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.

Two methods surface these findings, and they answer different questions. A life cycle assessment measures one product across its full value chain, from raw material to end of life. A corporate greenhouse gas inventory measures one organization over one reporting year, sorted into Scopes 1, 2, and 3. The examples below come from both. Each one carries the same lesson: you can't guess your footprint. You have to measure at the level of the actual physical input, and trace that input to its source.

Dry ice: the hotspot that wasn't

A client's LCA had what looked like an obvious hotspot. The product is shipped frozen, packed in dry ice, and dry ice sublimates into CO2. So the first-pass model counted the full mass of the dry ice as CO2 emissions at end of life.

Then we investigated further. Dry ice is made from captured industrial CO2. When it sublimates, is it introducing new fossil emissions, or releasing CO2 that was already captured upstream? And where did that CO2 originate?

We traced the supply chain: the dry ice came from the biological processing of feedstock in a bio-diesel refinery, which makes the CO2 biogenic rather than fossil. Both the GHG Protocol Product Standard and ISO 14067 require biogenic CO2 to be reported separately from fossil CO2, so the dry ice end-of-life emissions moved out of the fossil total and into a separate biogenic line.

The number went from a meaningful line item to zero in the fossil CO2 emission bucket. The same physical input, dry ice, can be a real emission or no emission at all, depending entirely on where the CO2 came from. You can't know which without tracing it, and guessing either overstates your footprint by counting biogenic CO2 as fossil, or understates it the other way, but neither one survives real scrutiny.

Whipped cream: small input, outsized impact

For a coffee chain, Scope 3 dominates the total footprint. Dairy, coffee, and packaging carry most of the impact, and that isn't news to anyone in the sector. Scope 1 is smaller and often gets less scrutiny. That's where an inventory can surprise you.

Ask someone to name the biggest driver there and they'll guess the espresso machines, the ovens, maybe the delivery fleet. In a recent corporate inventory for a multi-location beverage retailer, one of the largest was whipped cream.

The cream itself falls under Scope 3 emissions, while the propellant is Scope 1, a direct emission. Whipped cream dispensers use nitrous oxide (N2O), which has a global warming potential roughly 273 times that of CO2 over 100 years (IPCC AR6). You don't buy much of it. But in this inventory, N2O from whipped cream dispensers came in above 5% of total emissions, even under a conservative estimate of how much gas is in each canister.

This is a case where a low-volume input by weight can become a meaningful contributor by carbon impact, and is the kind of finding that spend-based or category-level GHG accounting misses. A propellant is cheap and low-volume, so it disappears in a top-down estimate. It only surfaces when you measure at the activity level, where a high-GWP input gets counted for its actual impact.

There's no commercial propellant alternative on the market today, so the only way to fully remove the impact is making whipped cream in-house, mechanically. Short of that, the first step is measuring how much N2O is actually in your canisters, since even this estimate had to be modeled rather than measured directly.

Refrigerants: the leak you don't see

Refrigeration is easy to account for as an energy cost, the electricity to run the compressors. The bigger climate issue is often the refrigerant itself.

Hydrofluorocarbon (HFC) refrigerants have global warming potentials in the thousands. Common ones used in commercial refrigeration carry GWPs ranging from roughly 1,800 to nearly 4,000 times CO2. To put that in perspective, regulators have noted that a single small canister of one common refrigerant is roughly as potent as a year's worth of fuel for eight cars. The catch is that refrigerant emissions come from leakage, not consumption. Equipment leaks slowly over its life and during servicing and disposal, and that leaked gas goes straight into the atmosphere at full GWP. A business can track its electricity precisely and still miss the larger refrigerant impact entirely, because nobody is metering the leak.

Depending on what your business model is, this might contribute more or less to your overall inventory. But in the case of a grocery retailer with hundreds of locations and refrigeration in all of them, it might end up contributing to over 70% of Scope 1 emissions or be 3-5% of the entire Scope 1, 2, and 3 inventory. Doing maintenance and leak management or switching to natural refrigerants can therefore have a very meaningful impact on overall emissions.

For any business with significant cold chain, refrigeration, or cold storage, whether that's grocery, food service, dairy, or logistics, this is worth measuring directly rather than assuming the energy figure captures it.

The pattern across all three

Three very different inputs, one lesson. The emissions that matter most to your footprint are often not the ones that cost the most or weigh the most. A trace-volume propellant, a slow refrigerant leak, a block of dry ice whose impact depends entirely on its source, none of these show up in a top-down, spend-based estimate.

They surface when you do two things: measure at the activity or ingredient level, so high-impact inputs get counted for their actual effect, and trace each input to its source, so you know whether an emission is fossil or biogenic, captured or new. That's the difference between a number you hope is right and one that holds up when an auditor, a regulator, or a customer asks how you got it.

Planet FWD builds ingredient-level life cycle assessments and corporate GHG inventories that surface findings like these and hold up under third-party review. If you want to know what's hiding in your footprint, talk to our team.

Today, we are witnessing a convergence. Retailers face increasingly stringent sustainability reporting requirements and, as a result, rising pressure to deploy AI and other advanced tools for more efficient, high-fidelity execution on that front. At the same time, use cases for AI in retailers' core businesses run the gamut from front-end hyperpersonalization and autonomous shopping agents to back-office dynamic pricing and inventory optimization.

The common denominator for success in this new era is the need for a foundation of harmonized data. By tracking and acting upon sustainability data at the transactional level--with the same rigor applied to financial and customer-purchase data today--retailers can unlock a powerful dual advantage. Seamless, transaction-level insights empower a retailer to:

• Boost Sales and Customer Retention: Deliver product-specific, verified sustainability metrics directly on the product page at the moment of choice.
• Close the Intent-Action Gap: Match products dynamically to consumers' verified sustainability preferences.
• Enable High-Integrity Discovery: Power sustainability-related search filters that eliminate greenwashing concerns.
• Fuel Next-Gen Commerce: Give AI shopping agents the high-fidelity data needed to incorporate planetary health into automated purchase decisions.

At many retailers, sustainability reporting needs an overhaul

These sorts of capabilities align with the true purpose of a retailer, which is absolutely not reporting regulatory data to government authorities. Retailers are in the business of creating value, not managing administrative burdens.

While the attitude-behavior gap persists in aggregate, retailers who make sustainability information frictionless at the point of decision are successfully closing it. What's clear is that modern consumers, particularly Gen-Z customers, are actively seeking brands that mirror their values and the retailers who champion them. Patagonia is perhaps the poster child here, but sporting goods innovator Decathlon and the Schwarz Group--which owns not only the grocer Lidl and the Kaufland chain, but also the recycler PreZero--highlight a critical truth: Authentic, greenwashing-free sustainability is fundamentally good for business.

Of course, sustainability, or at least sustainability reporting, is also a legal requirement. Europe's Corporate Sustainability Reporting Directive (CSRD) is just one of a few global examples of tightening environmental scrutiny fundamentally shifting the retail landscape.

AI will play a growing role in a retailer's sustainability reporting

Generally, both consumer-facing and compliance-focused sustainability reporting have been built on manual or haphazardly automated data collection from diverse, siloed sources. Typically compiled well after the fact, these delayed results then fed broad-brush regulatory filings, glossy ESG reports, and marketing efforts touting sustainability at the forest level, if you will.

If the CSRD is any measure, retailers can expect regulators to increasingly look for tree-level specificity at weed-growth pace. Given the current state of fragmented data affairs at many organizations, retailers will be hard pressed to provide such precision without extraordinary, tedious, and expensive effort. To address this, AI tools will become increasingly indispensable in taking over repetitive tasks, automating validation, and bringing a tighter, audit-ready workflow to the enterprise.

At the same time, AI, and agentic AI in particular, promises to enable the kinds of customer-side gains made possible by timely access to fine-grained sustainability data. Consider a concrete example: Drawing on verified, product-level footprint data, an AI shopping agent could seamlessly recommend a lower-carbon alternative to a customer who has opted into sustainability preferences. Operationally, a sharper, real-time understanding of waste, overstock, and logistics-related emissions can lead to cost-saving process improvements. These sorts of benefits are the core goals of operational sustainability.

Harmonized data at the heart of operational sustainability

Operational sustainability is about embedding sustainability data directly into day-to-day operational workflows. Harmonized data is its key enabler. Historically, that would entail unified physical databases (a near-impossibility given the reliance on diverse, legacy systems built around a core ERP) or rigid data warehouses.

Today, harmonized data is fast becoming the industry norm, thanks to enterprise data analytics platforms, also known as data fabric platforms. They provide a virtual, unified data model on top of existing systems, counting among the ERP business's hottest sellers at the moment--and for good reason.

