade.

Three ways to start accelerating your supply chain reductions:

• Put a carbon price into your next major tender in a high-emitting category.
• Build a TVD business case for that category with finance, and agree on the incentive envelope before negotiating.
• Change buyer KPIs so that cost includes the cost of carbon and value includes the value of decarbonization, and use that calculation to reward supplier action.

The supply chains that make your products or deliver your services are no different from those that gave us smartphones, vaccines and cheap solar. They are waiting for the same signal. Make carbon commercial, tip the seesaw, and Scope 3 stops being the problem. It becomes our biggest hope for change.

Then someone asks whether the comparison included repair costs and product lifetime.

This is an illustrative scenario, but the question is familiar. Before we celebrate a faster decision, we need to understand what the business asked the system to value. A ranking can look conclusive while the priorities behind it remain unresolved.

For sustainability professionals, this creates a demanding task: examining the recommendation while working with colleagues who may already feel relieved, vindicated or under pressure to proceed.

What did we ask it to value?

In our scenario, manufacturing cost is a visible input. The potential benefits of repairability will influence the ranking only if the assessment includes relevant consequences after the sale. Those benefits still depend on assumptions: will customers repair the product, can parts be supplied, and does extending its life reduce environmental impacts across the lifecycle?

Engineering might reasonably prioritise reliability. Procurement needs supply continuity. Service teams need a design they can support. Sustainability brings consequences that may sit outside the immediate budget or planning period.

Someone must decide how these considerations enter the assessment. Mandatory requirements should remain explicit constraints; other priorities need an agreed basis for comparison. A compelling explanation cannot settle a disagreement about what matters.

In their 2019 paper, Problem Formulation and Fairness, Samir Passi and Solon Barocas examined how a corporate data-science team translated business objectives into problems that could be modelled. Drawing on six months of fieldwork, they found that defining and operationalising those problems involved negotiation and discretionary choices, including the selection of target variables and proxies.

Once those choices have been made, a second question arises: does the explanation help colleagues assess the recommendation, or make them more willing to accept it?

Research by Gagan Bansal and colleagues, presented at CHI 2021, examined AI-assisted decisions across three experimental tasks involving review sentiment and logical reasoning. The researchers found that explanations increased acceptance of AI recommendations, including incorrect ones. However, explanations did not significantly improve human-AI team accuracy compared with simply displaying the AI's confidence.

When a sound ambition meets insufficient evidence

Agreeing on the criteria still leaves another challenge: whether the evidence is strong enough to compare the options.

In a consumer-product project I worked on, we proposed introducing recycled material into selected components. The environmental rationale was to reduce the use of virgin material. Existing customer research mentioned interest on recycled content at a broad level, but provided insufficient validation for this particular change. Technical questions about the new material and product specifications also required further work.

The proposal was postponed.

Here, the competing considerations were tangible: reducing virgin-material use, establishing technical suitability and demonstrating relevance to customers. General interest in sustainability could not answer the specific product question. The available evidence left too much unresolved to proceed.

AI's application to this example is hypothetical. In a similar situation, an AI-supported assessment would need to preserve that uncertainty. A broad consumer preference should remain separate from evidence about a particular component change. Technical suitability would still require validation. Producing a more polished business case would leave those gaps intact.

The emotional challenge for a sustainability professional is understandable. Postponement can feel like losing momentum on an important commitment. Yet recognising a colleague's unresolved technical concern gives us a specific problem to address. Treating it as resistance risks leaving the evidence gap untouched.

What are colleagues being asked to risk?

Return to the hypothetical design meeting. The engineering lead may be accountable for failures in use. A procurement colleague may face a launch deadline. The sustainability professional may feel responsible for consequences that otherwise receive little attention.

These are possible pressures, not diagnoses of colleagues' motives. They suggest a useful question: what would each person need to know before supporting a different choice?

Questioning a recommendation can also become uncomfortable when someone has invested time or credibility in producing it. A request to revisit assumptions may sound like a challenge to competence. Sustainability professionals can reduce that personal tension by making the question precise: "Would the ranking change if we included service costs over the expected product lifetime?"

Amy Edmondson's 1999 study of 51 work teams within one manufacturing company found that team psychological safety was associated with learning behaviour. The study described psychological safety as a shared belief that the team is safe for interpersonal risk-taking.

In practice, the person chairing the meeting can ask each function to identify one assumption that needs checking before the recommendation is accepted. This gives questioning a legitimate place in the process, including when the result favours sustainability's preferred option.

What would change our minds?

A useful next step is to examine the conditions under which another option becomes preferable. In the repairability scenario, the team could compare different repair uptake assumptions and service costs, using validated calculations and appropriate lifecycle evidence. A language model could help organise the questions and summarise supplied evidence, with sources checked by the relevant specialists.

If the ranking changes under plausible assumptions, decision-makers should see that sensitivity. If critical information is missing, the next action may be a test or targeted customer research. Teams can agree on the evidence required and who will obtain it before revisiting the choice.

Sustainability professionals have a valuable role in connecting these questions across functions. We can ask where a cost moves, who carries a risk and which consequence has disappeared outside the assessment's boundaries. We must also accept answers that challenge our own preferred solution.

Before approving an AI-supported recommendation, record the criteria, unresolved assumptions and accountable decision-maker. After implementation, compare actual results with expectations, including reliability, service demand and environmental performance where relevant.

In our hypothetical case, AI picked the sealed design because the assessment prioritised manufacturing cost and reliability. Including repair costs and product lifetime might change the result. Before accepting the winner, the team needs to agree whether those rules reflect what the business wants the product to achieve.

For generations, this has been considered a normal part of agricultural production. But what if those discarded leaves could become something valuable? What if agricultural waste could create jobs, support rural communities, and become part of the global textile industry?

That question became the foundation of PINA&KAKAW, a company my wife, Daniela Sagastume, and I co-founded in May 2025.

Our mission is to transform post-harvest pineapple waste into natural textile fiber while creating economic opportunities in the communities where that waste originates.

What began as an idea has become a journey involving farmers, machinery, textile engineers, manufacturing trials, and countless challenges. Along the way, we've learned that developing a sustainable material is only part of the equation. Building a viable business around it is an entirely different challenge.

Finding Value Where Others See Waste

Before starting PINA&KAKAW, I spent several years leading environmental operations in Guatemala, including helping establish 4ocean's operations in the country. During that time, our teams removed more than four million pounds of plastic and waste from waterways and coastlines while creating over 50 local jobs.

That experience fundamentally shaped how I view environmental challenges.

I learned that lasting environmental solutions must involve the communities most directly affected. They also need to create economic opportunities, not simply address environmental damage.

When Daniela and I began exploring agricultural waste, we recognized a similar opportunity.

Pineapple cultivation generates significant quantities of biomass after each harvest. Instead of treating that material as something to dispose of, we began looking at it as a potential raw material.

Our approach involves collecting pineapple leaves directly from farms, extracting their natural fibers, and preparing those fibers for textile manufacturing. The remaining organic material is directed toward composting, creating an opportunity to return nutrients to agricultural soils.

The goal is a circular system in which agricultural residues become resources rather than waste.

Building Something From the Ground Up

One of our biggest challenges was understanding how to transform a pineapple leaf into a material that existing textile manufacturers could actually use.

Pineapple fiber itself isn't new. The Philippines has a centuries-old tradition of producing textiles from pineapple leaves, and companies such as Ananas Anam have developed modern commercial applications.

We are not claiming to have invented pineapple fiber.

Our opportunity lies in establishing a production model in Guatemala, connecting agricultural communities with an established textile manufacturing industry, and developing fibers suitable for commercial spinning and fabric production.

Producing a beautiful handmade textile is one achievement. Producing consistent fiber that can move through industrial spinning equipment and meet manufacturers' quality requirements is another.

We have spent months working through fiber extraction, cleaning, processing, blending, spinning, knitting, and dyeing trials.

Some experiments worked. Others required adjustments.

Our initial development has focused on blending approximately 20% pineapple fiber with 80% cotton. Working with textile manufacturers, we have successfully produced yarn and knitted jersey fabrics using pineapple fiber collected and processed in Guatemala.

We've also explored blends with wool and are developing trials incorporating recycled polyester for applications such as carpets and rugs.

Each application brings different technical requirements. Fiber length, softness, strength, consistency, and production losses all affect whether a material can become commercially viable.

These challenges cannot be solved through sustainability claims alone. The product has to perform.

Measuring Impact Beyond the Material

Since beginning operations, PINA&KAKAW has diverted more than 150,000 pounds of pineapple agricultural biomass from conventional disposal and potential burning pathways.

We've also assessed our environmental impact using the Food and Agriculture Organization's EX-ACT methodology, which evaluates greenhouse gas impacts associated with agricultural and land-use activities.

Our assessment estimates 76 tonnes of CO2-equivalent emissions impact associated with our activities.

But environmental measurements tell only part of our story.

Our operation supports a local team, with women playing a central role in fiber processing and production.

For us, creating employment opportunities for women and young people in rural Guatemala is not an additional benefit. It is part of the business model.

We've watched team members learn to operate machinery, develop technical skills, and take responsibility for production activities that didn't previously exist in their communities.

Sustainable development should create tangible benefits for the people participating in it.

The Challenge of Bringing a New Material to Market

One of the most important lessons we've learned is that environmental impact alone doesn't guarantee commercial success.

Textile manufacturers operate in an extremely competitive industry. They need materials that meet technical requirements, arrive consistently, and make economic sense.

A manufacturer may appreciate our environmental mission, but if the yarn doesn't perform properly in their machinery or the resulting fabric fails quality tests, that mission won't be enough.

We have engaged in more than 150 conversations with industry professionals, potential customers, technical specialists, and other stakeholders while refining our product and understanding market expectations.

Currently, three potential customers are evaluating our materials for different applications, including flooring and carpets, hospitality textiles, and specialized performance textiles.

These are testing relationships, not confirmed commercial contracts. But they represent meaningful progress toward understanding where pineapple fiber can offer practical value.

We've also benefited from technical exchanges with specialists in Asia, particularly the Philippines, where pineapple fiber has a long history.

Rather than attempting to build everything independently, we believe collaboration and knowledge exchange are essential to developing a competitive industry.

From Rural Guatemala to the International Stage

In 2026, PINA&KAKAW was awarded first place in Guatemala's ClimateLaunchPad competition, followed by first place in the Central American regional competition.

Those achievements earned us the opportunity to represent Central America at the ClimateLaunchPad Global Finals in Singapore.

For a company that began operating just over a year ago, the experience has been significant.

But recognition is not the destination.

Our next challenge is moving from successful technical trials toward consistent commercial production, securing long-term customers, improving manufacturing efficiency, and expanding opportunities for the communities working with us.

There is still much to learn.

Rethinking What We Call Waste

When Daniela and I started PINA&KAKAW, we knew we wanted to create something that combined environmental responsibility with economic opportunity.

What we didn't fully appreciate was how much patience, experimentation, and persistence would be required to build an entirely new value chain.

We've learned that circularity isn't simply about finding another use for discarded materials. It's about creating systems where farmers, workers, processors, manufacturers, and customers can all participate and benefit.

Guatemala has agricultural resources, manufacturing capabilities, and talented people who can contribute to this transition.

Our work is about connecting those strengths.

We are still early in this journey, and many challenges remain. But every batch of fiber processed, every textile trial completed, and every new opportunity created reinforces why we started.

**What was once burned can become fiber. What was once considered waste can become economic value. **

And perhaps most importantly, the next generation of sustainable textile materials can create opportunities in the very communities where their raw materials originate.

Renewable energy, electric vehicles, critical minerals, transition finance and digital infrastructure are all essential to decarbonization. Yet being part of that shift does not automatically make an activity environmentally benign. A wind project can support clean power while affecting protected ecosystems. Mining the minerals needed for batteries can help electrify transport while placing additional pressure on water, land and local communities. Carbon projects can contribute to climate strategies while still raising questions about integrity or social impact.

As investment moves toward these activities, attention is moving with it.

RepRisk's latest Greenwashing Report found that the number of greenwashing-related incidents increased by 112% between 2022 and 2026, while the number of companies linked to greenwashing reached 1,594 in 2026. More revealing, however, is how that exposure is changing. Alternative energy, mining, industrial metals, utilities and software and computer services are all taking a larger share of greenwashing-related concerns.

Greenwashing is not disappearing as capital shifts toward climate solutions. It is following the energy transition.

Being low carbon is not the same as being low impact

For much of the past decade, corporate environmental performance has been framed primarily through carbon. That focus made sense. Emissions remain at the center of climate strategy, and moving away from fossil fuels is essential. But as companies go deeper into implementation, a carbon lens alone can hide important trade-offs.

RepRisk's data reflects that shift. For the first time in five years, ecosystems and biodiversity became the environmental issue most frequently linked to greenwashing risk, overtaking climate change and emissions. In alternative energy specifically, biodiversity and ecosystem-related concerns exceeded climate-related ones between 2022 and 2026.

This does not weaken the case for decarbonization. Rather, it shows why the next stage of the transition will require a broader understanding of impact. A project can genuinely reduce emissions and still create pressures elsewhere. Renewable infrastructure requires land. Batteries and grids depend on minerals. Industrial facilities use water. Large projects can reshape ecosystems and affect nearby communities.

The challenge, therefore, is no longer simply demonstrating that an activity contributes to lower emissions. Companies increasingly need to understand and explain the wider consequences surrounding it as well.

That makes broad labels such as "green," "clean" or even "sustainable" much harder to use without qualification. The more ambitious the language, the more important it becomes to understand what sits behind it. A claim that focuses only on the positive climate contribution of an activity may still present an incomplete picture if material impacts elsewhere are left out.

Greenwashing is becoming an operational issue

This is also why treating greenwashing primarily as a communications problem is becoming less useful.

Marketing teams can change the wording of a campaign, and legal teams can review a statement before publication. But neither can solve a project whose risks were poorly assessed, an investment whose impacts were not fully understood, or a sustainability strategy built around assumptions that cannot be substantiated.

The issue becomes even more complicated when the company making the claim is not directly operating the underlying asset. Banks and financial-services companies together remain the largest combined grouping of companies linked to greenwashing in RepRisk's 2026 data, with much of that exposure arising through the companies, assets and projects they finance, invest in or underwrite.

A financial institution can increase its allocation to transition finance and still face questions about the activities that capital supports. A company can purchase renewable energy while still needing to understand the land, biodiversity or community implications associated with a project. A technology company can position digital infrastructure as an enabler of decarbonization while facing growing attention around its own energy, water and resource demands.

In each case, the credibility of the final statement depends on decisions made much earlier. Procurement, investment approval, due diligence, supplier engagement, project design and governance all influence whether a sustainability claim can ultimately be defended.