Harmonized data provides the foundation for retailers to deliver superior shopping experiences while enjoying greater operational efficiency through automated compliance gathering and reporting. Importantly, with a data fabric, operational efficiency can more easily extend into the supply chain. This is where Scope 3 emissions, supplier declarations, and product-lifecycle data play heavily into a retailer's overall sustainability story, and where, to date, brands have faced their most formidable data-alignment challenges.

Considering all that, the regulatory burdens of the CSRD and similar regulations might just as easily be viewed as a powerful forcing function, leading to better, more resilient business results for retailers who harness technology wisely.

Tracking sustainability data at the transaction level

To exploit this opportunity, retailers must implement data fabrics across systems spanning operations, finance, supply chain, and customer experience. They must embrace highly granular, ERP-embedded sustainability-metric tracking systems--in particular, sustainability footprint management systems and green ledgers--to provide immediate, actionable visibility into how the business is performing against KPIs, whether they relate to regulatory requirements, sustainability-led sales goals, or operational efficiencies.

Perhaps I'm being overoptimistic. But if sustainability reporting must be overhauled anyway, and customers care deeply about systemic accountability--which they do--retailers have everything to gain on this front. Along the way, they'll be future-proofing their businesses with respect to both evolving regulatory landscapes and shifting customer trends, while providing a richer, high-fidelity trove of data for AI's currently incalculable possibilities.

Water has traditionally lived in a different category. In many organizations, it's still treated as a background utility expense. The invoice comes in, someone checks whether it looks reasonably close to prior months, and the process moves on.

But that mindset is beginning to change.

Recently, I've had many conversations with facilities teams, ownership groups, and finance leaders asking the same question: Why are water costs rising so aggressively, and what can be done about it without negatively affecting operations or customer experience?

Historically, most water initiatives focused on reducing consumption via low-flow fixtures, irrigation controls & conservation campaigns. Sure, those strategies helped and still make sense today.

But some organizations are realizing that not every inefficiency is tied to overuse or human behavior.

In many commercial environments, the issue is not necessarily the building itself, but the variability of the water moving through the broader municipal distribution system before it ever reaches the property.

Many people assume water enters a building in a streamlined manner. However, municipal water infrastructure can be highly turbulent. Water may travel long distances through widely shared piping systems, repeatedly changing direction as it responds to constantly shifting demand throughout the day. Construction activity and fluctuating usage across neighboring properties can influence flow conditions within the delivery system. Picture what happens when you first turn on a garden hose--the flow is often uneven and full of white, bubbly air before it settles. While commercial systems are more complex, this example provides a visual of how turbulence and air can be present in water systems.

Most organizations never consider these variables because, historically, there was little reason to. Water entered the building; the faucets worked; the bill was close to what had been charged in prior months, so it was simply accepted as a fixed operating expense.

A decade ago, this probably would have sounded like a niche facilities discussion. It doesn't anymore.

Water costs have risen sharply in many markets, particularly across hospitality, multifamily housing, and manufacturing, where usage volumes are significant. In places like San Diego, rate increases over the past several years have forced operators to look more carefully at delivery systems that previously received very little attention.

One facilities director I spoke with recently said they had spent years chasing small conservation wins while overlooking the broader performance characteristics of the incoming water system itself. That comment stuck with me because it reflects a larger shift happening across multiple industries right now.

Companies are starting to ask different questions.

Not just: How do we reduce water usage?

But also: How efficiently is water actually moving through the systems we already have?

That distinction matters.

For years, many organizations assumed the only path to lower water costs was to reduce pressure, limit flow, or ask occupants to change their behavior. In practice, those approaches can create friction -- especially in environments where user experience matters.

Hotels are a perfect example. Guests may support sustainability initiatives in theory, but no one wants a weak shower experience because a property is trying to meet sustainability targets. Multifamily operators face similar challenges. Residents are sure to complain if they can't easily wash the shampoo out of their hair. Comfort expectations don't disappear simply because utility costs are rising.

Food manufacturers face a different set of concerns. Production environments depend on stable, consistent water delivery for processing, sanitation, and operational reliability. As a result, organizations are becoming less focused on simple restriction and more focused on overall system performance. Some organizations are going beyond just cutting water use. They are now looking at how efficiently water is delivered, stabilized, and measured.

The importance of this is often underestimated.

Rather than focusing solely on reducing usage, organizations are exploring ways to improve the consistency and efficiency of water entering and moving through the property. In most cases, relatively small adjustments to flow conditions can improve overall system performance without any noticeable change in pressure, volume, or end-user experience.

At the same time, advances in monitoring technology are giving operators visibility they simply didn't have before.

AI-enabled smart water monitoring systems provide more detailed insight into pressure imbalances, irregular flow, leaks, and abnormal usage patterns across commercial properties. What used to be invisible between the utility connection and the monthly invoice is now measurable.

This insight changes how teams approach the problem.

In some cases, additional utility review has resulted in billing adjustments after operators identified previously unexamined system conditions.

More importantly, companies are beginning to recognize that water behaves more like an operational system than a simple commodity expense.

It reminds me of how closely this resembles the early stages of energy management 15 or 20 years ago. There was a time when many companies viewed electricity costs as mostly fixed and unavoidable. Once better monitoring and system-level analysis became available, organizations could detect inefficiencies they had previously been unable to see.

Now water is following a similar path.

Many organizations have already optimized procurement, telecom expenses, and energy usage. Water is increasingly the next operational category to receive serious attention -- particularly among companies seeking efficiency gains without requiring major capital expenditures or aggressive behavioral enforcement programs.

And unlike some large-scale sustainability initiatives, improving visibility into water systems often does not require organizations to reinvent their operations overnight.

Sometimes it starts with something much simpler: Looking more closely at a part of the system that most companies have ignored for decades. What is happening at the utility meter?

For years, water was treated primarily as something businesses consumed.

Now, more organizations are beginning to treat it as something they can actively understand, measure, manage, and control. This shift is not because companies suddenly care more about water, but because they are starting to manage inefficiencies that have been hidden for years.

But somewhere between the ingredient list and the directions, I found myself slowing down. Not because I was trying to avoid sulfates or decode a sustainability certification, but because the bottle was doing something surprisingly rare. It wasn't simply listing ingredients or making broad claims about being "clean." It was explaining why each ingredient was there and what it actually does for my hair in language that made immediate sense.

Native had turned what is often a wall of unfamiliar chemistry and a bunch of scientific hubbub into deeper understanding.

It reminded me of something I've noticed across the sustainability space. For years, brands have invested heavily in becoming more transparent. They have published ingredient lists, lifecycle assessments, sourcing commitments, carbon disclosures, recyclability instructions, and environmental certifications. Transparency has become an expectation rather than a differentiator.

According to NielsenIQ's 2026 analysis of health and wellness consumers, purchasing decisions are increasingly driven by people who are "self-directed, intentional, and informed." Rather than relying solely on brand familiarity, consumers are evaluating products based on functional benefits, ingredient transparency, and how well products deliver clear outcomes. NielsenIQ argues that the next phase of growth will belong to brands that translate these evolving expectations into products that deliver understandable, personalized value.

Transparency has become table stakes

Brands have spent the better part of a decade responding to growing consumer demand for transparency. Product labels have become crowded with sustainability claims, certifications, ingredient disclosures, and increasingly complex scientific language intended to demonstrate credibility.

But research suggests that simply adding more information isn't necessarily making consumers more confident.

McKinsey's research on sustainable packaging found that while 55% of U.S. consumers are highly concerned about the environmental impact of packaging, environmental considerations still rank well behind price, quality, brand, convenience, hygiene, and shelf life when consumers make purchasing decisions. At the same time, 60-70% of consumers said they were willing to pay more for sustainable packaging, and roughly one-third would buy more sustainably packaged products if they were better labeled.

Consumers aren't rejecting sustainability -- they're struggling to recognize it in ways that connect to the decisions they're already making. Sustainability is often communicated as an environmental outcome, while consumers are evaluating products through the lens of health, quality, convenience, safety, and performance. The opportunity isn't simply to disclose more sustainability information; it's to translate it into benefits people immediately understand and value.

The brands getting this right aren't simplifying science -- they're translating it.

Native is one example.

Instead of asking consumers to trust an unfamiliar ingredient list, the brand explains what ingredients do in plain language. Coconut oil moisturizes. Shea butter conditions. Citric acid balances pH. Rather than forcing consumers to decode chemistry, the product interprets it.

RXBAR took a similarly disruptive approach when it launched with packaging that simply listed its core ingredients directly on the front of the wrapper: "3 Egg Whites. 6 Almonds. 4 Cashews. 2 Dates. No B.S."

It wasn't revolutionary because the ingredients were unusual. It was revolutionary because consumers no longer had to interpret marketing language to understand what they were buying.

Keogh's, an Irish potato chip company, extends this philosophy beyond ingredients to provenance. Through its Spud Navigation platform, consumers can scan a QR code on each bag to discover the specific potato variety inside, the field where it was grown, when it was harvested, and even the name of the person who cooked that particular batch. Rather than treating traceability as back-end supply chain data, Keogh's transforms it into a tangible story of people and place. It answers a question many brands overlook: not just what am I buying, but where did it come from, and who helped make it?

Each brand is doing something deceptively simple. They're translating complexity into relevance.

Why translation works

Today's consumers have access to more product information than ever before, yet more information hasn't necessarily led to greater confidence. Ingredient lists, certifications, QR codes, and sustainability claims have increased transparency, but they have also increased complexity.

Research from the International Food Information Council's 2025 Food & Health Survey found that while most Americans are confident the U.S. food supply is safe, nearly one-third changed their purchasing habits in the past year because of food safety concerns. Meanwhile, the IFIC Consumer Perceptions of Food Chemicals Survey found that consumers' concerns are often driven less by actual risk than by the presence of unfamiliar ingredients or chemicals. Together, these findings suggest that consumers aren't simply looking for more information--they're looking for information they can confidently interpret.

Behavioral science helps explain why. Psychologist Norbert Schwarz's research on processing fluency found that information requiring less cognitive effort is more likely to be perceived as credible, trustworthy, and easier to act upon. In other words, communication doesn't simply transfer knowledge--it shapes how people evaluate it.

Brands that translate complex science into clear, accessible language aren't reducing scientific rigor; they're reducing the effort required to understand it. By lowering cognitive friction, they transform sustainability from something consumers have to decipher into something consumers can confidently understand.

That clarity matters in today's trust landscape. According to the 2025 Edelman Trust Barometer, 70% of respondents believe business leaders deliberately mislead people through falsehoods or exaggeration, yet 80% believe businesses should play a role in addressing societal issues when they can make a positive impact. Consumers haven't stopped looking to brands for guidance; they've become far more discerning about how that guidance is communicated.

The next competitive advantage

Standing in the shower that morning, I wasn't expecting a lesson in sustainable marketing. But somewhere between "cleanser derived from plant oils" and "Lather. Sing. Rinse. Repeat," I realized I wasn't reading an ingredient list anymore -- I was reading a translation.

Perhaps that's the next competitive advantage. In a world where information is abundant, brands won't earn trust by saying more. They'll earn it by helping people understand.

The era of the voluntary, check-the-box sustainability report is officially over. But if you think the current shift is merely a story about new compliance regulations, you are missing the reality of today's boardroom.

Sustainability is no longer a siloed communications exercise; it is front and center on the executive agenda. When I speak with CFOs and COOs today, the conversation has moved beyond how to format a disclosure to how environmental and social data are actively reshaping their budgets, risk models, and operational strategies. Corporate boards are demanding to know how supply chain vulnerabilities, volatile energy costs, and climate transitions will impact the bottom line. Asset owners are tying capital allocation directly to this information. Consequently, the data powering these strategic boardroom pivots must be treated with the same rigor, oversight, and accountability as financial disclosures.

Yet, if we examine this shift closely, it represents much more than a new compliance hurdle. It marks the moment when sustainability data evolves from a lengthy, fractured annual project into a core engine for operational resilience and strategic business intelligence.

The Demand for Decision-Grade Data

The immediate catalyst for this transformation is clear. If a company falls within the scope of these new regulations, its Chief Financial Officer and VP of Legal should oversee the process. The remit is no longer public perception; it is about protecting the board, avoiding legal penalties, and managing corporate risk. Regulators and external auditors now demand data that is highly standardized, trustworthy, and entirely audit-ready.

While the term "ESG" has faced public scrutiny--and the nomenclature itself may be less prominent in recent headlines--the underlying work has not disappeared. Instead, the conversation has matured into a pragmatic discussion about pure risk management. Astute business leaders are inherently sensitive to risk, and they now recognize that climate and social factors are systemic risks that directly impact enterprise viability. As a leader, interpreting this data isn't about looking at generic ESG scores; it's about translating environmental and social metrics into tangible operational levers. We see the real business impact when our customers use carbon data to map their direct exposure to volatile energy costs, or when they turn intangible risks into measurable metrics that dictate their competitive advantage.

While compliance is the most visible driver forcing companies to upgrade their data rigor, the capital markets remain the ultimate catalyst.

Throughout the recent period of "ESG backlash," one critical reality has remained unchanged: asset owners at the very top of the investment value chain continued to integrate climate and sustainability metrics into their capital allocation strategies. They require assurance that the businesses they fund are viable for the long haul. That pressure trickles down to asset managers, and ultimately, to the enterprise. To secure capital today, organizations must prove their performance with investor-grade data. The compelling point here is stark: if companies continue to manage this data using fragmented, unauditable methods, they will eventually be priced out of the market. Because asset owners are using these metrics to guide capital allocation, failing to provide investor-grade data puts you at risk of being screened out of major portfolios, incurring a higher cost of capital, and possibly losing the funding necessary to scale.

The End of Fragmented Tooling

As the stakes for data integrity rise, organizations are quickly realizing that their legacy technology stacks are no longer fit for purpose.

Historically, sustainability teams relied on a sprawling, disconnected web of point solutions, carbon calculators, and isolated spreadsheets to piece together their voluntary reports. In a mandatory, heavily audited environment, that fragmented approach becomes a massive liability. The reality of this manual reliance was highlighted in a KPMG survey, which revealed that while 83% of organizations believe they are ahead of their peers in sustainability reporting, nearly half (47%) admit they still rely on spreadsheets as their primary ESG data management system.

When data is scattered, governance inevitably breaks down. Traceability is lost, making it almost impossible to determine who made specific decisions and when. When auditors eventually ask for proof, answering their inquiries becomes an arduous process because there is no reliable, central system of record.

Today, sustainability practitioners are receiving significant pushback from finance and procurement teams regarding this decentralized approach. Those departments do not want a sprawling ecosystem of tools; they are mandating enterprise-grade platforms capable of covering both short-term compliance deadlines and long-term strategic objectives.

We are witnessing a macro-trend that closely mirrors the evolution of older enterprise software categories. Consider Environmental, Health, and Safety (EHS) software. It began as two or three distinct categories before the market matured, realizing that managing workplace hazards in one system and environmental compliance in another failed to provide a cohesive picture. Companies are actively abandoning disconnected tools in favor of integrated platforms that combine carbon accounting, broader ESG metrics, and climate risk into a single, traceable hub.

Translating Business Risk into Operational Strategy

The true value of bringing this information into an integrated platform extends far beyond appeasing regulators. When an organization connects risk analysis, carbon accounting, and reporting, it unlocks the ability to make fundamentally better business decisions.

These topics are inextricably linked. A company cannot credibly disclose how it is addressing climate risk without a comprehensive carbon management strategy.

Ultimately, for sustainability to resonate with the C-suite, it must make operational sense. When sustainability data becomes "decision-grade," it ceases to be a backward-looking reporting exercise. It transforms into a proactive tool to manage tangible business challenges.

A precise, auditable view of a corporate carbon footprint is more than an emissions tracker; it is the baseline financial data required to assess stranded asset risk, protect profit margins against carbon pricing, and ensure long-term operational continuity. Accurately tracking supply chain impacts allows leaders to identify hidden vulnerabilities before they disrupt operations. It even enables companies to take intangible assets,such as talent strategy,and turn them into measurable metrics that help attract and retain a top-tier workforce.

The companies that will lead the next decade are the ones recognizing this shift today. By moving away from fragmented tools and adopting integrated performance management platforms, they are doing more than checking a compliance box. They are embedding sustainability directly into the core of their business, building a foundation for genuine, long-term resilience.

For most of the past two decades, sustainability reporting was a narrative exercise. Teams gathered data, wrote annual reports, and published them as stand-alone documents. The verification standard was low; the audience was broad. Three regulations have since altered the underlying requirements in ways that matter for how organizations are structured.

1. The CSRD (revised by the EU's Omnibus package in February 2026) now applies to organizations with more than 1,000 employees and EUR450 million in annual turnover, requiring mandatory limited assurance, documented data lineage, board sign-off, and reporting under simplified ESRS.
2. The ESEF extends iXBRL tagging to sustainability disclosures, making reports machine-readable and taxonomy-mapped.
3. The ISSB's IFRS S1 and S2 standards bring sustainability risks and opportunities into investor-focused reporting, requiring climate risk to be discussed alongside capital allocation decisions.