That changes the role of communications. The task is no longer simply to find the right language for a sustainability initiative. It is to make sure the underlying business decision is strong enough to support the language in the first place.

Compliance and credibility are starting to diverge

At the same time, companies are operating in a regulatory environment that is becoming less uniform.

Some jurisdictions are tightening rules around environmental marketing and disclosure, while others are narrowing certain reporting or due-diligence requirements. RepRisk points to a growing distinction between what companies are formally required to disclose and what investors, regulators, customers or civil society may still expect them to substantiate.

That distinction could become increasingly important. A company may comply with a reporting requirement and still face criticism over an environmental statement. It may be required to disclose less in one area while facing more attention around what it chooses to say voluntarily. In that environment, reducing disclosure obligations does not necessarily reduce reputational or business-conduct exposure.

The data also suggests that the consequences are becoming more serious. Nearly one in four greenwashing incidents now involves severe allegations, compared with roughly one in six in 2022. Repeat exposure is also becoming more common, with three quarters of greenwashing incidents in 2026 involving a company that had already been linked to greenwashing in previous years.

Together, these trends point toward a different standard of sustainability credibility. Companies will increasingly need to trace their statements back to evidence, understand the trade-offs behind the activities they are supporting and communicate those trade-offs without pretending they do not exist.

The energy transition does not need fewer environmental claims. It needs better ones.

Companies can begin with three practical steps. First, build due diligence around both the intended climate benefits and material impacts on water, biodiversity and communities, documenting the evidence, assumptions and unresolved trade-offs. Second, require each environmental claim to have a supporting record that identifies its scope, source, limitations and the person responsible for keeping it current. Third, involve the teams responsible for the underlying project or investment in claim approval, alongside communications and legal, and reassess the wording when conditions or evidence change. This gives companies a clearer basis for deciding what they can credibly say and what still requires further work.

As investment continues moving into renewable power, minerals, infrastructure, technology and transition finance, the companies involved will face a broader set of expectations about what sustainability actually means. Being part of the climate solution will remain important, but it will no longer be enough, on its own, to prove that a project, product or business model is sustainable.

Today, there is an extraordinary opportunity in California. SB54, the new Plastic Pollution Prevention and Packaging Producer Responsibility Act, which comes to market in January 2027, incentivizes the transition from single-use packaging to a reuse economy. California is the 4th largest economy in the world, and has the potential to turbo-charge a new economic system where resources are valued, both literally and figuratively. This move will take time, energy and money for new waste systems, localizing consumer goods production and packing plants, changing behavior, and building alliances between the many links in the reuse chain. And SB54-generated funds will cover many of the costs.

We are former Greenpeacers who have been pivotal actors in transforming two industries - refrigeration and packaging. And our parent organization RESOLVE is leading a third transformation - mining. All three initiatives include multinational and small enterprises, civil society, cultural and labor groups, regional and national governments, engineers, scientists, and the United Nations. That's a lot of opinions to listen to and consider - all important.

Creating these catalytic alliances took tenacity, patience and courage - from everyone. Here's what we learned.

No matter what political and socio-economic winds are blowing, now is the time to socialize and exchange your ideas with those who oppose you. You may not achieve the desired change, but you will learn your missing links, and how and with whom you can overcome your obstacles.

Our most recent initiative, PR3: The Global Alliance to Advance Reuse, includes multinationals, informal waste labor, small reuse enterprises, environmental justice, science, health, and government leaders. We cross deep cultural and economic divides, and every timezone in the world...yet we arrived at consensus on a suite of new industry standards to undergird the growing reuse industry. We began building this coalition many years before SB54 became law.

When we both worked for Greenpeace in the 2000s, HFCs were the most important greenhouse gases no one ever heard of. They're thousands of times more potent than carbon dioxide and dissipate quickly. It was urgent they be phased out of refrigeration. After Greenpeace made a big noise against Coca-Cola and McDonald's, Coke, McDonald's and Unilever founded a consortium, Refrigerants, Naturally!, WITH Greenpeace and the United Nations Environment Programme. Pepsi joined soon thereafter.

Listen to people you mistrust as well as your adversaries or competitors. In addition to the Greenpeace/multinational chasm, Coke and Pepsi working together in a pre-competitive manner was newsworthy. After numerous meetings and dinners together, we ALL developed trust.

There is surprising common ground and mutual benefit where you least expect it. Some standards and U.S. Environmental Protection Agency (EPA) regulations had to be changed to legalize natural refrigerants. The chemical lobbyists told us it was never going to happen. But Claudette, an engineer on the international UL refrigeration committee, worked to modify the standards. She used peer-reviewed and market data, and the other committee members listened. Companies were ready to supply the U.S. market with a full array of HFC-free equipment immediately after the rules changed.

After our three major brand allies began changing their cooling equipment, they did something unexpected and world-changing. They invited Greenpeace to present its HFC phase-out request to the first Consumer Goods Forum Sustainability Summit. And the group agreed! A week after CGF announced its commitment to phase out HFCs at the COP in 2010, the U.S. Secretary of State invited the CGF CEOs to a meeting. With these corporations' blessing, the U.S. Government then began to flex its political muscle to include HFCs in the Montreal Protocol, anticipated to save up to 0.5?C of global warming. 175 parties have now ratified. Only an unlikely coalition could have achieved this milestone.

Coalition building has to begin before the legislation. NGOs are central players to de-risk markets for sustainable brands. We've been preparing for something like SB54 for eight years. When we co-founded PR3, we thought we'd create reusable packaging standards using the same playbook we used for HFCs. Nope.

We found early allies in Nestle and Cisco, and received funding from the Walmart Foundation, but were unable to rouse other consumer giants to champion reuse. (A few years in, Coca-Cola, Target, Ahold-Delhaize, Unilever, and Avery Dennison joined us to develop the standards.) Industry was reluctant despite clear data showing that reuse was the most effective and cost-efficient packaging system to reduce plastic waste. Until now. California's SB54, and other enabling and incentivizing regulation is coming soon to other U.S. states, the E.U., and other G20 countries.

SB54 became policy because NGOs of all stripes advocated for it over many years. There are six PR3 Standards covering the whole system, and we are launching certification shortly. The standards were designed to optimize and de-risk both environmental and economic performance, and ensure that workers and communities benefit from new reuse systems. If we had not spent the past eight years coalescing the full spectrum of players for successful reuse, and then developing industry standards with them, SB54 could not support reuse with interoperability, scalability, and security.

On PR3's Standards panel, we build consensus by dedicating sufficient time for every side to share its perspectives. Whether the priority is safety, environmental or public health, protecting jobs or maintaining a viable business, every perspective matters and is given an equal opportunity to be heard. When needed, we survey our workgroup and panel members to make sure every side can gather their thoughts and let us know how they really feel about the issue being debated. Sharing the findings with the full group leads to creative brainstorming of paths forward. With time, even the most contentious topics in the reuse standards were thoughtfully and successfully negotiated to consensus.

Finally, culture matters.

After thousands of meetings, trust has developed amongst our global and diverse Panel, and PR3's reuse industry standards are being adopted in numerous markets. They include a new reuse symbol introduced in June 2026 and already in use on every continent except Antarctica. As a visual narrative is so powerful, several other industries embracing circular economy have asked if they can use the symbol. In the coming year, we will develop criteria for using the symbol for textiles, fashion, and electronics reuse innovators.

Reaching systemic tipping points requires years of work from tenacious, courageous leaders from all ends of the spectrum. Despite pressures on every corporate department - from unpredictable costs/margins and tariffs, to marketing amid shifting cultural allegiances - now is the time to sow the seeds for change. The conversations you have today with your colleagues, adversaries and competitors mean that when the winds shift, you and your unlikely allies can make bold moves.

A product slows in one market, approaches its best-before date, and eventually enters a familiar sequence: markdowns, liquidation, returns, write-offs or disposal.

But the problem often begins much earlier.

Surplus inventory is rarely just a waste-management issue. It can result from disconnected decisions across forecasting, purchasing, pricing, allocation, distribution and demand generation. By the time those functions recognize the same problem, commercial options may already be limited.

A more useful question is not: "How do we liquidate this inventory?" It is: "Where, at what price, and through which channel does this inventory still have economic value?"

That question informed a framework I developed and tested through MuriMura, a zero-waste FMCG pilot that has since concluded. The objective was to treat surplus and short-dated inventory as a coordinated commercial system rather than an end-of-life disposal problem.

The more important lesson from the pilot was not the marketplace itself, but the operating framework behind it.

1. Identify surplus before it becomes distressed inventory

Most liquidation systems begin when a company already knows it has a problem. A recovery system should begin earlier.

Useful signals can include remaining shelf life, inventory velocity, recent sell-through, geographic demand, batch quantity, category performance and historical demand.

The goal is not to predict waste perfectly. It is to identify inventory whose probability of becoming surplus is rising while the business still has time to intervene. Every additional week of usable commercial life can create more options around buyers, pricing and distribution.

The first principle is simple: intervene while margin still exists.

2. Treat demand as a network, not a single channel

Inventory that performs poorly in one channel may still be valuable elsewhere. A slow-moving SKU in one geography could be attractive to a corporate purchaser, reseller, retailer, bulk buyer, institutional buyer, direct consumer or alternative commerce channel.

This changes the question from "How do we discount this product?" to "Where does this product still have the highest probability of selling?"

The principle can be applied without operating a marketplace. A brand or retailer could use the same logic internally by maintaining a ranked hierarchy of alternative channels for at-risk inventory.

3. Price inventory based on its actual condition

Blanket discounting is convenient, but it ignores the fact that the economic value of surplus inventory changes continuously.

Pricing should consider remaining shelf life, quantity, local demand, category sell-through, alternative-channel demand and minimum acceptable recovery value.

A product with substantial remaining shelf life and strong secondary-channel demand should not necessarily receive the same markdown as inventory approaching the end of its commercial window.

Dynamic pricing therefore becomes less about promotion and more about value recovery. The objective is to maximize expected recovered value before time erodes the available options.

4. Redistribution only works when buyers trust the inventory

A technically optimal price and channel do not guarantee sell-through. Short-dated inventory can suffer from perception problems, particularly when buyers misunderstand the distinction between product quality, safety and date labeling.

Any redistribution strategy therefore needs a trust layer: clear date information, transparency around product condition, appropriate safety information, consistent brand presentation and consumer education.

This communication should be treated as part of the operating system rather than an afterthought, especially for brands concerned about consumer perception or retailer relationships.

5. Measure both commercial recovery and waste avoided

The final step is measurement. A company should be able to answer how much inventory was recovered, what value was preserved, which channels performed best, how much inventory avoided write-off or disposal, and which interventions produced the strongest sell-through.

Each transaction can then become feedback for future purchasing, forecasting, allocation and pricing decisions. The model should operate as a loop rather than as a one-time liquidation process.

What early testing showed

The MuriMura pilot has concluded, but the testing period provided useful evidence that both sides of the system could engage.

Approximately 18 brand partners were onboarded within four weeks, four corporate purchase agreements were secured within about five weeks, a pipeline of more than 100 prospective buyers was developed, and multiple pilot orders were completed across packaged foods, personal care and cosmetics.

The pilot also progressed beyond expressions of interest into real product transactions. Products from participating brands were ordered and fulfilled for buyers across multiple locations, demonstrating that the commercial workflow could function in practice.

Some pilot activity was conducted with commercial partners under confidentiality obligations, so I cannot disclose all partner-specific volumes, pricing or commercial terms. The aggregate figures above are the traction metrics I can share publicly.

The pilot was intended to test whether brands would make inventory available, whether alternative demand could be identified, and whether the workflow could operate commercially. It provided early validation on each front.

At the same time, the pilot was not large enough to support broad claims about percentage margin recovered, total waste diverted or performance relative to traditional liquidation. Those are metrics a larger-scale implementation should measure systematically.

Where the framework can break

The framework is not universally applicable.

Timing is one failure point. If inventory is identified too late, there may not be enough commercial life remaining to find demand and move the product economically.

Logistics can also destroy the business case if transportation and fulfillment costs exceed the remaining inventory value. Channel restrictions may conflict with distributor agreements, retailer relationships or brand positioning. Poor data can undermine forecasting, while alternative-channel discounts can create pricing conflict with full-price partners.

Finally, sustainability measurement must be defensible. Claims about avoided emissions or environmental impact require clear methodology and should not be extrapolated beyond what the underlying data supports.

These limitations are not reasons to abandon the approach. They are reasons to build explicit decision rules into it.

The broader opportunity

The fundamental idea is applicable beyond one marketplace or company.

Any organization holding perishable or time-sensitive inventory can ask four questions earlier: What is likely to become surplus? Where does alternative demand exist? What price maximizes recoverable value? What can we learn from the transaction?

When those questions are treated as part of the same operating system, sustainability and commercial performance no longer need to sit on opposite sides of the organization.

Waste prevention becomes easier to scale when avoiding waste also preserves working capital. That may be the most important shift: treating sustainability not only as a cost or reporting obligation, but as a better way of designing the economics of inventory itself.

Each additional step adds time and project-development cost before the buyer can make an informed investment decision.

That delay has an economic consequence. If a solar, storage, EV charging or heat pump project is expected to reduce energy costs, improve resilience or support decarbonization goals, every unnecessary delay pushes those benefits further into the future.

Site Surveys Are Becoming Digital

For years, the first step in many solar projects has been a physical site survey. A technician visits the property, takes measurements, records roof dimensions and obstructions, photographs equipment and sends the information back to a design team.

That process still has an important role, particularly for complex sites and final engineering verification. But much of the information needed for early-stage design can now be captured digitally.

Tools such as LiDAR can capture three-dimensional site geometry, while photogrammetry can reconstruct site models from overlapping photographs. AI-assisted modeling can also help identify roof geometry and visible obstructions from imagery and available site data.

These technologies matter because inefficient site assessment and project-development processes can add time and cost before construction begins. The U.S. Department of Energy notes that slow or inefficient processes increase those costs, while software and process improvements can help reduce them.

The practical benefit is that structured site information can become available earlier in the project, allowing preliminary design and evaluation to begin sooner.

For C&I buyers with large or complex facilities, every additional site visit by the project team can require access coordination, staff availability and disruption to normal operations. If the information collected is incomplete or inconsistent, the installer may need to revisit the site or revise the design, further delaying the proposal the buyer needs to evaluate the project.

Where Digital Surveys Still Need Physical Verification

Digital site assessment does not eliminate the need for physical verification in every project. Structural roof conditions, electrical panels and switchgear, concealed equipment, cable-routing constraints, site access and safety conditions may still require an engineer or surveyor to inspect the facility in person.