Taken together, these three requirements describe a reporting function that needs audit-ready workflows, version-controlled data, and systems capable of withstanding external scrutiny. That is a finance capability. It is also, increasingly, a cross-functional one: IT, legal, procurement, and operations all have a role in building the underlying data architecture.

The Infrastructure Gap and What It Looks Like in Practice

The challenge facing most organizations is not that sustainability data is absent. Most companies in scope for CSRD or ISSB have been collecting metrics for years. The problem is that much of that data was built for voluntary disclosure, not for external verification. According to recent CSRD research, 83% of companies report that collecting accurate CSRD data is significantly challenging, and 29% indicate they feel unprepared for ESG audits.

A practical illustration: a sustainability team may calculate Scope 2 emissions accurately, using the correct methodology and current conversion factors. But if those figures cannot be traced to metered source data, if there is no version control on the inputs, and if no formal approval workflow exists, the number may still fail an assurance review. Not because it is wrong. Because it cannot be proven to be right. That is the gap that needs closing, and closing it requires the kind of process discipline that finance functions have spent decades building.

A 2024 Verdantix global survey found 73% of sustainability leaders now view the CFO as among the most influential figures in funding and governing ESG strategies. Protiviti's 2025 Finance Trends Survey found ESG moved from 14th to 9th in CFO priorities in a single year, the largest upward shift of any category tracked. Among organizations preparing for CSRD-grade assurance, this is not a theoretical trend. Finance teams are actively taking ownership of the reporting architecture.

How Leading Organizations Are Responding

The organizations managing this transition most effectively are not simply reassigning tasks. They are redesigning how the two functions relate. A 2024 study by Kearney and We Don't Have Time, covering 500 CFOs across sectors and geographies, found over 90% of CFOs at companies with integrated sustainability strategies expect revenue to grow as a result. Integration is not just a compliance response. It carries commercial logic.

Three approaches characterize organizations making real progress:

• Shared data ownership. Emissions figures, energy data, and social indicators are being brought into the same governance frameworks as financial data. Finance brings accountability structures. Sustainability brings the subject matter knowledge to define what gets measured and why. Neither function can do the other's job.
• Joint reporting oversight from the outset. Rather than sustainability producing a report and asking finance to validate it at the end, leading organizations build cross-functional ownership from the beginning of the cycle. Research on aligning finance and sustainability teams consistently shows that late-stage validation produces weaker disclosure than early joint ownership.
• Systems built for verification, not just collection. Spreadsheet-based processes are being replaced by platforms that produce a documented, traceable, auditable output. Organizations that have made this investment typically find the assurance process more manageable, because the work is done before the auditor arrives.

It is worth being honest about how this transition feels from the inside. It is rarely smooth. Ownership disputes, incompatible systems, and differing views on what data matters are common. Finance teams can lack ESG subject matter knowledge. Sustainability teams can feel displaced from processes they built. ERP systems were not designed with sustainability metrics in mind. The organizations making this work are doing so iteratively.

What This Means for Sustainability Teams

Sustainability teams built corporate ESG disclosure from the ground up, often without meaningful organizational support, against significant internal resistance, and well before regulation mandated any of it. The function created the metrics, the frameworks, the stakeholder relationships, and the reporting culture that now underpins a significant portion of corporate accountability. That foundation matters.

The shift described in this article is not a correction of that work. It is what maturation looks like. As external requirements have become more technically demanding, the operational side of disclosure production has grown into a function that finance is better equipped to run. That does not diminish what sustainability built. It frees the function from work that was never its natural territory.

The CSO's most valuable contribution is not configuring taxonomy mappings or defending data methodology in front of auditors. It is setting direction: which commitments the organization makes, how it engages its value chain, where it chooses to go beyond what regulation requires. In the organizations doing this well, finance produces the auditable record of what is happening; sustainability determines what should be happening. Linking executive compensation to sustainability performance reflects exactly this division, where finance verifies the metrics and sustainability sets the ambition.

That said, the risks of an over-financialized approach to sustainability disclosure deserve acknowledgment. When assurance and quantification become the primary lens, there is a real tendency for measurable metrics to crowd out material issues that resist numerical treatment. Social risks, ecosystem dependencies, and long-term resilience questions do not always fit neatly into the formats that audit processes prefer. Finance-led disclosure that optimizes for verification at the expense of relevance would be a poor outcome. Subject matter expertise is not optional. It is the check on that risk.

Practical Starting Points

For teams working through this now, three questions tend to surface the most important gaps:

• Who owns each data point? Map every required metric to a named owner, validator, and sign-off. Ambiguous ownership is consistently where errors accumulate across a reporting cycle.
• Can each figure be traced to its source? If not, build that traceability before the next assurance cycle. This is a systems and process investment, not just a data quality problem.
• Have finance and sustainability agreed on a shared operating model before reporting season starts? Governance questions resolved under deadline pressure tend to produce fragile answers. Agreement in advance is the simplest improvement most organizations can make.

The Direction of Travel

At some point in the near future, asking whether a sustainability disclosure meets financial reporting standards will seem like an odd question, because the underlying systems will be the same. This convergence is already visible in organizations at the leading edge of this transition. Their sustainability verification processes sit inside their enterprise oversight architecture. Their ESG data flows through the same systems as their financial statements. Their reports are reviewed by the same audit committee that reviews their accounts.

For these organizations, sustainability reporting has not become more burdensome. It has become more defensible. And in a market where the gap between disclosed commitments and verified outcomes is under growing scrutiny, defensibility is starting to look like a strategic advantage.

The CFO's growing role in this is not a side effect of regulation. It is what happens when disclosure is taken seriously enough to be built properly. The question for most organizations is not whether this convergence is coming. It is whether they are building for it now or waiting until they have to.

• PM2.5 exposure due to wildfire-related air pollution contributes to health issues, often lasting months to years.
• Effects can show up long after exposure and even in areas without fires due to pollution travelling long distances.
• El Nino events reduce improvements in heart disease and injury-related mortality, eroding longevity gains.
• These trends may have implications for insurance and actuarial models.

Climate change is negatively impacting human health by increasing the risk of death, disease and other health crises, according to the World Health Organization (WHO). A 2023 WHO Fact Sheet estimates there will be 250,000 additional deaths annually between 2030 and 2050 due to climate change impacts on disease and coastal flooding.

Many Americans have already been experiencing negative health outcomes due to climate change. In a consumer survey conducted by The Society of Actuaries (SOA) Research Institute to gauge the public's experiences with climate risks, 53% of respondents reported that extreme weather had impacted their health. Nearly a quarter said it impacted existing chronic conditions and 15% reported it caused long-term injury and/or chronic conditions.

The SOA Research Institute has studied two natural phenomena that have intensified due to climate change: El Nino weather events and exposure to wildfire smoke. Researchers found that both types of climate-related events have lagging effects on the health landscape in the U.S., which may slow the progress of people living longer, also known as mortality improvement.

Health Risks Due to Wildfire-Related Air Pollution

Most wildfire-related deaths result not from the flames themselves but from the health effects of wildfire-related air pollution. According to The Impact of Wildfire-Related and Environmental Air Pollution on Morbidity, breathing in fine particulates that are less than 2.5 micrometers in size (PM2.5) impacts many diseases. When PM2.5 exposure occurs alongside extreme heat, the delayed health impacts are significant, accounting for 2.3% to 8.6% of overall disease prevalence for the conditions studied. In other words, 2 to 9 of every 100 cases of the conditions studied are due to the effects of wildfire-related air pollution coupled with heatwaves, which rivals and often exceeds the impacts of COVID-19 and its aftermath.

The health effects of wildfire-related air pollution can persist for months or sometimes years after exposure. Respiratory conditions rise immediately, while circulatory and mental health issues peak months later, reflecting the difference between short-term airway inflammation and longer-term systemic and neurological effects.

The study also found that wildfire-related air pollution doesn't affect everyone equally. Communities with less access to health care, more chronic health problems, and greater social and economic challenges tend to get sicker when exposed to wildfire-related air pollution than people in better-resourced areas.

An accompanying SOA Research Institute study on the effects of wildfire-related air pollution on mortality cites a finding by the U.S. Environmental Protection Agency that wildfires have accounted for up to 40% of annual PM2.5 emissions. This impacts the prevalence and severity of health conditions, especially cardiovascular and respiratory diseases, increasing mortality in the medium to long term.