Remote models also depend on the quality and recency of the underlying data. Outdated aerial imagery, poor photo coverage or inaccessible areas can leave gaps that need to be checked before final engineering and installation.

The goal, therefore, should not be to eliminate site visits entirely. It should be to reduce unnecessary pre-design visits and make the physical verification that remains more targeted and useful.

Why Faster Design Changes Project Economics

Design time is often treated as a technical or operational issue, but for C&I buyers it can directly affect how quickly a project reaches financial review and internal approval.

When project information moves through disconnected surveys, design and engineering processes, buyers may wait longer for revised layouts, technical assumptions and updated proposals. That can slow the point at which facilities, finance, procurement and sustainability teams have enough information to evaluate the investment.

For the buyer, a shorter design cycle brings the entire project forward.

That matters because commercial energy projects often require several stakeholders to align, including facilities, engineering, finance, procurement and sustainability teams. When the first usable proposal takes too long to arrive, momentum can disappear. Priorities may shift, capital budgets may change and internal approval can become harder to maintain.

This is why project-development speed can affect both cost and the timing of the buyer's return on investment.

This is where solar soft costs become important to the investment case. The U.S. Department of Energy classifies design, siting, permitting, interconnection, financing and customer acquisition among the non-hardware costs of a solar project. A 2023 U.S. national-lab cost benchmark estimated the cost of acquiring a single large customer for a comparable commercial PV system at about $0.041/Wdc, showing that customer acquisition remains a measurable project-development cost even at commercial scale.

We have seen the same dynamic in practice through our work at Reslink. Freyr Energy reduced the time required to move from initial site information to a customer-ready proposal from weeks to minutes after digitizing more of its survey and design workflow. For C&I buyers, a shorter design cycle can mean earlier access to the layouts, assumptions and financial information needed to compare options, secure internal approvals and decide whether a project should move forward.

Commercial Clean Energy Is Becoming a Multi-System Problem

This becomes more important as businesses move beyond standalone solar projects.

A commercial property considering rooftop solar may also be evaluating battery storage, EV charging or heat pumps. Traditionally, each system can involve its own survey, software, modeling process and specialist team.

As a result, the same roof, electrical infrastructure, load profile, parking area and site constraints may need to be captured multiple times for different technologies. Each additional workflow creates another opportunity for duplicated work and disconnected assumptions.

A more efficient model is to treat the site itself as the shared starting point.

Consider a logistics operator evaluating warehouse solar. It also needs to know whether the electrical room can take a battery, where chargers fit in the yard and whether heat pumps can replace gas heating. An accurate site baseline can support the early assessment of all four, alongside the relevant electrical, load and equipment data.

Once a facility has been accurately digitized, the same site information can support several clean energy decisions. Solar, storage, heat pumps and EV charging can then be assessed as connected systems rather than isolated projects.

In our work at Reslink, we often see installers assessing the same commercial property for more than one energy system. If relevant site information has already been captured accurately for a solar project, much of it can be reused when the customer later evaluates battery storage, EV charging or heat pumps. For the buyer, that can mean fewer repeat surveys, less disruption at the facility and a faster path to evaluating additional energy upgrades.

The Next Efficiency Gain Is in the Workflow

Clean energy hardware tends to dominate conversations about project economics, but a meaningful share of project friction happens before installation begins.

Survey labor, travel, design time, proposal preparation, coordination between teams and duplicated site work all contribute to project-development costs. Reducing them does not require removing engineering judgment or physical verification. It means applying each at the stage where it creates the most value.

A remote or digitally assisted survey can establish an earlier project baseline. That can give buyers earlier access to the layouts, system options and assumptions they need for financial evaluation, while engineering teams focus on the physical verification and detailed technical work required before construction.

The goal is not to remove people from the process. It is to remove unnecessary repetition.

For commercial and industrial buyers, the business case for on-site clean energy is also becoming broader. Solar can reduce electricity costs. Storage can provide flexibility and resilience. EV charging can support fleet transition. Heat pumps can replace fossil-fuel heating loads.

But none of those technologies creates value until it is approved, installed and operating.

That makes project-development speed an economic variable in its own right.

When project teams can reuse relevant site information across multiple clean energy systems, buyers can receive the information they need sooner, while installers and engineering teams reduce avoidable handoffs and duplicated work.

For commercial buyers, the practical benefit comes when project teams can capture site information accurately, reuse relevant data across clean energy systems and limit repeat work to where it is genuinely needed. That can shorten the path from assessment to approval and installation.

We often hear and share important numbers: people reached, liters replenished, systems installed, dollars invested. Those numbers matter. But after more than two decades working in social impact, I have learned that the most important results are usually the hardest to count. They do not live in a spreadsheet. They live in someone's day.

I saw what this looks like near PepsiCo's manufacturing facility in Kosi, India. Women in neighboring communities had spent hours every week collecting water for their families. After a rainwater harvesting structure was installed, that burden eased. When I had the privilege of visiting several years later, those same women were making and selling handmade crafts. They were using the time they once spent collecting water to become entrepreneurs, earn an income and create new possibilities for themselves, their families and their community.

The same shift was unfolding in a classroom nearby. At the local school, the lack of safe drinking water and sanitation created a significant barrier to regular attendance for many children, particularly girls. But installing infrastructure, including rainwater collection, filtration, hand-washing stations and toilets, was only the start. The students became leaders, maintaining the equipment, demonstrating stewardship and teaching hygiene practices to others. Since 2022, the program has trained 1,400 people, scaled across six villages, impacted 76,000 in the community and helped to conserve 28 million gallons of water.

These community members are not just beneficiaries. They are the leaders, operators, teachers, entrepreneurs and stewards who help make the life-changing impact of safe water sustainable.

Behind the numbers

Daily realities like these sit behind the numbers. Since 2010, PepsiCo and the PepsiCo Foundation have helped approximately 97 million people gain access to safe water, moving us closer to our goal of 100 million by 2030. I am proud of that progress, but access is just the beginning.

Through this work, three lessons have stayed with me:

• Look beyond the infrastructure to what it makes possible. A rainwater harvesting system, filtration station or school toilet may be the most visible result of an investment, but it is not the whole story. The impact beyond the tap shows up in hours returned to families, children able to attend school, stronger livelihoods and communities with greater control over their futures.
• Stay close and build for the long term. The value of an investment is not determined on the day it is completed. It is determined by whether it still works and still serves people years later. Lasting impact depends on colleagues who know the local context, capable community partners and relationships that continue long after installation. I have seen this focus across our PepsiCo India team, from colleagues in Delhi to employees living and working around Kosi. They work alongside local partners and communities not as distant donors, but as neighbors invested in helping the region thrive. No single organization can see everything on its own. That is exactly why proximity matters, and why we look to local colleagues and trusted partners to build alongside communities rather than for them.
• Invest in capabilities, not only capital. Funding can help build infrastructure, but lasting impact also requires pairing global expertise with local knowledge and community leadership. For instance, experts can help build understanding and protect local watersheds while communities are equipped to operate and maintain new systems. In Egypt, I have seen PepsiCo agronomists work alongside smallholder farmers, sharing irrigation and water stewardship practices that have helped farmers produce healthier, deeper-rooted crops, improve yields and increase incomes. Over three years, moving to improved irrigation methods saved more than 1.2 billion liters of water. Farmers adopting improved irrigation also saw an average 18% increase in crop yields and a 30% decrease in irrigation costs.

These lessons are especially important for companies connected to the food system. Water grows the crops we source, supports the communities where we operate and sustains the ecosystems we all depend on. None of this can be addressed alone. Lasting change requires us to think in generations, not projects, and to build in a way that communities, ecosystems and businesses can all carry forward together.

Our work to expand safe water access is part of a wider approach to water stewardship. By the end of 2025, PepsiCo had achieved 100% water replenishment at company-owned manufacturing facilities located in high-risk watersheds. These efforts are connected because they often support the same watershed. Replenishment helps restore the local water resources on which communities and businesses rely, while safe water programs help turn that shared resource into reliable access for people. Investing in both aims to create a reinforcing cycle that strengthens water security for communities while helping build the resilience of the places where businesses operate, source ingredients and employ people.

Reaching 100 million people will be a milestone worth celebrating. But numbers, infrastructure and investments tell only part of the story. We should look beyond what was installed to what people and communities can do because of it. We should invest in the capabilities and local leadership needed to sustain impact. And most importantly, we should stay connected and engaged for the long term.

After more than two decades in this work, what stays with me is not the infrastructure installed. It is the lives changed. That is what matters most.

Digital Product Passports (DPPs) are emerging as a way to provide that information. While regulations such as the European Union's Ecodesign for Sustainable Products Regulation (ESPR) are accelerating adoption, DPPs represent more than another compliance requirement. They are changing how companies collect, manage, and share product information across complex global supply chains.

For retailers, brands, manufacturers, and suppliers, preparing for DPPs creates an opportunity to improve supply chain visibility, strengthen collaboration, support circularity, and provide the transparency that customers and regulators now expect.

What Is a Digital Product Passport?

A Digital Product Passport is a structured digital record that accompanies a product throughout its lifecycle. Typically accessed through a QR code, RFID tag, or another digital identifier, it can provide information about how a product was designed, manufactured, tested, transported, used, repaired, and ultimately recycled or disposed of. Unlike a traditional product label, a DPP can provide a more comprehensive digital record that follows the product through its lifecycle and can be updated as relevant information changes.

Depending on the product category, a DPP may include:

• Product identification and serial information
• Material composition and bills of materials
• Country of origin
• Carbon footprint and environmental impact data
• Manufacturing and supplier information
• Certifications and declarations of conformity
• Repair and maintenance instructions
• Spare parts availability
• Recycling and end-of-life guidance
• Verification of no restricted substances

The goal is a standardized, machine-readable source of product information that can support stakeholders from raw material sourcing through end-of-life recovery.

Beyond Compliance: Visibility, Circularity, and Trust

The EU is leading DPP implementation through the ESPR, with requirements expected to affect industries including batteries, textiles, electronics, furniture, and other consumer products. For many organizations, compliance will be the immediate reason to act. However, building the capabilities needed for DPPs can also expose longstanding gaps in supply chain data.

Creating a DPP requires companies to gather, verify, and maintain accurate information across multiple supplier tiers. That process can reveal fragmented information, inconsistent data, and limited visibility into upstream suppliers. This is particularly important because many organizations have detailed relationships with their direct suppliers while having less visibility into the facilities producing raw materials, components, or subassemblies further upstream.

Those suppliers can have a significant influence on a product's environmental footprint, compliance status, and overall risk profile. Greater visibility can help organizations better understand product origins, identify risks earlier, verify sourcing claims, strengthen supplier collaboration, and respond more quickly to regulatory inquiries. Instead of discovering issues after a product reaches the market, companies can work toward identifying potential concerns earlier in the sourcing and production process.

DPPs can also support the transition toward more circular product lifecycles. Product information is often lost once an item leaves the manufacturer. Repair professionals may lack information about replacement parts, recyclers may not know the composition of materials, and consumers may have limited guidance about extending a product's useful life or disposing of it responsibly.

Making this information accessible can support repair, reuse, refurbishment, remanufacturing, and recycling. It can also give manufacturers greater insight into how products perform after sale. Transparency is another important piece of the equation. Consumers are skeptical of broad sustainability claims without supporting evidence.

DPPs offer brands an opportunity to provide more verifiable information, giving consumers access to details about materials, manufacturing, environmental impacts, certifications, sourcing, repair, and recycling. Rather than asking customers to simply trust a sustainability claim, organizations can provide the information behind it.

The Data Challenge Behind DPPs

The concept of a DPP may be straightforward. Building the information foundation required to support one across a global supply chain is considerably more complicated. Product information frequently resides across disconnected systems and business functions. Data may be spread across product development, enterprise resource planning, supplier management, logistics, quality management, and certification processes.

At the same time, many suppliers continue to rely on spreadsheets, email, and manual documentation. Collecting information through these processes can be time-consuming and can introduce inconsistencies or errors. This creates a fundamental challenge for organizations preparing for DPP requirements. The quality of the passport ultimately depends on the quality of the information behind it.

Artificial intelligence is also beginning to play a role in addressing some of these data challenges. AI can help extract information from supplier documents, identify missing records, assess data quality, and flag potential risks. Used appropriately, these capabilities can reduce some of the manual work associated with maintaining product information while helping organizations identify gaps earlier, though technology alone does not resolve the underlying challenge. Organizations also need clear data ownership, consistent processes, and supplier participation.

Preparing for What Comes Next

Although DPP requirements are being introduced in Europe, transparency expectations are unlikely to stop at regional borders. Customers, business partners, and regulators in other markets may expect more detailed information about products and their environmental and social impacts. Preparation therefore involves more than collecting data for a future regulatory deadline.

Companies should evaluate how product information is captured throughout the product lifecycle, assess supplier readiness, strengthen data governance, and improve collaboration among procurement, compliance, sustainability, product development, and logistics teams. These efforts can help organizations move from a reactive approach to one in which product information is treated as an ongoing business asset.

The broader opportunity is to make product information more useful to more stakeholders:

• Manufacturers and suppliers can use it to improve collaboration
• Compliance teams can use it to support due diligence
• Sustainability teams can use it to substantiate environmental information
• Brands can use it to support marketing claims and additional revenue streams
• Repair professionals and recyclers can use it to support longer product lifecycles
• Consumers can use it to make more informed decisions

DPPs may have been accelerated by regulation, but their implications extend much further.

As supply chains become more complex and expectations for transparency continue to grow, companies that improve how they collect, verify, and share product information can strengthen visibility, support circularity, and build greater confidence in their products. The passport itself may be digital. The larger transformation is how businesses understand, manage, and communicate a product's story from its beginning to its end.

Make the product easy to take apart. Separate the materials. Send each one into its own recycling stream. It sounds sensible, and sometimes it is.

But after years spent around wood in a small plywood factory in Hokkaido, Japan, I've started to wonder whether we think too much about how a product should end before we think enough about how it should live.

Wood makes this question hard to ignore. A thin sheet can curl when humidity changes. A piece that looks perfectly flat can behave differently as conditions change. Grain direction matters, species matters, even the weather outside the factory can affect what happens inside it. We deal with these small movements every day, so when we develop a wood-based material, the first question isn't usually how easily it can be taken apart later. It's how to make it stay where we put it.

One approach we use is to laminate thin veneers of domestic hardwoods -- Japanese birch and basswood -- with layers of recycled colored paper.

Building the material up in thin layers, with alternating grain directions and dense paper between them, reduces the movement that makes thin wood difficult to keep dimensionally stable.

But the construction is only part of the story. What interests me more is what happens once that construction becomes visible.

I founded "bosje" partly to explore this. Rather than hiding the layered structure under a surface finish, we let it become the design itself: the alternating wood and colored paper create stripes that run straight through the material, into its edges and cross-sections.