Additionally, the study found that wildfire frequency and burned area within a state are poor indicators of air pollution-related mortality. One reason is that PM2.5 from wildfires can travel long distances, increasing mortality even in states that did not experience fires directly. The health effects of PM2.5 often emerge months or years after exposure, creating a disconnect between when wildfires occur and when their health impacts are detected.[^1]

Big Impacts From El Nino

El Nino events are also associated with a slow-down in mortality improvements, particularly for cardiovascular and injury-related deaths. The SOA Research Institute report, Climate Anomalies' Enduring Impacts on U.S. Mortality and Health Landscape, finds that circulatory death-rate improvement worsens significantly, with an estimated cumulative loss of about 4.8 percentage points in improvement over five years. The study also uncovers a 5.0% loss in mortality improvements from external causes, including accidents and trauma.

The study shows that heart disease drives most of the increase in circulatory deaths linked to El Nino. For external causes, transportation accidents and medical or surgical complications are the main drivers of higher risk.

Findings also indicate that the long-term mortality burden falls primarily on middle-aged and older adults. Impacts on circulatory-related diseases are most pronounced among people ages 50 to 80, while deaths from external causes peak among those ages 35 to 44. Although the immediate effects of the event at year zero are relatively modest, the consequences compound over the years that follow, driving long-term deterioration of mortality trends.

The report finds that under intensified El Nino Southern Oscillation (ENSO) variability, mid-century to end-of-century projections show material erosion of U.S. life-expectancy gains. Predictions under higher-emission scenarios show losses exceeding the entire mortality improvement achieved in the early 21st century, with circulatory disease being one of the largest drivers of these projected losses.[^2]

Implications for the Insurance Industry

The effects of increased climate risks, such as those posed by El Nino and wildfire-related air pollution, create an increasingly complex environment for the insurance industry to navigate. These and other extreme weather events could exacerbate existing uncertainties in health care utilization, premium pricing, and regulatory policies. As a result, insurers may need to adapt how they assess risk, design benefits, and engage with stakeholders.

For example, the Climate Anomalies' Enduring Impacts on U.S. Mortality and Health Landscape study suggests that life and health insurers can use ENSO forecasts to anticipate claims volatility, stress-test capital, and adjust solvency buffers and reinsurance coverage in response to expected increases in morbidity and hospitalizations. ENSO-related uncertainty can also be reflected in benefit pricing, reserving assumptions and reinsurance design. In addition, insurers may find value in exploring parametric triggers for catastrophe or stop-loss coverage. Regulators and actuarial bodies may consider the use of climate-adjusted mortality improvement assumptions in valuation and solvency frameworks.

Similar challenges are expected from wildfire-related air pollution, particularly when combined with extreme heat, which may further increase claims volatility. These risks are unlikely to be evenly distributed, reflecting differences in geographic factors and social determinants of health. At the same time, ongoing uncertainty from medical cost trends underscores the need for actuaries to explore new methods of measuring risk and developing appropriate contingency loadings.

Together, these studies reveal that climate-driven events are not merely short-term disruptions. They can lead to lasting health effects and weaken long-term mortality improvement trends. The findings emphasize the potential value of integrating climate considerations into modeling, pricing, reserving,and capital planning to better manage both health and financial outcomes.

To learn more, visit the SOA's Catastrophe and Climate and the Mortality and Longevity strategic research pages.

1. The SOA Research Institute studies, The Impact of Wildfire-Related and Environmental Air Pollution on Morbidity and Modeling the Impact of Wildfire-Related Air Pollution on Mortality, provide valuable evidence on wildfire-related PM2.5 health and mortality impacts, but data limitations and complex relationships warrant caution and further research on long-term effects.
2. A limitation of the analysis in the SOA Research Institute report Climate Anomalies' Enduring Impacts on U.S. Mortality and Health Landscape is its national scope; future research could incorporate higher-resolution health data. Also, extending the framework to a global basis could enable comparative insights into ENSO's impacts. Additionally, the projections in the report are based on model outputs that do not yet fully represent updated climate simulations which could provide a more realistic assessment of ENSO-related health risks.

Business leaders still expect sustainability to contribute to competitive advantage, and most companies are maintaining or increasing climate-related investment. At the same time, executives are concerned by the risk of a disorderly transition, shaped by physical climate impacts, policy shifts, supply chain disruption and geopolitical fragmentation.

Yet one of the most revealing findings is more specific. When companies were asked to identify the main drivers of their sustainability strategies, regulatory compliance and resilience and risk management ranked first, both selected by 52% of respondents. Future growth opportunities followed at 46%.

That ranking helps explain the current phase of corporate sustainability. The field is being pulled by two forces at the same time: obligation and protection.

From Voluntary Action to Regulatory Architecture

For many years, corporate sustainability was largely presented as voluntary action. Companies launched commitments, published reports, created programs and defined targets, frequently ahead of formal legal requirements. That landscape has changed significantly.

Today, sustainability is embedded in regulation, disclosure, procurement and market access. Climate reporting standards, ESG disclosure rules, due diligence requirements, taxonomy frameworks, product regulation, carbon pricing mechanisms and sector-specific transition policies are raising expectations on what companies need to measure, manage and demonstrate.

For that reason, the prominence of compliance in the Barometer is not surprising. In many jurisdictions and sectors, sustainability work has moved from corporate preference to formal obligation. Even companies with limited strategic conviction still need to respond to reporting requirements, customer expectations, investor scrutiny and legal exposure.

This regulatory expansion has also changed the internal location of sustainability. The agenda now requires data systems, governance processes, controls, risk ownership, legal interpretation, finance involvement and operational accountability.

However, compliance explains part of the shift. The second leading driver points to a more strategic interpretation.

The Rise of Resilience as a Business Driver

The second leading driver in the Barometer is resilience and risk management. Its equal weight with compliance is the sharper finding.

Companies are facing a business environment where disruption is becoming routine. Heat, water stress, storms, flooding and wildfires are affecting assets, logistics, infrastructure, labor productivity and supplier reliability. Geopolitical confrontation is reshaping energy markets, trade routes, industrial policy and access to critical materials. Macroeconomic pressure is increasing sensitivity to costs, margins and capital allocation. Policy volatility is making investment decisions more complex, especially in sectors exposed to transition rules, incentives and technology pathways.

In this context, resilience becomes a practical business capability. It refers to the ability to anticipate exposure, absorb shocks, adapt operating models and keep value chains functioning under stress.

This is where sustainability gains strategic depth. A mature sustainability strategy gives companies a structured way to understand environmental and social conditions that can affect performance. It connects climate risk with asset planning, water availability with supply chain continuity, workforce safety with heat and productivity, energy strategy with price volatility, and product portfolios with regulation, demand and technology costs.

Therefore, sustainability starts to operate as part of the company's risk architecture.

The Barometer's investment findings reinforce this reading. Power generation and storage, grids, regenerative agriculture, zero-emission vehicles and resilient buildings show the strongest improvement in attractiveness. In those areas, the connection to energy security, cost reduction, infrastructure resilience, supply chain stability or future demand is easier to quantify.

By contrast, low-carbon hydrogen and protein diversification show a more difficult investment profile. Their relevance may be high, but the business case is more dependent on infrastructure, policy certainty, demand creation, technology maturity and value chain coordination.

This distinction is important for corporate decision-making. Sustainability investment moves faster when executives can connect it to direct business variables: cost, continuity, risk exposure, market access, customer demand and competitive positioning.

Compliance may set the minimum level of action, but resilience determines the quality of the strategy. A compliance-led approach asks whether the company can meet disclosure requirements, respond to regulation and satisfy external expectations. That work is necessary, although it rarely produces a full view of business exposure.

A resilience-led approach asks a deeper set of questions. Which assets, suppliers, markets and communities are most vulnerable to climate and transition risks? Where could energy, water, logistics or labor disruption affect performance? Which assumptions guide capital allocation? Which investments reduce exposure while strengthening competitiveness?

Those questions bring sustainability closer to enterprise risk management, scenario analysis, procurement, operations, finance and corporate strategy.

The growth dimension also deserves attention. With 46% of respondents identifying future growth opportunities as a driver, companies are using sustainability to assess where demand, technology and policy are moving. The transition is creating new markets and changing the conditions for existing ones.

The next phase of corporate sustainability will likely be defined by the interaction between compliance, resilience and growth. Compliance creates the baseline. Resilience strengthens the business model. Growth identifies where value can be created as markets shift.

Corporate sustainability is now a management discipline for a more volatile economy. It helps companies understand risk, allocate capital, protect operations, adapt value chains and compete under changing environmental, social and regulatory conditions.

The pressure to act may come from compliance. The business reason to act is increasingly resilience.

At Not Naked Swim, sustainability was never intended to be a marketing layer added after launch. It became the system through which we chose everything: recycled nylon over cheaper virgin materials in procurement, doing our small-batch production with a domestic manufacturer, using ocean-recycled packaging over standard mailers, and choosing inventory selection strategically. And while "circular fashion" is often discussed aspirationally, the operational reality for small brands is considerably messier.