Nothing here is printed on. The stripes are the material.

That distinction matters to me, because sustainability is so often presented as something that needs explaining -- recycled content, certifications, carbon figures, end-of-life pathways.

Those things matter. But I think we sometimes forget a simpler reason people hold onto things: they like them.

A material can be technically responsible and still get thrown out if nobody wants to live with it. An object that's useful, durable, and beautiful enough to become part of someone's life is more likely to be kept -- not as an environmental decision, but as the obvious thing to do.

This is where I think design has a role in circularity that's easy to overlook.

A stable material is less likely to warp, split, or become unusable. A repairable object stays in service longer. And an object whose visual identity deepens through use has a real chance of being kept rather than replaced.

None of this means recyclability doesn't matter -- for plenty of products, separating and recycling materials is exactly the right answer.

What concerns me is when recyclability becomes the starting point of the design brief, ahead of durability, repairability, and whether anyone actually wants the object.

A product engineered to come apart easily may well be easier to recycle. But if getting there means compromising how it's built, how long it lasts, or whether it's worth keeping, it's worth asking what was actually gained.

Perhaps recyclability should be a safety net -- not the destination we design toward from day one.

Because circularity isn't only about what happens after a product is finished. It is also about everything we can do to keep it from becoming finished in the first place.

I've spent much of my career thinking about how materials can become more sustainable. Working with wood taught me to ask a slightly different question: not just what happens to a material when it's finished, but what makes someone want to keep it in the first place.

That, I think, is where circular design should really begin -- not at the point of disposal, but much earlier, with the question of why the object needs to get there at all.

That question captures a tension I have encountered in sustainable product innovation. Teams can explain what makes an improvement environmentally valuable long before they can explain what makes it commercially compelling.

In one programme, we explored introducing recycled material into selected components for the first time. The opportunity was to reduce the use of virgin material and improve resource efficiency. Sustainability had surfaced in customer research, but only at a high level. We still needed to understand whether helping customers contribute to that resource saving would give them a meaningful reason to choose the product.

The new material also required further technical validation. With insufficient material de-risking and customer validation, the initiative was postponed. A promising idea had reached a decision point before the evidence was ready.

There is no universal sustainable value proposition. A feature that creates differentiation in one category, market or customer segment may be irrelevant in another. The job of sustainable innovation is therefore not simply to reduce a product's environmental impact, but to understand where environmental improvement and customer value genuinely intersect.

Four questions help make that intersection visible while product specifications can still change.

Which Customer Need Does the Improvement Serve

For the recycled-material initiative, the customer did not need to become interested in the composition of a particular component. The relevant benefit was contributing to resource efficiency through reduced demand for virgin material. The question was whether that benefit mattered enough to influence preference, alongside everything else the customer expected from the product.

A sustainability feature can offer practical value, such as lower energy bills or fewer replacements. It can also help customers act on their values. Both deserve investigation. Assuming every environmental improvement must save the buyer money is as limiting as assuming every buyer will pay more to support it.

A 2022 review of 46 studies on products made from recycled materials identified environmental benefits, perceived quality, safety, risks, emotions and individual differences as factors influencing consumer acceptance. The authors also noted that positive attitudes towards these products frequently did not translate into purchases.

What Evidence Supports That Need

Our customer research offered a useful signal. It had not tested the resource-efficiency benefit as part of a concrete product proposition. A topic appearing in research should prompt better questions, rather than quietly become proof of demand.

A choice experiment involving 800 UK respondents tested a hypothetical circular economy score alongside price, battery life, warranty, appearance and other attributes for mobile phones and robot vacuum cleaners. The score ranked fifth in importance for phones, and third or fourth for robot vacuum cleaners, depending on the experimental scenario. The experiment measured stated preferences rather than actual purchases. Differences also appeared within a single market.

McKinsey's 2025 packaging survey across 11 countries reported that 25% of high-income millennials in Germany said they would pay "a lot more" for sustainable packaging, compared with 1% of high-income Gen X consumers. These figures concern stated willingness to pay for packaging.

Purchasing data provide another perspective. NYU Stern and Circana's 2025 Sustainable Market Share Index, released in April 2026, reported that sustainability-marketed products accounted for 25.4% of dollar sales in the US consumer packaged goods market analysed, and nearly half of its growth since 2013.

What Trade-Offs Are Acceptable

The recycled-material decision had two unresolved sides. Customers needed a meaningful proposition, and the new material needed to meet product specifications. Enthusiasm on either side could not complete the work on the other.

Material validation should examine performance, manufacturing consistency and quality, as well as supply availability. Customer assessment should explore the proposed benefit alongside price, functionality and experience. A resource-efficient product still has to do its job.

PwC's 2024 Voice of the Consumer Survey reported that some consumers said they would pay, on average, 9.7% more for goods meeting specific environmental criteria, including those made from recycled materials. PwC cautioned that this willingness might not translate into actual spending because of inflation, macroeconomic volatility and cost-of-living concerns.

Another programme made this tension particularly visible. New legislation on battery replacement required changes to a product's design layout. A regulatory requirement had become a product-experience question, prompting substantial investment in a dedicated customer assessment.

The assessment addressed how customers would respond to the changed design. Compliance set the boundary; customer understanding was needed to shape the proposition within it. A replaceable battery may offer longer use, but the design and the customer experience also has to make sense to the person holding the product.

Which Benefits Can Be Communicated Credibly

For the recycled-material proposition, "uses less virgin material" offers a clearer explanation than an undefined promise of being more sustainable. It also creates a specific evidence requirement: the claim must accurately describe the material saving and its scope. Recycled content in selected components cannot justify implying that the entire product is recycled or environmentally superior in every respect.

The battery example poses a similar challenge. Replaceability creates the possibility of extending use. Whether customers realise that benefit can depend on replacement cost, access to parts and ease of replacement. A design feature and a promise about its outcome require different evidence.

These questions belong in development. Leaving them until launch asks communication teams to solve uncertainties that the specification brief should already have addressed.

Give Sustainability a Role in the Reason to Choose

The postponed material initiative and the battery assessment exposed the same need from different directions: connect environmental intent with customer understanding before decisions become expensive to change.

The specification brief should make that connection explicit, naming the customer benefit, target market and segment, acceptable trade-offs and evidence still required. This gives research and technical teams a shared decision to work towards.

The question for sustainable innovation is therefore not simply whether a product can be made more sustainable. It is whether sustainability can influence the choices that determine why the product deserves to exist, why a customer would choose it and why the business should invest in it.

It's an understandable concern. The EUDR places significant new obligations on companies trading products linked to deforestation and forest degradation, requiring unprecedented levels of traceability throughout global supply chains. But by looking at this solely through the lens of compliance, you risk overlooking a larger shift already underway.

At its core, EUDR represents a new expectation of business accountability -- one beyond sustainability claims and certification schemes that values verifiable evidence, measurable outcomes, and transparent sourcing practices. For organisations willing to embrace that shift, this offers an opportunity to strengthen supply chain resilience, improve risk management, and build greater trust with stakeholders.

What Makes EUDR Different?

The EUDR applies to a range of commodities associated with deforestation, including cattle, cocoa, coffee, palm oil, rubber, soy, and wood, as well as many derived products. Companies placing these products on the EU market, making them available within the EU, or exporting them from the EU must demonstrate that they are deforestation-free and produced in accordance with the laws of the country of origin.

What makes the regulation particularly significant is the level of evidence required.

Historically, many organisations have relied on certification schemes and supplier declarations to support responsible sourcing claims. While these systems continue to play an important role, EUDR raises the bar considerably. Businesses must now provide precise geolocation data showing where commodities were produced and demonstrate that the land has not been subject to deforestation after the regulation's cut-off date.

In practical terms, this means organisations can no longer rely solely on broad assurances about responsible sourcing. They must be able to trace materials back to their origin and substantiate claims with detailed documentation.

For many industries, this represents a fundamental transformation in how supply chains are managed.

What Are the Challenges?

Businesses shouldn't underestimate the scale of the challenge. Many global supply chains involve multiple intermediaries, fragmented data systems, and varying levels of digital maturity. Gathering accurate information from every supplier, verifying its accuracy, and maintaining it over time can be resource-intensive.

Smallholders and smaller suppliers may face particular difficulties in meeting new traceability requirements, creating risks of exclusion from international markets if support mechanisms are not in place.

At the same time, companies must navigate evolving reporting processes, data management requirements, and heightened regulatory scrutiny. Those that get it wrong face significant consequences, ranging from financial penalties and product seizures to reputational damage.

Yet these challenges are not unique to EUDR. They reflect broader pressures businesses are already experiencing as investors, customers, and regulators increasingly demand greater visibility across environmental and social impacts.

In that context, EUDR can be viewed not as an isolated regulatory burden but as part of a wider transition toward more transparent and accountable value chains.

Why Transparency Is a Competitive Advantage

The most forward-thinking organisations recognise that traceability is no longer just a risk-management exercise.

Access to high-quality supply chain data can help you identify inefficiencies, reduce operational risks, and respond more effectively to disruptions. It can improve supplier relationships, strengthen procurement decisions, and support broader environmental and social objectives.

In the wood products sector, for example, traceability systems can provide greater visibility into sourcing practices, helping organisations verify legality, monitor resource use, and better understand the environmental impacts associated with raw materials.

This level of insight is becoming increasingly valuable as businesses face growing expectations around biodiversity protection, climate resilience, and responsible resource management.

The organisations that invest in robust traceability systems today are likely to be better positioned for future regulatory developments, stakeholder expectations, and market demands.

Supporting a Culture of Accountability

Perhaps the most significant aspect of EUDR is the cultural shift it encourages.

For years, sustainability discussions have often focused on commitments, targets, and policies. While these remain important, stakeholders increasingly want evidence of implementation and measurable progress. The EUDR reflects this evolution by embedding accountability directly into business operations.

Companies must not only make claims about sourcing practices but also demonstrate, through data and documentation, that those claims are accurate.

This shift has implications far beyond forestry and agricultural commodities. It signals a broader movement toward evidence-based sustainability management, where transparency becomes an operational capability rather than a communications exercise.

For business leaders, this creates an opportunity to strengthen collaboration across procurement, sustainability, compliance, risk, and technology functions. Successful implementation depends not on a single department but on integrated approaches that connect data, decision-making, and governance throughout the organisation.

Turning Regulatory Pressure Into Long-Term Value

There is little doubt that EUDR introduces new complexity for businesses. Many organisations will need to invest in digital systems, supplier engagement programmes, and enhanced due diligence processes to meet the regulation's requirements.

However, focusing exclusively on the costs risks missing the strategic value these investments can generate.

Greater transparency can improve supply chain resilience. Better data can support more informed business decisions. Stronger traceability can enhance stakeholder confidence and reduce exposure to environmental, legal, and reputational risks.

For companies operating in resource-intensive industries, these capabilities are becoming increasingly important as nature-related risks move higher on corporate agendas and biodiversity considerations become more deeply integrated into business strategy.

At EGGER, the principle that wood is a valuable resource has shaped business decisions for decades. Working with wood in cascading and circular systems requires visibility, accountability, and long-term thinking across the value chain. While regulations such as EUDR raise expectations for all market participants, they also reinforce an important reality: responsible resource management depends on understanding where materials come from, how they are sourced, and how they are used.

The most important legacy of EUDR may not be the compliance processes it creates, but the transparency it encourages. In an era where stakeholders increasingly expect businesses to substantiate their environmental commitments, the ability to provide credible, verifiable evidence is becoming a defining characteristic of responsible corporate leadership.

The companies that see EUDR as an opportunity to build that capability -- rather than simply another regulatory hurdle -- may find themselves better equipped for the future of business.

Business and society are entering a phase in which incremental change is no longer sufficient. The challenges we face -- ecological degradation, social fragmentation, economic volatility, and institutional fragility -- are not isolated problems. They are systemic. They require new ways of understanding and responding to a rapidly changing world.

This article introduces a Synthetic Strategy(TM) lens for understanding how changing systemic realities reshape the conditions for future value creation--and how leaders can identify emerging opportunity spaces and shape strategic trajectories in response.

These systemic shifts are not simply creating new risks. They are reshaping the conditions for future value creation. As realities change -- including those connected to nature, society, technology, and markets -- new opportunity spaces emerge, while existing assumptions become less reliable. The strategic challenge for leaders is no longer adaptation alone, but understanding which trajectories are emerging and how they can be actively shaped.

From Control to Coherence

As systemic realities become increasingly interconnected and volatile, management approaches that focus primarily on isolated economic, operational, or market variables become less reliable. Strategies built on static assumptions often struggle when environmental, social, technological, economic, and geopolitical conditions are simultaneously shifting.

The challenge is not simply managing greater complexity. It is maintaining coherence between organisational strategy and the realities shaping future outcomes.

This requires a different strategic capability: the ability to continuously interpret changing conditions, integrate signals across multiple systems, and align decisions with emerging realities rather than outdated assumptions.

In this context, coherence becomes a source of strategic advantage. Organisations that remain aligned with changing real-world conditions are better positioned to identify emerging opportunity spaces, navigate risk, and shape viable strategic trajectories. Under conditions of strategic transition, disciplined responsiveness increasingly outperforms rigid control.

The Cognitive Challenge of Strategic Transition

As systemic realities change, leaders are increasingly required to make decisions across longer time horizons, multiple stakeholder interests, and interconnected risks. Yet many organizations continue to rely on assumptions, governance models, and planning frameworks developed under very different conditions.

The challenge is not simply having more data or better forecasting tools. It is the ability to integrate signals across nature, society, technology, markets, and geopolitics, and translate them into coherent strategic choices.

This requires a form of synthetic cognition: the capacity to connect fragmented information, recognize emerging patterns, and understand how shifting realities create both new risks and new opportunity spaces.

In practice, this becomes strategic transition: shaping organizational trajectories that remain viable under changing real-world conditions while creating value in the process.

When Strategic Assumptions No Longer Match Reality

The metacrisis is not merely a convergence of environmental, social, and economic challenges. It reflects a growing gap between the assumptions embedded in leadership, strategy, and institutions and the systemic realities now reshaping the conditions for future value creation.

Today, organisations are increasingly required to simultaneously operate within existing market conditions while positioning for a future shaped by accelerating environmental, technological, social, economic, and geopolitical change. Yet many continue to rely on planning assumptions, governance models, and performance frameworks developed for a more stable and predictable environment.

This tension is becoming increasingly visible across sectors.

A concrete illustration is emerging in the insurance industry. As former UN climate chief Christiana Figueres has relayed from senior industry leaders, warming beyond 2?C risks creating a world that is systemically uninsurable. Such a world would not only affect insurance markets; it would trigger cascading consequences across property values, financial stability, inequality, displacement, and trust in institutions.

In parallel, trust in governance remains fragile, while current climate trajectories continue to point toward levels of warming that many senior global leaders and scientists have described as profoundly destabilising.

Recent economic analysis further sharpens the picture. Research by Boston Consulting Group and the University of Cambridge suggests that productivity loss--not physical asset destruction alone--is likely to become a primary driver of long-term economic damage from climate change. As heat stress, disruption, and instability accumulate, organisational performance is affected across industries, sectors, and geographies.

These developments are not isolated challenges. They are signals that many of the assumptions underpinning strategy, governance, risk management, and value creation no longer fully match emerging realities.

The challenge for leaders is therefore not simply responding to change. It is developing the strategic capability to recognise shifting conditions, identify emerging opportunity spaces, and shape trajectories that remain viable under those conditions.

Synthetic Strategy and the Capacity to Shape Strategic Transition

If changing systemic realities are reshaping the conditions for future value creation, the central strategic challenge is no longer prediction alone. It is the ability to integrate signals across nature, society, technology, markets, and governance, and translate those signals into coherent strategic direction.

This capability can be described as Synthetic Strategy(TM): the ability to integrate signals across changing systemic realities, connect fragmented information across systems, time horizons, and stakeholder interests, and translate that understanding into actionable strategic judgement.

Rather than reacting to isolated events, organisations applying Synthetic Strategy seek to understand the deeper forces shaping emerging realities, identify new opportunity spaces, and actively shape strategic trajectories in response.

Key characteristics include:

• Systems awareness across interconnected realities
• Long-horizon strategic judgement
• Detection of emerging opportunity spaces
• Integration of economic, environmental, technological, and social signals
• Capacity to navigate uncertainty without losing direction
• Alignment between strategic ambition and real-world conditions
• Disciplined experimentation and adaptive learning

Organisations that develop these capabilities are better positioned not only to manage disruption, but to shape strategic trajectories aligned with emerging realities. In an era of systemic transition, competitive advantage increasingly depends on the ability to recognise where future conditions are heading and act before those conditions become obvious to everyone else.

Capturing Opportunity in an Era of Strategic Transition

The challenge of strategic transition is not simply identifying emerging risks. It is recognising where changing systemic realities create new opportunities for value creation, innovation, resilience, and competitive advantage.

The economic case is increasingly clear. Allowing global warming to reach higher levels carries significant long-term economic consequences, while investments in mitigation and adaptation can help reduce future disruption and unlock new areas of growth.

One reason action has lagged is a timing mismatch embedded within many business and capital allocation cycles: investments are required today, while many consequences emerge later. As a result, short-term performance frameworks often underestimate long-term strategic risks and opportunities.

The leadership challenge is therefore to translate strategic insight into coordinated action through capital allocation, portfolio choices, governance, incentives, and execution systems designed for strategic transition.

This shift is increasingly visible across industries. B Lab's global network continues to expand, while companies such as Velux have demonstrated that reducing emissions and strengthening competitiveness can reinforce one another rather than compete. Strategic transition is no longer solely about risk management. It is becoming a source of innovation, resilience, and future value creation.

Organizations that develop the capability to identify emerging realities, recognise new opportunity spaces, and shape strategic trajectories will be better positioned to thrive as systemic conditions continue to evolve.

Continue the conversation This article forms part of a three-part exploration of strategic transition, systemic change, and emerging opportunity spaces.

Read Part 1: When Strategy No Longer Holds. A New Mind Architecture For Leading Under Complexity.

In a related Leadership for Systems Transformation dialogue, Sandja Brugmann and John Fullerton, Founder and President of Capital Institute, explore how changing economic systems create new possibilities for regeneration, resilience, and long-term value creation.

Listen on Spotify | Watch on YouTube

Four project members shared their insights into the initiative, which not only incorporated tools that help reduce environmental impact into the business, but also created opportunities to deepen environmental awareness among customers and employees.

A bag with an understated, durable design that helps reduce environmental impact

It all started in early 2024 when Hitachi Property and Service embarked on a new project to promote the circular economy. Reflecting on the endeavor's early days, project member Kazuki Ogura explains what led them to choose paper bags.

"We thought long and hard about what we in the company's condominium business could do to promote the circular economy. We first thought of service-based ideas, but then someone suggested creating something tangible instead. In the end, we decided to go with bags made from OUT OF THE WOODS(R) washable paper."

What mattered most was finding an approach that would also get customers thinking about environmental issues. By showing how the company thinks about and acts on everyday environmental issues that are within reach, they wanted to convey that Hitachi is committed to shaping the future through these small actions.

"When purchasing a condominium, customers receive a substantial amount of paperwork, so it is important that the bag is durable. In addition, its understated look and feel, which does not appear inexpensive, made it a good fit as part of the condominium's branding," says Atsuhito Yasukawa.

Yuka Akagi, who personally handed the bags to customers, recalls their reactions at the time: "What left the strongest impression on me was a customer saying, 'It's amazing to see how seriously Hitachi is approaching these initiatives. It's just like Hitachi to pay attention even to the materials used for its eco-bags.' It made me realize once again that people have an image of the Hitachi Group as being actively engaged in sustainability, including environmental initiatives. While I felt proud of that, I also found myself wondering whether we are truly as environmentally conscious as we believe we are, and whether we are really taking actions that are good for the environment." Akagi's question was also reflected in the results of a survey conducted when the bags were distributed to company employees.

Survey insights that spark the first steps toward change

The circular economy project team distributed the same bags to their fellow employees so that they could experience the material texture and utility firsthand. Another goal of the project was to raise awareness of forest-related environmental issues as a company that works with real estate developed using forest resources. To this end, they conducted an employee survey to understand more about their environmental awareness and behavior.

"We asked questions such as, 'Are you familiar with the circular economy?', 'Do you engage in environmentally conscious behaviors?', and 'Do you actually purchase environmentally conscious products?' Nearly half of the employees answered 'yes' to the first question, but more respondents selected 'neither' for the subsequent questions. This suggests that although employees have knowledge and information about environmental issues, these do not necessarily translate into environmentally conscious actions or purchasing behavior," says Ogura.

Moving from awareness and interest to actually changing one's behavior is not easy. That is precisely why using a bag--something people see and use in their daily lives--as a way to convey messages about environmental issues is so meaningful.

While these efforts have yet to fully translate into action, Ayaka Tabira noted that some younger employees in their 20s and 30s clearly responded that they are already taking action. The results also suggest that there is potential for further change in the future. The next generation is likely to play a central role in efforts to reduce environmental impact and advance the circular economy, accelerating progress in these areas.

Through this project, Hitachi Property and Services is working together with its customers to think and take action on environmental issues in ways that are close to everyday life, steadily connecting these efforts to a more sustainable future.

Related Links

• Hitachi Property and Service, Ltd.: https://www.hitachi-property.co.jp/
• OUT OF THE WOODS(R) washable paper bag: https://www.pipeline.jp/oot/

The 2026 edition of the Global Trends in Climate Change Litigation report from the Grantham Research Institute at the London School of Economics tracks more than 3,600 climate cases filed since 1986. More than three quarters of them have been filed since the Paris Agreement in 2015, and cases have now been documented across 62 countries, compared with 17 a decade ago. In 2025 alone, 249 new cases were filed.

For companies, however, the more relevant development may be where litigation is heading.

More than 50 strategic climate aligned cases were filed against companies in 2025, bringing the total since 2015 to 434. The defendants now span energy, finance, transport, real estate and consumer goods, while litigation is increasingly reaching businesses further along emissions intensive supply chains.

That expansion should get the attention of sustainability leaders.

Climate litigation cannot be treated as an issue concentrated among a relatively small group of fossil fuel companies. As climate considerations enter regulation, investment decisions, product claims, infrastructure planning and corporate governance, the potential points of legal exposure are also expanding.

The risk is becoming more distributed

One of the most useful aspects of the report is the range of litigation strategies it identifies.

Companies can face cases related to their overall contribution to climate change, their governance and transition plans, their management of physical climate risks, the way directors manage transition risk and the accuracy of environmental claims. Climate washing alone accounts for at least 226 cases globally since 2015, according to the report. Failure to adapt, transition risk and cases seeking changes to corporate policies and governance represent additional areas of activity.

New areas are also appearing. The report identifies litigation involving carbon removal infrastructure, data centres and plastics, illustrating how legal arguments are following the evolution of climate policy and investment.

For sustainability teams, this creates a different type of risk landscape. A company does not need to operate an oil field to have climate related legal exposure. Decisions around financing, procurement, infrastructure, advertising, resilience and product strategy can all create connections.

This also means that identifying exposure requires a broader view of the organization. Sustainability teams need to understand where climate considerations enter important decisions, which jurisdictions the company operates in, what claims are being made publicly and where physical or transition risks could affect assets and operations.

Better climate communication requires better evidence

Climate washing remains one of the clearest examples.

More than 65% of climate washing cases that have reached a decision have been resolved in favor of claimants, according to the report. At the same time, annual filings have declined from 58 cases in 2023 to 31 in 2025. The authors suggest several possible reasons, including greater corporate awareness of the risks associated with unsupported environmental claims.

The report specifically warns that greenhushing does not eliminate litigation exposure and argues that well evidenced transition plans and substantiated disclosure can help companies manage risk.

That has an important implication for how sustainability communication should be managed. Environmental claims increasingly need to be connected to evidence, governance and implementation. A target should have a credible pathway behind it. A product claim should be supported by the methodology used to reach it. A transition plan should connect ambition with investment and operational decisions.

Communications teams cannot solve this at the end of the process. The quality of the claim depends on the quality of the underlying sustainability work.

Climate litigation should influence how sustainability teams assess risk

The report also shows how legal exposure is spreading through interconnected corporate relationships.

Financial institutions and state owned enterprises are defendants in at least 42 strategic climate aligned corporate cases, with more than 40% of those filed since 2023. Insurers and shareholders are also appearing as claimants as they seek to recover losses associated with extreme weather, while regulators are taking action around the assessment of climate and environmental risks.

This makes climate litigation relevant to areas that sustainability teams may not traditionally have treated as part of their remit.

Supplier due diligence, capital allocation, adaptation planning, environmental impact assessments and public claims can all have a legal dimension. The appropriate response is therefore unlikely to come from sustainability or legal teams working separately. It requires coordination across legal, risk, finance, operations, communications and sustainability.

The report also stresses that the picture varies significantly between jurisdictions. The regulatory environment is fragmenting, particularly around ESG, while legal strategies are increasingly crossing borders as claimants and courts learn from cases elsewhere.

Companies operating internationally will need to understand that exposure accordingly.

A broader role for sustainability leadership

There is a tendency to discuss climate litigation after a lawsuit has been filed. By then, many of the underlying decisions have been made.

Are climate risks properly reflected in investment decisions? Can environmental claims be defended with evidence? Do transition plans connect with actual capital expenditure? Are physical climate risks being incorporated into asset planning? Does the company understand potential exposure across its supply chain and markets?

These are sustainability questions, but they increasingly carry legal and financial consequences.

The Grantham report concludes that climate litigation has established itself as a permanent feature of global climate governance. Courts are now hearing cases involving governments, companies, banks and financial institutions, while litigants are learning from one another across jurisdictions.

For sustainability leaders, that makes litigation another source of information about where expectations around corporate climate performance are heading. Understanding those signals early can help companies make better decisions before they have to defend them in court.

The emissions tied to producing that equipment have already occurred. If a usable asset is scrapped too early, it delivers less productive life from the materials and energy already invested in it.

Reuse keeps that equipment working longer and reduces the need for new manufacturing.

For manufacturers, that makes industrial surplus reuse a practical way to support asset recovery while reducing carbon emissions.

The Carbon in Industrial Equipment Already Exists

Embodied carbon refers to the emissions created before an industrial asset begins operating. It comes from producing the materials, components, and finished equipment that make up the asset.

By the time a machine reaches a facility, its steel has been smelted, copper and other materials have been refined, and its components have been machined, assembled, and transported. Each step uses energy and creates emissions.

Once the equipment exists, those production emissions have already occurred. Scrapping the asset does not remove them.

What Happens When Usable Industrial Surplus Is Scrapped?

Scrapping usable industrial equipment creates two separate carbon effects.

1. The Embodied Carbon in the Existing Asset Is Wasted When usable equipment is scrapped before the end of its productive life, the emissions tied to producing it have already occurred.

The asset then delivers less useful life from the materials, energy, and manufacturing already invested in it. Recycling can recover some of the underlying materials, but it does not preserve the finished equipment or its remaining productive value.

Premature scrapping therefore reduces the useful return from the carbon already emitted in manufacturing the asset.

2. Replacement Equipment Creates Another Round of Emissions The carbon impact does not stop with the equipment that was scrapped.

A buyer who still needs that asset may purchase a newly manufactured replacement. Producing it requires another cycle of raw material extraction, processing, manufacturing, assembly, and transportation.

Take an industrial pump as an example. If a usable surplus pump is scrapped instead of resold, another buyer may order a new one. That new pump brings another set of production emissions.

Scrapping usable surplus can therefore end one asset's productive life early while triggering another manufacturing cycle.

How Reusing Industrial Surplus Reduces Carbon Emissions

Reusing industrial surplus keeps existing equipment in productive use instead of sending it directly to scrap. A surplus asset can be redeployed within the same company or resold to another manufacturer that still needs it.

That continued use reduces demand for newly manufactured equipment and can avoid emissions associated with raw material extraction, metal processing, component production, manufacturing, assembly, and transportation.

Reuse also supports industrial circularity by keeping finished equipment in service for longer. When usable equipment is sent to scrap, some materials may be recovered through recycling, but the finished asset and its remaining productive value are lost. Reuse preserves more of the materials, energy, and production effort already invested in a working asset.

A U.S. Department of Energy analysis estimated that the cradle-to-gate footprint of U.S. machinery products totaled about 78 million metric tons of CO2e in 2018, with roughly 81% of those embodied emissions arising from upstream supply-chain activities.

Keeping usable machinery in service longer can reduce demand for replacement equipment and the upstream activity required to produce it.

These avoided emissions can also support a manufacturer's sustainability reporting. Under GHG Protocol guidance, avoided emissions should be reported separately from Scope 1, Scope 2, and Scope 3 inventories rather than deducted from those totals.

Reuse therefore supports decarbonization by extending the productive life of existing equipment and reducing demand for new manufacturing.

How Reuse Supports Financial Recovery and Decarbonization

Surplus reuse can create financial value at the same time it supports carbon reduction.

When managing surplus inventory, reselling an idle asset can convert unused equipment into cash. Internal redeployment can reduce the need to purchase replacement equipment, while moving surplus out of storage helps lower carrying costs and frees space.