This is not a founder story about good intentions. It is a case study in what happens when a brand attempts to apply circular and lower-waste operating principles from day one, and the tradeoffs that follow. As a full coverage swimwear brand preparing for launch after debuting at Miami Swim Week 2026, we are still early in the journey. But the lessons have already been expensive, operationally difficult, and unexpectedly clarifying.

When sustainability becomes the constraint, procurement changes completely

In apparel, sustainability is often treated as a feature added later through a recycled capsule collection, offset initiative, or revised packaging program.

We approached it differently.

We asked: What would a swimwear brand look like if sustainability shaped the decisions from the beginning?

That shift reorganized nearly every procurement decision.

Fabric became both a sourcing decision and a longevity decision

We selected high quality recycled nylon fabrics with built-in UPF protection. The recycled component mattered because it reduced dependence on virgin petroleum-based inputs. The high quality & UPF protection mattered for a different reason: longevity.

A swimsuit that doubles as sun protection is a product customers may keep and use more often, extending product life and reducing replacement frequency. Circularity is not only about recycled inputs, it is also about keeping products in use longer.

There were tradeoffs.

More conventional fabrics would have expanded our color options, simplified sourcing, and lowered cost per yard. But material decisions are rarely isolated decisions. They shape transportation requirements, supplier relationships, production flexibility, and ultimately, waste.

We prioritized sourcing fabrics already stocked domestically to avoid unnecessary international freight for materials intended to support a lower-footprint brand story.

For small brands, fabric selection becomes more than an aesthetic choice. It becomes a systems decision.

Pattern efficiency became a sustainability input

One of the least discussed waste streams in apparel production is fabric loss during cutting.

Trim waste, the fabric discarded between pattern pieces, often becomes an accepted byproduct of production. We chose to treat it as a design parameter instead.

Our development process required us to think explicitly about how patterns sat on the fabric yard, reducing unnecessary waste wherever possible. No emerging brand will eliminate material waste entirely, but attention paid at the design stage has measurable downstream effects.

For founders entering apparel, this is one of the earliest sustainability opportunities available and one of the easiest to overlook.

Packaging became part of the product decision

Sustainability claims frequently stop at the garment itself.

We chose ocean-bound recycled polymailers for customer shipments and worked toward minimizing unnecessary packaging throughout fulfillment. Our products are shipped to us plastic-free from manufacturing, and we avoided traditional disposable hangtags in favor of a heat-transfer, lower-waste alternative.

Care instructions are provided on plant-able seed paper intended for reuse rather than disposal. Even the try-on hygiene liners are made from recycled materials.

None of these decisions dramatically alter the economics of a business on their own. But collectively, they shape operational consistency.

Customers notice when sustainability appears selectively.

They also notice when it appears systematic.

The financial math: sustainability carries a real cost

Discussions around sustainable fashion often become abstract. In practice, the costs are concrete and immediate.

The sustainability premium appeared in our cost structure almost immediately.

Domestic cut-and-sew manufacturing added roughly $10-$20 per garment compared with overseas alternatives we benchmarked during sourcing. Recycled fabrics increased material costs. Ocean-bound recycled packaging carried a higher per-unit shipping expense. Smaller production runs reduced waste risk but eliminated many economies of scale.

The result was straightforward: lower margins by design.

For early-stage brands, this matters.

There is often an assumption that sustainability can be layered onto a business once scale is achieved. Our experience suggests the opposite: foundational supply-chain decisions become harder to reverse as operational habits solidify.

Rather than treating higher costs as penalties, we began viewing them as investments in three forms of resilience:

Customer trust. Consumers increasingly recognize the difference between sustainability messaging and operational transparency. Early customer conversations suggested that clear sourcing practices shortened the trust-building process, particularly among consumers already seeking alternatives to fast fashion.

Supply-chain visibility. Working with domestic partners allowed for faster problem-solving. A construction issue identified in production can often be corrected in days rather than months. Geographic proximity reduces friction and in apparel, friction often becomes a hidden cost.

Inventory discipline. Smaller production runs force operational rigor. They reduce excess inventory exposure and discourage speculative overproduction.

For founders considering a similar path, sustainability costs should be modeled honestly. The margins are harder. The tradeoffs are real.

But some costs create strategic advantages that do not immediately appear on a spreadsheet.

Why "Made in USA" is harder than most apparel founders expect

Domestic production sounds straightforward in theory.

In swimwear specifically, it is anything but.

A swimsuit is not one material. It is fabric, elastic, thread, clasps, bra cups, zippers, drawstrings, and trims; each sourced through different supply chains, many of which remain heavily globalized.

What surprised us most was how difficult it became to source an ecosystem rather than a garment.

At one point, we removed a design from our launch collection because we could not source the bra cups domestically within our timeline. The decision slowed development but preserved alignment with our sourcing standards.

This is the less visible side of sustainable manufacturing: constraints.

Many apparel founders imagine domestic production as simply selecting a local sewing facility. The bottleneck often appears much earlier at the material and component level.

The United States currently has a limited number of swimwear-specific cut-and-sew facilities capable of handling smaller production runs, supporting domestic sourcing efforts, and maintaining realistic pricing for emerging brands.

The supplier ecosystem is improving, but slowly.

For founders exploring this path, the lesson is practical: budget significantly more sourcing time than expected.

Every domestic supplier relationship becomes infrastructure.

The most underrated sustainability decision: refusing to overproduce

Perhaps the most overlooked sustainability decision an apparel startup can make has nothing to do with recycled materials.

It is choosing not to overproduce.

Overproduction is one of fashion's most persistent waste problems. Excess inventory eventually becomes discounted inventory, liquidation inventory, deadstock, or landfill waste.

Most apparel waste begins as a forecasting mistake.

For emerging brands, small production runs offer one structural solution.

Because unit costs are higher, brands are incentivized to produce only what they can realistically sell. Restocking becomes demand-driven rather than projection-driven.

This creates tradeoffs.

Per-unit manufacturing costs rise. Margins compress. Reorders become more frequent.

But the operational upside is meaningful: cleaner inventory management, reduced waste exposure, and fewer products manufactured without a clear destination.

For sustainability-minded founders, this may be one of the most practical circularity principles available.

Produce less. Learn faster. Restock based on evidence.

What we would tell other founders

If there is one lesson we would share with emerging apparel operators, it is this:

Build your sustainability standards before growth makes them inconvenient.

The earliest sourcing, packaging, and production decisions become increasingly difficult to reverse later. Habits harden. Vendor relationships deepen. Operational shortcuts become normalized.

Circular fashion is often framed as an aspiration.

For small brands, it may be more useful to think of it as operational discipline: sourcing closer, producing less, extending product life, and building systems designed to generate less waste from the start.

The economics are harder. The tradeoffs are real.

But for brands willing to absorb those constraints early, sustainability can become less of a marketing claim and more of a structural advantage.

They assume stability where there is systemic transition. They assume predictability where there is emergence. They assume control where complexity is increasing.

As a result, many organisations are still optimising within systems that are already being restructured.

What is less recognised is that this is not only a structural challenge. It is a cognitive one.

The conditions we are entering cannot be engaged with using the same ways of perceiving, deciding, and acting that were shaped in a more stable world.

They require a different order of thinking--a new mind architecture capable of engaging reality as it actually is, not as it has been.

This is not theoretical. It is already determining which organisations can navigate transition coherently--and which cannot.

This publication draws on more than two decades of work at the frontier of leadership, strategy, and systems--where inquiry and practice converge to shape strategic transition across organisations, economies, and multi-stakeholder systems under conditions of increasing complexity.

Why this work exists

We are moving into an economic and institutional era in which the underlying conditions of value creation are shifting:

• climate and resource constraints are redefining growth
• regulatory and capital dynamics are changing how markets function
• geopolitical and technological disruption are reshaping competitive landscapes
• systemic interdependencies are increasing at a pace few organisations are structured to manage

In this environment, the question is no longer:

How do we perform better within the existing system?

It becomes:

How do we remain viable--and actively shape both outcomes and system direction--in ways that sustain resilience, economic performance, and the conditions life depends on--as the system itself changes?

This is where strategy now operates.

From new mind architecture to strategic action

Understanding complexity is not enough.

Most organisations recognise the external transition but continue to operate with internal decision architectures designed for a different reality.

They add data, models, and reporting layers-- but leave the underlying logic of how decisions are made unchanged.

This is not a knowledge gap.

It is a design problem.

The quality of strategy is determined not only by what is decided, but by the accuracy with which reality is perceived--and the capacity of the organisation to act on it over time.