The environmental benefit comes from keeping that same asset in productive use. When reuse replaces the need for a new purchase, it avoids another manufacturing cycle.

This overlap means the financial and environmental effects of reuse are often connected. Extending the productive life of existing equipment can preserve economic value while reducing demand for new production.

Conclusion

By the time industrial equipment becomes surplus, the emissions associated with producing it have already occurred. When usable equipment is scrapped before the end of its working life, the materials, energy, and production effort invested in that asset generate less productive value over its life.

Reuse keeps those assets in service longer and can reduce the need for newly manufactured replacements. Across a large surplus portfolio, those avoided emissions can add up.

For manufacturers, the financial and environmental cases are closely connected. Prioritizing reuse over premature scrapping can recover more value from existing assets while reducing emissions tied to replacement manufacturing.

Vickie: Today we're here to talk about new research that was just released by Sustainable Brands in partnership with FINN Partners and Babcock Ranch. It's a study of American consumers that gives a fresh look at how they are defining and pursuing "The Good Life" today

KoAnn, you've been asking Americans about "The Good Life" for nearly a decade. What has changed most dramatically since you first asked this question--and what surprised you most about what you heard this time?

KoAnn: Thank you for the conversation, and for your partnership in this work, Vickie and thanks to so many others at Finn who have participated, as well as to the team at Babcock Ranch for their support in making this new research possible.

Sustainable Brands, initially in partnership with Harris Poll, first conducted this research from 2017 through 2019, both here in the US and in several other global markets. Results of that initial research showed a marked transition among consumers across all demographics -- irrespective of geography, political or religious affiliation or generation -- from the pursuit of money, status and personal achievement as measures of the good life, toward a desire to seek balance, simplicity, and a greater integration of our values into all aspects of our lives. Nearly a decade later, in the midst of increasing instability in many fronts, we're seeing the same themes. Today, 90% of Americans agree that "a good life is defined more by what you do than what you own? Think about that.

10 years ago, though, consumers were feeling uncertain about what they could do individually to 'get off the hamster wheel' of societal expectations and habits that are no longer serving them, their families, their communities and the planet. One of the most surprising findings of this year's research is that today, consumers are feeling much more confident in their own power to have a positive impact and achieve the good life they seek. In fact, 84% say they are optimistic about their ability to improve their quality of life over the next 5 years.

Vickie: Can you give us some examples of how consumers are feeling empowered?

KoAnn: Yes, but first for context, it's important to acknowledge that a substantial majority of the US consumer base sees sustainability issues as key to the Good Life they're trying to build. 85% said taking action to protect the environment is important and 80% said they trust brands engaging in CSR.

In terms of their confidence in being empowered, one way they're taking action is actively looking to work for companies that align with their values. In 2017, a little over half of consumers said they would choose work aligned with their values over high pay. This year that number jumped to 77% -- that's almost a 25% move in that statistic. But there's definitely more to the story! One of the most important findings in this year's research is that 82% believe that when consumers demand better products and services, companies will rapidly innovate to provide them -- so expect consumers to be engaged -- and we've certainly seen lots of evidence of that over the past 3 years or so. The question is--are we enabling the kind of demand that actually accomplishes what consumers are hoping for. Our sense is that we have more work to do on that front. 73% today believe they influence companies through their purchases; in other words by "voting" with their wallet. But again, our question is: How can we encourage more Buycotting vs. Boycotting? A full 88% of consumers today say they are loyal to the brands that actively help them achieve this better life that they imagine. So if you can get them on board through smart education and involvement you'll likely keep them in your corner.

Now the catch at the moment that I know many of our brands and retailers are seeing -- and it's real -- is also acknowledged in our current research, which is that in today's economic environment -- 78% said they delay sustainable lifestyle choices because of rising costs. But the important thing not to lose sight of, is this: all of this data -- taken together -- point to opportunities for brands that innovate to deliver on consumer aspirations for a balanced, simple, stable life for themselves, their families and communities and for the planet. And after all, business is the institution that is traditionally best equipped to leverage innovation to solve real challenges :

The bottom line is this: Consumers prefer brands that help them live the Good Life - which includes contributing to a stable and Sustainable future. But they need help understanding how to make good choices, and they will reward brands they trust to help them.

Vickie: Those are some very powerful insights. Let's focus on that concept of self-reliance. There's an interesting tension in the research. You pointed out that a high percentage of consumers say they believe they have the power to influence brands, but 82% believe companies should do more to help them live The Good Life. What are consumers actually asking brands to do?

KoAnn: Great question! Here's what the research found: Consumers are asking brands to be practical partners in their pursuit of a better life. They want help living better: 74% explicitly want brands to help them learn how to make good choices. They want companies to be good places to work - 78% of Americans want to work for a company that "creates 'The Good Life' by supporting a healthier planet and people.? 78% again are especially looking for greater transparency regarding environmental and social impact investments.

I find this last point about consumers' demand for transparency particularly interesting. In the absence of clear communications from brands in recent months, almost three-quarters believe that "companies have pulled back somewhat from investing in sustainability and impact initiatives? due to the political climate. But 67% said they see through this silence on environmental issues, and they still believe companies are still "doing sustainability work without talking about it." The resounding request from 81% of Americans is for companies to communicate more about the work they are doing to help consumers achieve "The Good Life. We hope this market signal will spur more work on HOW to do so in a way that engages trust across demographics, and this is one primary area of opportunity for shared learning -- one that the SB community is actively working on.

Vickie: So, in light of that data, if you were sitting in a brand leadership meeting today, what is the one thing you would tell them to do differently based on this research?

KoAnn: I think Finn would agree that our findings point to some very clear conclusions and guidance for brands, and we've shared more on this guidance in our latest report and playbook on our findings.

First, move from greenhushing to truth and transparency. Consumers don't expect perfection, but they do expect candor, evidence and visibility into what companies are actually doing. Kenvue's Sustainable Innovation Profiler is a good example: it made the science behind product sustainability more transparent and understandable.

Second, connect the dots. Help your stakeholders understand what your initiatives and product innovation mean to everyday lives. Talk about your efforts in plain language that connects directly to impacts they can understand. HelloFresh did this with childhood hunger, focusing on the very practical challenge families face when school is out and connecting them with meals and resources.

Third, start your brand building with your employees. Your employees can be one of your biggest brand advocates. By providing them a way to live a life that matters through their work, you reduce recruitment and retention costs and create powerful brand ambassadors. By showing them how to take the actions you'd like your customers to take, you'll help them close the say-do gap and serve as a model for all those who they influence through their behavior.

And fourth, move from abstract advocacy to consumer involvement and affirmation. Instead of simply telling consumers what the company believes, help them see themselves and their own values reflected in what you do and give them ways to participate. We're excited about our partnership with Babcock Ranch who is already illustrating this by embedding sustainable choices into the community itself, making the better choice part of everyday life rather than asking residents to make a sacrifice. And we are working with them as we speak to explore ways for brands and their residents to co-create new ways to build a community that is safe, resilient and future fit.

To sum up: Consumers are increasingly defining The Good Life for themselves around things that matter beyond money and status. They want brands to be practical partners in achieving it and they will reward brands that help them. That is an open door for competitive opportunity--especially in this moment where some are pulling back -- to shape a new strategy for delivering good growth for our businesses, brands, customers and communities -- growth that doesn't compromise our planetary health and well-being so that we can all continue to thrive on this finite planet for the next seven generations and beyond.

To download the full Report and Playbook; go to: https://go.sustainablebrands.com/2026-reframing-the-good-life-report.

For many companies, the answer is that materiality is shifting from a periodic disclosure requirement into an ongoing input for risk management and strategy; something revisited as markets, supply chains, and operating footprints change, rather than redone from scratch every few years. That shift also changes who's in the room: if materiality findings are meant to inform business decisions rather than just satisfy a reporting requirement, finance and operations teams increasingly need a seat at the table alongside sustainability.

Nick Sanscartier, Vice President of Partnerships & Strategy at Novisto, spoke about what a more continuous, data-driven approach to materiality looks like in practice, and where human judgment still has to override the data.

What's actually changing about materiality assessments right now: is it the regulations, the stakeholders, or how companies are using the outputs internally?

NS: It's really a combination, but I think the biggest change is how companies are using the outputs. Regulation has been an important driver, particularly in Europe, but companies are increasingly looking at materiality as more than a reporting exercise. The assessment can help identify which sustainability issues could affect the business, where the company has its most significant impacts, and where those issues should factor into risk management and strategy. So we're starting to see materiality move from something companies do periodically for disclosure purposes to something that can inform broader business decisions.

CSRD's scope has narrowed significantly since the Omnibus changes. Does that make double materiality less urgent for mid-sized companies?

NS: CSRD has been an important driver for double materiality, but the value of the process goes beyond compliance. Companies still need to understand what sustainability topics and data points they need to report to their stakeholders on, and importantly which sustainability-related risks and opportunities could affect the business and where they are having their most significant impacts. For organizations outside the scope of CSRD, double materiality can still provide a useful framework for risk management, sustainability planning and business strategy.

What does "continuous" materiality assessment look like in practice?

NS: Continuous materiality means moving away from a one-time assessment that quickly becomes outdated. Instead, companies can revisit and update the assessment as business circumstances change, such as entering a new market, acquisition/divestments, supply chain shifts, or any alterations in operational footprint. Furthermore, the external context is constantly evolving whether it's regulatory landscape, technological advancements, or scientific research - and it's critical to monitor these material changes over time.

Stakeholder engagement is the slowest part of a traditional assessment. How do you keep that meaningfully ongoing without it becoming a box-checking exercise that stakeholders tune out?

NS: Stakeholders remain an important part of evaluating materiality, the approach is just different. Traditionally, stakeholders have been the primary source of idea generation for material topics and IROs via a cumbersome series of workshops and interviews. Despite these exhaustive efforts, much still gets lost due to the qualitative nature and limited sample size being considered. With a data-driven approach, a highly representative array of objective considerations become embedded in the assessment. This then allows for more effective stakeholder engagement leveraging a more focused subset of stakeholders. Any areas of divergence between data-driven recommendations and stakeholder feedback can then be investigated, allowing resources to be solely concentrated where novel anecdotal evidence can be acquired to refine the assessment and strategy.

You're using GIST Impact's methodology as the scientific backbone. What does "science-backed" mean concretely here: is this peer-reviewed, third-party validated, benchmarked against other frameworks?

NS: GIST Impact have been experts in measuring impact for nearly two decades, and have expanded on this foundation to develop a comprehensive scoring model for materiality. The methodology combines primary data stored in Novisto's system of record, with a variety of external sources including scientific literature, media, regulations, and peer/sector level datasets. It is therefore scientific both in terms of the type of sources it incorporates, but also in terms of the objectivity it yields by calibrating against peer and sector datasets. The methodology has been endorsed by some of the largest assurance providers in the world.

What happens when a company's materiality outputs from this tool conflict with judgment calls their sustainability team wants to make for strategic reasons? Does the tool defer to the data or to the team?

NS: Ultimately, the discretion and agency resides with the practitioners driving the assessment. The purpose of the tool is to inform decisions, by making recommendations with complete traceability, including rationale and lineage to underlying sources. Anecdotal gathered through the stakeholders that cannot be captured through data, can then be compared against to identify any potential recommendations that can be overridden.

What's the closest existing alternative, and what does this actually do that a well-run internal process with a shared tracker doesn't?

NS: The closest alternatives exist in three forms: 1) a consultant-led assessment, 2) a documentation workflow embedded in a sustainability platform, or 3) a materiality engine that is not embedded into a sustainability management platform.

Consultant-led assessments have been the conventional approach historically, and are primarily driven by stakeholder feedback and typically result in high costs and long timelines, while also being a static point in time analysis. In the second instance, these platforms offer a DIY approach to materiality that is absent of data or methodology, allowing practitioners to document their findings and decisions stemming from stakeholder exchanges. In the last case, these standalone solutions can offer a more robust analysis than the first category of alternative, however they still lack the bottom-up granularity gained by leveraging the businesses bottom up data stored in a system of record. Further, they do not benefit from the continuity of the materiality assessment directly driving the data points you manage and report on.

If double materiality becomes less of a compliance requirement and more of a strategy input over the next few years, what changes about who owns this process inside a company?

NS: I think it becomes much more cross-functional. Sustainability teams may still lead or coordinate the process, but if materiality is being used to inform risk management, strategy and other business decisions, functions like finance and operations will naturally need to be involved. If an issue can have a real impact on the business, it needs to be understood and managed beyond the sustainability team.

What's the one thing sustainability teams get wrong about materiality assessments that you wish more companies understood before starting one?

NS: Getting started doesn't have to be daunting. Technology lowers the barriers in terms of time and cost, so it stops being a special project and can actually become integrated as part of the annual reporting cycle. You also don't need perfect data to begin. Companies earlier in their maturity can start with estimates and convert to a higher resolution assessment as their data improves. The assessment improves each cycle as a result rather than starting from scratch each time, building on an incremental foundation. Materiality truly is a journey that anyone can begin today.

That is the date the EU's Empowering Consumers for the Green Transition directive (ECGT, Directive 2024/825) reaches full applicability across all 27 member states. It amends the Unfair Commercial Practices Directive that has governed advertising since 2005, and it moves the burden of proof. Until now a regulator had to show a claim was misleading. From September the advertiser has to show it is substantiated, before publication.

Some claims stop being arguable at all. Generic labels like "eco-friendly", uncertified sustainability badges and carbon-neutrality claims resting on offsetting go onto a blacklist of practices treated as unfair in all circumstances, with no case-by-case defense. For cross-border infringements, penalties reach at least 4% of annual turnover in the member states concerned.

So the question is not whether your sustainability language is on-message. It is what that language is worth, and what it might cost.

The liability side

The 4% is simple arithmetic. A company with 500 million euros in European turnover is looking at a 20 million ceiling on a cross-border infringement. That is illustrative rather than predictive, since enforcement will vary by member state and by severity, but it sets the order of magnitude.

Now the other side of the ledger: what it costs to know what you have published.

Most large companies cannot produce a current list of their live environmental claims. I have yet to meet one that could. The claims accumulated over years, added by different teams, across websites, product pages, packaging, campaigns, investor decks and press releases, with no owner and no consistent evidence standard applied. Auditing that by hand is a real project, weeks of legal and sustainability time, and it still sits in a different order of magnitude from the fine.

That gap is what makes the decision easy. Even at a low probability of enforcement, not knowing costs more than finding out, and you do not need generous assumptions to get there.

There is a second cost that rarely makes the risk register. A claim withdrawn under pressure is not a quiet event. It gets covered, usually by the trade press, usually at the worst possible moment. The damage lands on the same brand equity the claim was built to create.