Why strategy fails under complexity

Most organisations recognise the external transition. But they continue to operate using decision-making architectures built for a different reality.

This creates a predictable pattern:

• strategy fragments across functions
• governance cannot hold long-term direction under pressure
• incentives pull in contradictory directions
• communication becomes disconnected from operational reality
• decision-making becomes reactive

But these are symptoms.

The underlying issue is more fundamental:

Leaders are often unable to perceive systemic reality with sufficient depth and accuracy to navigate it coherently.

When reality is not seen clearly:

• strategy is built on partial or outdated assumptions
• decisions do not align with how systems actually behave
• organisational responses lag or misfire
• execution breaks down

This is why strategy so often fails--not at the level of intent, but at the level of alignment with reality and the capacity to act within it.

In parallel, there is a second constraint:

Even when direction is understood, many organisations lack the cognitive, relational, and nervous system capacity required to carry it through under conditions of sustained complexity and pressure.

This is where breakdown occurs:

• alignment is lost over time
• decision quality deteriorates under stress
• implementation fragments
• and strategic intent does not translate into outcome

This is not a failure of intelligence.

It is a mismatch between the complexity of the environment and the capacity of the system--both organisational and human--to meet it.

Synthetic strategy: the operating response

Synthetic strategy is the disciplined practice of:

thinking across systems, synthesising complexity, and redesigning how organisations decide, govern, and act over time.

This is not optimisation.

It is repatterning.

At The Passion Institute, this work happens at the level where:

• economic systems
• planetary constraints
• governance structures
• capital allocation
• and leadership cognition

intersect with commercial reality.

This is where enterprise value is now created, protected, or eroded.

Synthetic strategy aligns three domains:

• Mind -- how leaders perceive reality, risk, and make decisions
• Structure -- how governance, capital, incentives, and business models are designed
• Purpose -- what the enterprise is ultimately shaped to serve

When these are coherent, organisations gain the ability to:

• act with direction under uncertainty
• absorb and adapt to systemic pressure
• align internal decisions with external reality
• and shape transition rather than react to it

Synthetic strategy ensures that strategy is not only analytically sound, but structurally aligned with reality and executable by the organisation that must carry it.

Where this work sits

I work with leaders and boards at strategic inflection points--when existing strategy no longer holds--aligning capital, governance, and decision-making so the organisation can remain viable and perform as markets and economic systems fundamentally shift.

This is particularly relevant in the transition to a clean, future-fit economy, where climate, regulation, and resource constraints are fundamentally reshaping how value is created and sustained.

The intellectual foundation: New Global Mind

This work is grounded in New Global Mind--a field of inquiry and strategic sense-making into how societies, organisations, and economies evolve under conditions of increasing complexity.

It integrates insights from:

• systems science and living systems theory
• political economy, finance, and capital flows
• governance and institutional architecture
• human behaviour and decision systems
• futures literacy and anticipatory thinking

At its core, New Global Mind explores:

what becomes possible when leadership, governance, and economic systems are aligned with how life actually works.

Why a podcast

Complexity cannot be understood within a single discipline.

New Global Mind is therefore also a video podcast series, featuring conversations with senior leaders and experts across systems science, economics, governance, sustainability, and human behaviour.

The aim is strategic clarity--and practical pathways for action.

Episode 01

Syntony Sense -- Evolutionary Intuition for World Changers

with Dr Alexander Laszlo

The first episode explores a capability that is becoming increasingly necessary at the frontier of leadership:

Syntony sense--evolutionary intuition.

In this conversation, I speak with Dr Alexander Laszlo, a world-recognised systems scientist whose work has shaped the field of sustainability leadership and systemic innovation for decades.

Watch the episode

What this conversation opens

This is not intuition as instinct.

It is attunement within living systems.

We explore:

• how leaders develop the capacity to sense coherence and direction beyond linear analysis
• the shift from self-centred to reciprocal systems
• why leadership is moving from control to enabling emergence
• what anti-fragility means in organisational context
• how systems mature--from reactive to generative
• the relational dimension of sustainability and value creation

At its core, the conversation points to something fundamental:

The transition we are in is not only structural. It is cognitive, relational, and systemic.

The transition to a clean, future-fit economy will not occur by preserving existing patterns or relying on aspiration alone.

Business operates within powerful systemic dynamics.

Strategy is how those dynamics are intentionally redirected over time--toward outcomes that are commercially viable, systemically coherent, and aligned with how life actually works.

Synthetic strategy(TM) is how this becomes real.

Full podcast series

All episodes are available here:

Spotify podcast channel

Youtube video podcast channel

About The Passion Institute

The Passion Institute is a strategic transition institute working with leaders, boards, and organisations engaged in the shift to a green, clean, and wellbeing economy--through a business perspective grounded in real-world conditions. We support enterprises and multi-stakeholder efforts in structuring credible transition pathways, aligning strategy, governance, and decision-making so direction holds and execution follows. Website.

It's also a concept Ali Adams returns to when she talks about Christchurch - a city of roughly 420,000 people on New Zealand's South Island.

"When you operate far from markets, you tend to become very pragmatic," says Adams, Chief Executive of ChristchurchNZ, the city's economic development agency.

While globalization and connectivity have softened the impact of distance, the discipline it created endures, and she argues it's at the heart of a city-wide economic approach grounded in innovation, pragmatism, and long-term thinking.

That pragmatism has deep roots. For more than a century, Christchurch has served as New Zealand's gateway to Antarctica, supporting scientific research and logistics in one of the most demanding environments on earth. Its universities developed early strengths in engineering, applied science and medicine; physicist Ernest Rutherford began his scientific career there before reshaping modern physics.

"This is a place with a long history of solving problems under constraint," Adams says.

It is also why, she argues, Christchurch is well placed to host conversations about the next phase of global economic change.

"In a global economy defined by disruption, cities are increasingly being judged not by how fast they grow, but by how well their systems perform under pressure."

Christchurch is no stranger to pressure.

In 2010 and 2011, the city experienced a devastating earthquake sequence that destroyed much of its central city. With one-third of Christchurch's buildings lost, the city was given an opportunity to rebuild to modern 21st-century standards, with sustainability at its core.

"We've created a compact, people-focused city center much safer for walking and cycling," says Adams.

But the recovery forced a deeper reckoning.

"Not just about rebuilding infrastructure, but about what kind of economy could actually hold up in an uncertain world."

Out of that emerged a more deliberate economic strategy. Rather than pursuing broad-based growth, Christchurch articulated a clear Economic Ambition: to build a regenerative, low-emissions economy focused on sectors that lift productivity and resilience over time.

"In Christchurch, we do that by focusing on specific growth sectors that are 'sticky' to our place. By that, I mean industries that already have momentum here because of our unique advantages and capabilities. That builds resilience."

The five growth sectors are cleantech, healthtech, aerospace, the bioeconomy and the Antarctic gateway.

The ambition is increasingly visible on the ground. The city has emerged as something of a cleantech hub, ranked first in New Zealand and 44th out of more than 1,450 cities in the StartupBlink Global Startup Ecosystem Index for cleantech.

Nowhere is the region's boldness more visible than at Christchurch Airport's Kowhai Park, a 300-hectare renewable energy precinct. Set to host a 150 MW solar array capable of powering 30,000 homes, the site is also becoming a hub for clean aviation innovation.

That progress is matched by the airport itself, which has cut its operational emissions by 92 percent since 2015, primarily by replacing diesel boilers with a geothermal heating and cooling system. It is now targeting absolute zero emissions from its operations by 2035.

Another expression of Christchurch's approach is being led by Ngai Tuahuriri, a Canterbury hapu (sub-tribe) of Ngai Tahu - the principal Maori iwi (tribe) of the South Island.

Alongside Ngai Tahu Farming and the New Zealand Government, Ngai Tuahuriri is leading Te Whenua Hou Te Whenua Whitiora (The New Land, The New Horizon), a seven-year research programme testing regenerative agriculture at commercial scale. Two adjacent dairy farms are being managed side-by-side - one using regenerative practices, the other conventional systems - allowing environmental, social and financial outcomes to be evaluated rigorously.

The programme tracks soil health, water use, emissions, productivity, profitability and worker wellbeing, with the explicit aim of understanding whether regenerative systems can perform commercially while delivering lower environmental impact.

"What's significant is how matauranga (Maori knowledge) is being applied," Adams adds. "It's not about symbolism. It's a decision-making framework that works across long time horizons."

Adams says examples like this make Christchurch a particular kind of case study: a small, export-reliant economy attempting to embed sustainability into how systems actually operate.

"There's a growing understanding that sustainability and productivity are not separate conversations," Adams says. "They're deeply linked."