The asset side

The more useful half of this is what happens to the companies that get it right.

Until now, a rigorous, evidenced, independently verified claim competed on level terms with a vague one. Both sat in the same ad. The company that ran the life cycle assessment got very little visible credit over the company that wrote a nice sentence.

Enforcement changes that. When unsubstantiated claims carry legal risk, vague language starts leaving the market, and specificity becomes something a competitor cannot copy without doing the work. A claim with evidence behind it stays on the page while others come down.

That is a return, and it goes to whoever moves first. Companies treating September as a compliance chore will come out with thinner claims. The ones treating it as an evidence exercise will come out with fewer claims that are much harder to match.

What a credible program looks like

It is not glamorous. Inventory every live environmental claim across every channel, which is the step that stalls most audits, because the estate is always bigger than anyone expects. Classify each claim by risk, separating the specific and verified from the vague from the outright blacklisted. Map the evidence you actually hold and be honest about the gaps. Then fix, qualify or withdraw. Deleting alone is weak, because a deleted claim tends to reappear in the next campaign; the durable version is a rewrite that says the same thing in language you can defend.

Then gate it. Screen new claims before they publish, or the inventory stays accurate only until marketing ships the next campaign.

AI is genuinely useful for the early steps. Finding claims buried across large volumes of text, sorting them by risk and proposing compliant rewrites are pattern-matching jobs, and pattern matching is what these systems do well. They turn a multi-week audit into something close to real time, which matters a lot when you have weeks.

What they cannot do is judge. Whether the underlying evidence holds, whether a verification is adequate, whether a scope is honest: those stay human decisions, and from September they are legally accountable ones. Nor can a model produce evidence that does not exist. If your recyclability claim has no assessment behind it, run the assessment or drop the claim. Rewording it more carefully is not a fix.

The same tools cut both ways, and that is worth saying plainly. Ask a language model to make a product sound greener and it will hand you fluent, confident, evidence-free copy. That is the practice ECGT exists to stop, only faster. No regulator is going to accept "the tool wrote it".

Where this leaves you

With the deadline this close, the instinct is to treat the whole thing as a copy exercise. Soften the language, cut the boldest sentences, move on.

I would do the opposite. Treat your published claims as an inventory with a value and a liability attached, count it properly, and put your evidence budget behind the claims worth keeping. That is a defensible position in September and a competitive one afterwards.

Greenwashing was always a problem of scale. The companies that come out of this ahead will be the ones that measured their own exposure before somebody else did it for them.

Enrique Burgos is the founder of Haze, an AI compliance layer for sustainability communications, and a marketing and social-impact advisor (ex-Coca-Cola).

References

• Directive (EU) 2024/825 (ECGT), full text
• Directive 2005/29/EC (Unfair Commercial Practices Directive)

When people hear "sustainable AI," the conversation usually zooms in on data centers, electricity, water and compute because AI may feel digital at the point of use, but the infrastructure behind it is deeply physical. That focus has made AI's environmental footprint much more visible, but it can also make the sustainability question seem as if it begins only after a use case already exists.

In our work on this topic, we have found ourselves going further upstream and asking a different question: if AI is supposed to make organizations more efficient, are we actually eliminating work, or are we simply creating more of it because now we can? That changes the conversation from how efficiently we run AI to what we are asking it to produce in the first place.

Sustainability leaders have spent decades helping organizations do more with less, and while AI appears to promise exactly that, it also changes the economics of creating work. When the cost and friction of producing another analysis, deck, summary, draft or line of code collapse, the natural result is not necessarily less work. It can be more, creating a sustainability paradox in which individual tasks become more efficient while the total amount of work expands.

When Efficiency Creates More Work

When we use AI, each prompt facilitates an additional analysis, another deck, another email, another summary.

Individually, each one may take seconds instead of hours, which is a real productivity gain. But an output is not the same thing as value, and generating it faster does not remove the work that can follow. A report may still trigger review, revision, meetings, storage, decisions and additional work downstream, while a faster workflow may still be a workflow that should have disappeared.

We started calling this work inflation: the expansion of work because the marginal cost of creating it has become so low.

Work inflation can happen even while individual tasks become more efficient. One person may save an hour, while the organization creates ten new things for other people to review, interpret or act on.

This is why measuring AI productivity only through output can be misleading. A more useful measure is whether work disappears, becomes reusable or leads to better decisions rather than simply increasing the volume of activity moving through the organization.

When Work Inflation Becomes Organizational Waste

What looks like work inflation at the individual level becomes organizational waste when it scales across hundreds or thousands of people.

Five teams can solve the same problem independently, pilots can be launched without visibility into what already exists, tools overlap and teams generate similar content for slightly different audiences. A process that should be redesigned or eliminated can simply become faster because AI was layered on top of it.

When those patterns accumulate, the waste is not the use of AI itself. It is the duplication, rework and activity that consume resources without compounding into capability.

Experimentation is also not the problem; some experiments should fail because that is how organizations learn. Waste appears when the learning does not cascade, useful work is not reused, duplication is not reduced and low-value use cases continue because there is no mechanism to stop them.

One useful way to understand why this happens is to separate AI adoption from AI absorption.

• Adoption tells us that the technology entered the organization through licenses, users, pilots and use cases.
• Absorption tells us whether the organization changed because of it: whether work disappeared, one team's learning became another team's starting point, a process improved permanently or a low-value use case stopped.

When adoption moves faster than absorption, AI can sit on top of the existing operating model and accelerate it rather than transform it. The organization may look advanced while quietly accumulating more tools, more outputs and more activity without building much more capability.

That gap is critical for sustainability because every additional workload ultimately draws on compute, electricity, water, infrastructure, specialized chips, capital and human attention. The point is not that every additional AI workload is wasteful, but that the resources behind it should create enough durable value to justify what they consume.

From Footprint to Capability Yield

Once organizational waste is visible, measuring only AI's footprint is no longer enough because two applications can consume similar resources and create completely different outcomes.

One might improve renewable-energy forecasting, optimize a logistics network or make scarce expertise available to people who previously could not access it. Another might generate content that nobody reads and that disappears into a folder a week later.

What differentiates those use cases is not only what they consume, but what the organization is able to do differently because of them.

We have started using the term Capability Yield to describe the lasting capability created from the compute, energy, water, infrastructure, capital and human attention invested in AI. The word "lasting" matters because the value should survive the individual prompt or output.

• Did a person become more capable?
• Did a team create knowledge it can reuse?
• Did the organization improve a process beyond a single task?
• Did an insight transfer?
• Did a capability that used to be scarce become accessible to more people?

A high-yield use case compounds over time because the organization retains something useful after the immediate output is gone. A low-yield use case may produce something impressive in the moment but leave very little behind.

We are still working through what Capability Yield should look like as a measurement framework because AI is evolving faster than many of the frameworks around it. A perfect metric is not a prerequisite for recognizing that activity and value are not the same thing. The direction is already useful; connect what AI consumes with what the organization actually becomes capable of doing because of it.

Building the Filter Before the Footprint

For sustainability professionals wondering where to start, the first step does not need to be another framework. It can be much more practical, such as beginning to understand where AI decisions are already being made across technology, operations, legal, risk, security and procurement, and begin bringing these questions into those existing processes. That approach is most useful upstream, when organizations are deciding what deserves to be built and scaled.

• Does this work need to exist?
• Is AI necessary for the problem?
• What type of AI is sufficient?
• What will this use case replace rather than simply add?
• What becomes reusable?
• What capability remains after the task is complete? When should a use case scale, change or stop?

Those questions begin to connect AI adoption with organizational waste, resource consumption and Capability Yield without requiring sustainability to own the AI agenda.

The more the three of us have worked through this topic, the more convinced we have become that sustainable AI will not be solved by looking at any one of those questions in isolation. Its footprint is really important, but so does the work we choose to create.

Productivity matters, but so does whether that productivity compounds across the organization. Adoption matters, but only if the organization develops the ability to absorb what it is adopting.

Sustainability professionals may not own every one of those decisions, but we work at the intersection of many of the systems they affect, which gives us an important opportunity to connect what can otherwise remain separate. Perhaps that is the larger role for sustainability in this next chapter of AI; not to become the owner of the technology, but to help organizations become more deliberate about what they build, what they scale, what they stop and ultimately whether all of that investment is making the organization more capable or simply creating more.

The last year has been marked by geopolitical turbulence and an intensely polarized domestic political climate, leaving American businesses at the center of a perfect storm defined by policy uncertainty, energy price volatility and economic instability.

Energy prices, already elevated in the years following Russia's invasion of Ukraine, have risen further in the wake of the Iran conflict, and US businesses are feeling the strain of higher prices and operational costs.

In an uncertain economic environment, pressure on business leaders has been compounded by a political climate in which climate skepticism is becoming an increasingly entrenched feature of the political establishment. As the federal government scales back climate commitments, "drill, baby, drill" has become the defining slogan of its energy posture, leaving businesses pursuing long-term transition strategies in the lurch.

Yet with oil prices as high as they are, and with the risks of relying on volatile fossil fuel markets becoming harder to ignore, this rollback looks increasingly out of step with commercial reality. Recent geopolitical events have reinforced the strategic case for diversification, resilience and greater energy sovereignty.

In that context, American businesses are being forced into a pragmatic reassessment of their climate and energy strategies. The question is not whether the operating environment has changed, it clearly has, but how business is responding.

Rhetoric vs reality

So how are American businesses navigating high prices, political uncertainty and a fractured policy landscape?

BSI's G7 Temperature Check points to the growing prevalence of what might be called "climate coding," a phenomenon where firms reframe emissions reduction in the language of cost reduction, operational efficiency, resilience and risk management, rather than environmental altruism. This is not a retreat from action, but a recalibration of how that action is justified and communicated.

The underlying appetite for decarbonization remains strong. An overwhelming 84% of US businesses believe decarbonization should remain a priority, even if specific targets prove temporarily unattainable. That places the US second only to Canada on this measure and suggests that, beneath the political noise, business leaders still see climate action as strategically important.

That conviction is also reflected in behavior. More than three quarters (76%) of US businesses say they will take steps to reduce emissions, even if many are now placing less emphasis on "net zero" as a public-facing term. In other words, action is continuing even as the language around it evolves.

The impact of the media and public discourse on how businesses communicate is clear. More than half (55%) of US business leaders say they have changed how they promote or communicate their emissions reduction efforts over the past 12 months in response to political and media skepticism. The politics may have hardened, but corporate behavior has not collapsed.

If anything, many businesses appear increasingly aware that the costs of inaction are rising. 74% of US firms are concerned about the future costs and resilience implications of failing to prepare for climate change, while 75% say the cost of transition is outweighed by the long-term benefits. For many companies, decarbonization is no longer principally an environmental gesture, but rather a business continuity strategy.

The competitiveness question

If climate action is increasingly framed in commercial terms, that is partly because the commercial stakes are becoming clearer.

One of the most striking findings in the research is that 59% of US businesses are concerned about losing competitiveness to overseas firms if the federal government continues to scale back progress on net zero or abandons it altogether. This suggests that many American businesses no longer see climate policy simply as a compliance burden, but as part of staying competitive in a global market where other major economies continue to invest in cleaner technologies, industrial standards and energy systems.

This is also why policy uncertainty is proving so damaging. Three quarters of businesses say uncertainty around net zero policy makes it difficult to invest confidently. For companies making long-term decisions about capital expenditure, procurement, supply chains and facilities, uncertainty can act as a direct barrier to action.

There is, then, a growing disconnect between political rhetoric in Washington and the strategic calculations being made in boardrooms across the country. For all the heat around the term "net zero," many firms are still planning for a world in which decarbonization, resilience and climate adaptation will remain central to economic performance. That long view is reflected in business expectations, as 83% of US business leaders believe net zero will once again become a political priority within the next decade.

The need for greater support

Despite showing commitment, businesses remain clear-eyed about the obstacles in front of them.

Costs remain a significant constraint, and many firms feel their industry is expected to shoulder a disproportionate share of the burden even as the broader cost of doing business remains high. A quarter of businesses expect that economic instability will make progress on net zero more difficult over the next 12 months. More broadly, the transition is still seen by many as financially challenging, particularly in sectors with high energy use, complex supply chains or long investment cycles.

Amid these challenges, the ask of policymakers is for practical support, not abstract encouragement. 84% want greater government financial incentives, while 71% say policy support will make it easier for their business to reach net zero targets by 2050.

As it stands, 77% say state-level policies currently provide more certainty than federal approaches, highlighting that, in the absence of a stable federal framework, many firms are finding greater predictability at the state level. But while state leadership matters, it is not a complete substitute for national clarity.

They are also asking for more specific guidance. A third (32%) of US businesses want clearer standards and more practical, industry-specific support as it would help them act. Many firms no longer need to be persuaded that climate risk matters, but they do need help translating that understanding into concrete operational decisions.

Translating intent into action

The US corporate picture in 2026 is more resilient than the politics might suggest.

American businesses have not abandoned decarbonization but have adapted to a changing environment by becoming more practical in how they talk about it and more strategic in how they position it In many cases, net zero is no longer being presented primarily as a moral imperative but as a strategy to manage volatility, improve efficiency, and strengthen long term competitiveness. That is a significant shift, and in many ways a healthy one. It places climate action at the center of business resilience, rather than at the margins of corporate messaging.

But pragmatism alone will not be enough. If businesses are expected to keep moving, they will need a more supportive operating environment. That means clearer policy signals, stronger incentives, more stable standards and practical help in turning ambition into delivery.

The real story in 2026 is not that American business has turned away from climate action. It is that companies are trying to make it workable in a world that has become more politically fractured, more geopolitically unstable and more economically volatile. For policymakers, the lesson should be simple: business commitment is still there. What is needed now is the clarity and support to turn that commitment into action.

Western Europe experienced its hottest June on record in 2026, with average temperatures more than 3?C above the 1991-2020 level. Europe as a whole recorded its second-warmest June, as did the planet. Across the continent, temperatures broke monthly and all-time records, drought conditions worsened, wildfires spread and health systems came under greater pressure.

The effects on people were immediate. Older adults, people with existing health conditions and workers exposed to high temperatures faced particularly serious risks. Hospitals and emergency services dealt with rising demand, while warm nights gave the body little opportunity to recover.

At the same time, a less visible cost was building across workplaces and the wider economy.

Research published in July by the Grantham Research Institute on Climate Change and the Environment at the London School of Economics, together with the Euro-Mediterranean Center on Climate Change, estimated that the June heatwave cost the UK economy approximately GBP1.15 billion in lost output in a single week.

To reach that estimate, the researchers surveyed a nationally representative sample of 1,950 working adults about their experiences during the week beginning 22 June. They examined changes in working hours, sleep, health, travel and workplace conditions.

On average, respondents reported working 0.47 fewer hours over the course of the week. Applied to the UK's working population, that reduction represented approximately 16 million lost hours and GBP770 million in lower economic output.

Absence added substantially to the total. Around 3.6% of respondents said they did not work at all because of the heat. Across the wider workforce, that would amount to roughly 1.25 million people, another eight million lost hours and an estimated GBP380 million in foregone production.

Combined, shorter working time and full absences produced the headline figure: 24 million working hours and GBP1.15 billion lost during one severe week of heat.

Even so, the estimate captures only part of the economic damage.

One-third of respondents said high temperatures reduced the effort they were able to make while working. That decline was excluded from the calculation because measuring its effect on output would require a different method. Slower work, reduced concentration, mistakes, delays, operational disruption and pressure on health services were also left largely outside the final figure.

In practice, losses begin well before a site closes or an employee misses an entire shift.

A person who sleeps poorly during an unusually hot night may still arrive at work the next morning, yet fatigue can weaken concentration, judgment and physical capacity. Outdoor workers may need additional breaks or shorter shifts. Machinery, uniforms and protective equipment can become harder to use safely. As tasks take longer, deadlines move and disruption reaches suppliers, customers and contractors.

The burden was also unevenly distributed.

Employees in construction, agriculture and other physically demanding or highly exposed roles reduced their hours more than people in lower-risk occupations. Many of these workers have limited control over their schedules and surroundings, and many are among the lowest paid. Women, workers under 35 and people with existing health conditions were also more likely to report harm.

As a result, extreme temperatures can widen existing inequalities while generating broader financial losses. Workers bear the immediate physical consequences. Companies face weaker output, delayed projects and higher operating costs. Governments absorb additional pressure through healthcare spending, reduced tax revenues and greater demand for public services.

For companies, these findings should influence the way climate exposure is managed. Heat belongs within operational planning, workforce policy, health and safety procedures, facilities management, procurement and financial risk assessment.

Businesses need a clear view of which jobs, sites and suppliers are most exposed, as well as what happens when high temperatures persist for several days and nights.

Preparation may involve adjusting working hours, scheduling demanding tasks during cooler periods, increasing break frequency and improving access to water, shade, ventilation and cooling. Buildings and equipment may require investment, while managers need clear protocols for slowing, rescheduling or suspending work.

Better data would also make the financial impact easier to identify. Companies routinely monitor absence, productivity, delivery times and workplace incidents, yet many do not compare those indicators with periods of extreme heat. Without that connection, climate-related losses remain scattered across departments and are often absorbed into routine operating costs.

Similar patterns can be seen across other climate hazards. Drought can reduce agricultural production, raise food prices and constrain industrial activity. Floods damage homes, factories and transport networks. Wildfires interrupt tourism, logistics and electricity supplies. High temperatures weaken productivity, affect infrastructure and place additional demands on public services.

Although each hazard moves through the economy differently, the consequences eventually reach household incomes, company balance sheets and government budgets.

Environmental damage remains central to the climate debate, yet environmental language alone cannot describe the full scale of the exposure. Climate change is increasingly shaping the basic conditions under which economies operate: where people can work safely, how reliably businesses can produce and deliver goods, how much governments must spend responding to emergencies and which communities carry the heaviest losses.

The GBP1.15 billion lost during one week in the UK offers a clear view of that broader economic pressure. As severe heat becomes more frequent, businesses and governments will either invest in adaptation or continue absorbing repeated disruption.

Extreme heat already has a price tag. The cost is being paid through lost income, weaker productivity, damaged health and growing pressure on public and private finances.

To ensure that the history, culture, architecture, landscapes and stories of Japan's oldest hot spring continue on for another next millennia, the town of Dogo Onsen is embracing cutting-edge art and technology as it embarks on a new era of reform.

Town Development Driven By The Community

Hot spring towns can be affected by many factors -- external factors like economic downturns, soaring prices, natural disasters, infectious diseases and declining birth rates, and internal factors like staff shortages and aging facilities. Dogo Onsen is no exception. Despite its fame in Japan, the town faced a critical situation starting in 2020, when the number of visitors halved during the COVID-19 pandemic.

The Dogo Onsen Pride in Community Development Promotion Committee has been leading town development efforts to solve these challenges and create a stronger, more attractive area. Established in 1992, the organization is formed of traditional ryokan inns and hotels in the Dogo area, as well as shopping district associations, local residents, and companies and universities in Matsuyama City, where Dogo Onsen is located.

Mitsuhiko Miyazaki, the chair of the Promotion Committee and owner of several ryokans and hotels in Dogo Onsen, reflects on the early days of the organization. "The Committee was established to bring the community together to solve local challenges and improve the town. This movement was directly triggered by signs of decline after the burst of the bubble economy. Even back then we were keenly aware of one issue specific to Dogo Onsen, which was that it depends too much on the fame of the Dogo Onsen Honkan. It was up to the community to find a way to overcome this. We felt that, without change, Dogo Onsen would become another tourist destination that simply lives off its past. That might be fine now but thinking about the legacy that would leave future generations, we just couldn't ignore the issue."

Construction of the Dogo Onsen Honkan was completed in 1894 as part of renovations of the town's aging hot spring facility. Then-mayor Yukiya Isaniwa championed its design by insisting that "to make a true mark, we need to build something that can't be replicated -- even 100 years from now." The result is a three-story wooden building renowned for its imposing, majestic appearance, featuring two bathing areas and four kinds of relaxation rooms. The mayor's insight proved correct: the Honkan has long served as a symbol and source of prosperity for Dogo Onsen. In 1994, it became the first public bathhouse to be designated a National Important Cultural Property.

Dogo Onsen now aims to become a sustainable hot spring destination by reducing its dependence upon both the historically and architecturally valuable Honkan, and the hot springs themselves. This seemingly counterintuitive policy was announced in 2024 by the Promotion Committee as the Dogo Onsen 2050 Vision.

The Dogo Onsen 2050 Vision

The Dogo Onsen 2050 Vision represents the town's next step and was unveiled as restoration works on the Dogo Onsen Honkan were completed and the world entered the post-COVID era. Amid accelerating socio-economic and technological changes, the Promotion Committee conducted research, analysis and discussion on what Dogo Onsen should aspire to be in 30 years' time and established this vision as a concrete guide to future change. The vision is twofold: to become a sustainable hot spring destination that doesn't rely only on its hot springs, and to become a "digital hot spring city" where visitors from around the world can enjoy their stay in a variety of ways.

One factor behind this vision is inbound tourism, which is becoming crucial to the Japanese economy. Miyazaki explained the connection between the Dogo Onsen 2050 Vision and tourism from abroad.

"Dogo Onsen has a lower inbound tourism rate than other destinations. It currently stands at around 13% but was only 4% before the pandemic. As Japan's population declines, attracting these tourists is becoming essential, and our vision sets a goal of increasing this rate to 50% by 2050. So, we asked, what kind of town could make this happen? This led us to two concepts: a sustainable hot spring town where bathing isn't the focus, and a digital hot spring city. Baths are a vital resource, and that will not change. But what is needed now is local development that doesn't rely on them alone. If we could attract visitors to the town with things besides the hot springs, and then additionally capitalize on them, it would surely give Dogo Onsen incredible appeal."

Planning For the Next Decades In Order To Last For A Millennia

Miyazaki calls the Dogo Onsen hot spring both "waters of renewal" and "waters of reform." "In ancient times, the legendary Shotoku Taishi (Prince Shotoku) is said to have bathed in the waters of Dogo and conceived the Seventeen-Article Constitution and the Twelve Level Cap and Rank System, both of which shaped the early Japanese state. That was political reform. Then there is Ippen Shonin, the monk born in Dogo during the Kamakura period who famously made Buddhism accessible to ordinary people. That was religious reform. Finally, there is the reform of literature brought about by Natsume Soseki and Masaoka Shiki, who both frequented Dogo. It's a stretch, but you could say that Dogo Onsen was involved in these three pivotal moments. By unraveling how the springs have become a part of and developed alongside the area's history and culture, and presenting this in a clear and accessible way, we hope to create a valuable experience for people from Japan and around the globe. We'd like to be a town that embodies Japan's hot spring culture and is open to the world."

The tradition of Dogo Onsen has never been about living assets such as its hot springs and history, but about consistently innovating and taking on challenges in pursuit of new ideas.

Yukiya Isaniwa envisioned Dogo Onsen Honkan lasting for the next 100 years, yet 2014 marked the 120th anniversary of its reconstruction. It appears that the true tradition of Dogo Onsen lies in taking action not just for the present, but also for the decades and even centuries to come.

The Dogo Onsen 2050 Vision focuses on the next 30 years, yet also has the potential to serve as the spark for innovation with long-reaching impact -- perhaps into the next hundred or even several hundred years. That innovation may be the first page of a new story that continues for the next millennium.

For a while now, and for many reasons, political pressure, tighter economic conditions, geopolitical instability, supply chain disruption and higher scrutiny on corporate spending, sustainability budgets have faced a harder internal test. Projects that once moved forward because they aligned with commitments, stakeholder expectations or reputational logic are now being evaluated against a more demanding standard.

What is the return? Where does the value show up? How does this affect margin, cash flow, risk, resilience or growth?

This pressure does not mean sustainability lacks value. It means sustainability is now being treated like other major business investments. It needs to compete for capital, management attention and execution capacity. That requires a different level of financial evidence.

For years, companies have invested heavily in sustainability strategy, reporting, target setting and operational improvement. They have mapped emissions, strengthened disclosure, built governance structures, assessed materiality, engaged suppliers and defined transition plans. This work created important foundations.

But one piece has remained underdeveloped: the ability to quantify how sustainability changes the economics of the business.

That is the gap identified in KPMG's report, Closing the Sustainability Valuation Gap. The report shows that 72% of executives surveyed have a detailed understanding of their sustainability strategy, metrics and performance, or are familiar with the key aspects. Sixty percent say they consider sustainability related risks and opportunities in financial planning. Yet only 19% use robust quantification approaches to measure how sustainability affects financial outcomes, operational gains and innovation.

This is the tension now facing corporate sustainability. Awareness has improved. Reporting has matured. Strategy is more visible. But the financial translation is still weak.

Companies may understand the business case at a conceptual level. They know climate risk can disrupt operations. They know resource efficiency can reduce costs. They know stronger supply chains can protect continuity. They know better products, better data and better governance can improve competitiveness.

But internal investment decisions rarely move on conceptual logic alone. They move when value can be modeled.

**The business case is not enough

For a long time, sustainability teams have been asked to "build the business case." That was useful language for an earlier phase of corporate sustainability. It helped move the conversation from values and reputation into strategy, risk and opportunity.

But the business case is now too broad a concept.

• A business case can explain why action makes sense. Valuation explains how action changes financial performance. Those are different disciplines.
• A business case may say that energy efficiency reduces emissions and costs. Valuation shows the impact on OpEx, payback period, margin volatility and exposure to energy price increases.
• A business case may say that water stewardship protects operations. Valuation shows the potential cost of production disruption, permit constraints, insurance exposure or forced downtime.
• A business case may say that supplier resilience is important. Valuation shows how procurement risk affects revenue continuity, working capital, product availability and customer retention.
• A business case may say that circularity creates opportunity. Valuation shows how repair, reuse, take back models or material recovery affect unit economics, customer lifetime value and capital requirements.

The distinction is important because sustainability is now entering the same room as finance, strategy and investment appraisal. In that room, broad claims are weak currency. Quantified assumptions, ranges, scenarios and financial pathways carry more weight.

This does not mean every sustainability outcome can be reduced to a perfect number. It means companies need a more credible way to connect sustainability indicators with enterprise value.

KPMG's report points to the types of financial language boards and finance teams recognize: EBITDA bridges, cash flow impacts, CapEx implications, balance sheet exposure and credible risk ranges.

**Sustainability metrics are not valuation metrics

Corporate sustainability has become better at measurement. Companies track emissions, water, waste, safety, diversity, supplier practices and other indicators with increasing detail. These metrics remain essential. They show performance, progress and exposure.

But they do not automatically show financial consequence. Tonnes of emissions reduced are not the same as carbon cost avoided. Cubic meters of water saved are not the same as production risk reduced. Waste diverted is not the same as material value recovered. Training hours are not the same as productivity, retention or safety related cost avoidance. Supplier audits are not the same as margin protected from disruption.

Sustainability metrics tell the company what changed. Valuation metrics tell the company what the change is worth.

That translation is becoming central to the credibility of sustainability work. It is also where generic ESG measurement starts to lose power. Standard indicators are useful for reporting and comparability. But business decisions require metrics that connect directly to the company's own economics.

**Finance already works with uncertainty

Many companies hesitate to quantify sustainability because the data is imperfect. Climate scenarios are uncertain. Nature risk is complex. Social impact can be difficult to monetize. Some effects unfold over years, not quarters.

But finance has never operated with perfect certainty. Companies routinely make decisions using assumptions about inflation, demand, churn, pricing, discount rates, commodity prices, terminal values, market growth and competitive behavior. These assumptions are uncertain, but they are modeled, challenged and updated.

Sustainability should be treated with the same discipline. The answer is not to wait until every number is perfect. The answer is to build ranges, test assumptions, use scenarios and clarify decision relevance.

A financial model with transparent assumptions is better than a qualitative narrative that never reaches capital allocation.

This is where tools such as scenario analysis, risk adjusted ROI, avoided cost modeling, value at risk, marginal abatement curves, Monte Carlo simulations, digital twins and enterprise value impact assessments become useful. They do not eliminate uncertainty. They make uncertainty usable.

**The cost of inaction needs to enter the model

One of the biggest weaknesses in sustainability investment decisions is the treatment of inaction as the neutral baseline. It is rarely neutral.

Doing nothing can increase energy costs, regulatory exposure, supply chain fragility, insurance premiums, downtime, customer attrition, financing constraints and asset impairment risk. It can also mean missing revenue opportunities, losing procurement eligibility or falling behind competitors that can prove lower risk and stronger resilience.

Once inaction is priced, the investment case can change significantly. This is especially true for adaptation, resilience and transition investments. A project may look expensive when viewed only through upfront CapEx. It may look very different when modeled against avoided losses, business interruption, physical asset risk, carbon cost exposure or loss of market access.

Sustainability needs science. It needs targets. It needs reporting. It needs stakeholder trust. But it also needs valuation discipline.

The companies that build this capability will be able to defend sustainability investment with greater confidence. They will understand where action protects margin, where it reduces exposure, where it strengthens cash flow, where it creates revenue and where delay erodes enterprise value.

Sustainability is not losing relevance. It is being asked to prove its financial architecture.