New Zealand has long benefited from a clean, green reputation. The opportunity now, Adams says, is to convert that reputation into capability. "Embedding sustainability into how products are designed, sourced and delivered - in ways that strengthen performance."

She points to a growing number of Christchurch businesses doing just that. Giesen Winery, now a global leader in the premium non-alcoholic wine market, has developed a process that captures the alcohol removed from its wines and reuses it to fuel the boilers powering its spinning cone system - creating a closed-loop energy cycle.

Meanwhile, pet food exporter Gourmate has embedded practical sustainability through all aspects of its business, from sourcing and packaging to employment practices and governance.

For Christchurch, hosting Sustainable Brands Aotearoa in the city this August is another step in its reinvention.

"It tells us we're on the right track," Adams says. "That a pragmatic, growth-focused approach to sustainability - one that's honest about trade-offs and focused on long-term value - resonates globally."

But those openings come with greater scrutiny. Political polarization, ESG backlash and rising skepticism around corporate climate claims have changed the conditions in which sustainability messages are received. Capgemini's 2025 sustainability trends report found that 62% of consumers believe companies are engaged in greenwashing, up from 52% in 2024 and 33% in 2023.

Yet staying quiet during those moments carries its own risks. According to GlobeScan, as brands have become more reserved in their climate and sustainability messaging amid the backlash, fewer consumers are seeing those messages and consequently, trust in them has continued to decline.

For companies with meaningful progress to communicate, the answer is to treat high-attention moments as credibility checkpoints, using them to assess whether the business is prepared to communicate with enough evidence, specificity and transparency to withstand greater scrutiny.

These five questions can help companies make that assessment before they speak.

1. What are we prepared to prove?

Many climate and sustainability narratives lean on broad language around commitments, ambitions, journeys, leadership, vision and transformation. These may look great and convincing on paper, but they do little to build trust on their own.

Trust starts with proof. Companies communicating their progress need to show what has changed, when it changed, how it was measured and what business, environmental or social outcomes followed. Depending on the claim, emissions data, waste-reduction metrics, lifecycle analysis, third-party certification, audited reporting, supply-chain traceability and operational case studies can help substantiate the claim.

An organization that can demonstrate how its packaging redesign reduced material use, a sourcing change improved traceability, or a circular model created measurable resource and cost benefits draws a direct line between sustainability and business value.

If this type of evidence isn't ready, then neither is the message.

2. What does the moment change about stakeholder expectations?

High-attention sustainability moments are not interchangeable. A climate-tech company speaking during COP may be expected to connect its work to policy, finance or systemic decarbonization. A retailer speaking ahead of new packaging regulations may need to show operational readiness. A travel company discussing climate resilience during a summer of extreme weather may need to address adaptation, customer safety and destination impacts together.

Each moment creates different expectations and communications strategies should be shaped by those expectations. The message should reflect the work the company is actively doing or simply reflects the desire to be part of the moment and a reactive need to be visible.
That distinction helps companies move beyond reactive campaigns and build communications around relevance and timeliness rather than visibility alone.

3. Are the right teams aligned before we go public?

Sustainability claims often touch many parts of the business, from legal, finance and procurement to product design, reporting and customer experience. Without internal alignment, the same claim can be interpreted quite differently across the organization, making it harder to substantiate, defend or act on.

A company describing new packaging as "more sustainable," for example, needs to know exactly what that phrase means. Is it using less material? More recycled content? Lower-emissions production? Improved recyclability? Reduced shipping weight? Maybe it's all of these; however, each answer depends on different data, different teams and different trade-offs.

That alignment becomes especially important as regulators raise the standard for environmental claims. In jurisdictions such as the EU, rules like the Empowering Consumers Directive are designed to protect consumers from vague or unsupported environmental claims. In that context, credible sustainability communication depends on whether a company can marry what it says externally with what it measures, manages and can verify internally.

4. What can we discuss transparently?

Credibility doesn't require perfection. In fact, when it comes to sustainability messaging, claims of perfect progress can undermine trust. The most serious sustainability challenges are operationally complex and rarely solved through a single initiative.

That complexity should be discussed publicly, not hidden or treated as a weakness. A retailer working to reduce the impact of its supply chain, for example, may be improving packaging, expanding resale, reducing returns, working with suppliers on emissions data and rethinking logistics at the same time. Not all those efforts will move at the same pace, and some may expose trade-offs around cost, convenience, product availability or customer expectations.

Explaining what the company has learned, where progress has been slower than expected and how it is adjusting may offer a much more credible contribution than one that only highlights finished successes.

5. Is this our moment to join?

This final question may be the most important. Not every sustainability moment needs every brand's participation.

If the only reason to speak is that a date appears on the calendar, the company may be better served by staying quiet, in contrast to what I wrote earlier. Participation should be earned by relevance, evidence and usefulness. Does the company have data that adds something to the conversation? Can it offer a perspective that helps the sector move forward? Is there a lesson others can apply?

When the answer is yes, high-attention moments can create an opportunity to strengthen trust and brand value. When the answer is no, forced participation can have the opposite effect, making sustainability messaging come across as opportunistic and inauthentic rather than substantive and genuine.

Remember that not every sustainability moment needs a response, even if there's an opening in the calendar. The ones worth joining, or even driving, are those where the company can add real value and leadership, not add to the noise.

That system is now at risk. The Securities and Exchange Commission is considering significant changes to the shareholder proposal process, and recent actions suggest the agency is already stepping back from its longstanding role as a neutral referee. Earlier this year, the SEC abruptly stopped issuing "no-action" letters, which provide guidance on whether proposals follow existing rules and whether the SEC is likely to act if a company excludes a proposal. Without that guidance, companies do not have the clarity and legal certainty they have relied on for decades.

We are already seeing the consequences. In the absence of SEC oversight, disputes that were once resolved through the no-action process are increasingly moving into the courts. Companies such as AT&T and PepsiCo faced lawsuits from shareholders after they excluded proposals, only to later settle and agree to include those proposals on their proxy ballots. What was once a predictable, rules-based process is quickly becoming more fragmented, costly, and time-consuming.

If this trend continues, companies should expect a more challenging and unpredictable relationship with their investors. Shareholder engagement is likely to become more contentious--including more aggressive campaigns targeting directors--with fewer opportunities to resolve issues collaboratively. Litigation risks will also increase, as shareholders turn to courts to seek disclosure or challenge exclusions. Over time, this could lead to a patchwork, state-by-state approach to governance disputes, governed in part by a company's state of incorporation, creating additional uncertainty for businesses.

The current system is not perfect, but it evolved over decades through practical use and incremental improvement. It provides a shared framework that benefits both companies and investors by creating a clear path for raising concerns and reaching resolution. Weakening that framework does not reduce pressure on companies, it shifts that pressure into more disruptive channels, such as litigation, that are much harder to manage and very expensive and tedious to resolve.

Companies have a clear stake in maintaining a stable and predictable way of working with investors, and now is the time to act. Freedom to Invest is working to elevate the business voice on this issue--providing resources, coordinating outreach, and creating opportunities for companies to engage policymakers and the media. Business leaders can join these efforts by leveraging Freedom to Invest resources, participating in advocacy opportunities--including by making their voice heard within their trade associations--and helping make the case that preserving the shareholder proposal process is essential to effective corporate governance and long-term value creation.

Ensuring that policymakers understand the real-world business impacts of these changes will be critical to protecting a system that works for companies, investors, and the broader market.

The evidence continues to accumulate.

While every sector faces some degree of exposure, vulnerability is not evenly distributed. Industries that depend on global sourcing networks, agricultural commodities and energy-intensive production systems face a particularly complex combination of physical and transition risks.

The apparel and footwear sector sits squarely within that group.

A recent analysis from the Apparel Impact Institute (Aii), The Cost of Inaction, estimates that climate-related pressures could reduce profits for a representative apparel company by up to 34% by 2030. Under the longer-term scenarios evaluated, the reduction could reach 67% by 2040.

Those figures are striking, but the financial pathway is even more relevant. Higher energy bills, volatile cotton prices, carbon costs and supplier investments can all move directly into cost of goods sold, operating margins and capital-planning decisions.

The analysis focuses on three sources of exposure that are becoming increasingly relevant for apparel companies: carbon pricing, raw-material volatility and energy costs.

Carbon, energy and materials are becoming margin variables

Among the risks analyzed, carbon pricing generates the largest projected impact.

Governments around the world continue to expand carbon markets, emissions trading systems and other mechanisms that place a financial value on greenhouse-gas emissions. The European Union's Carbon Border Adjustment Mechanism, China's expanding emissions trading system and India's carbon market developments all point in a similar direction.

For apparel companies, this means emissions embedded within manufacturing processes increasingly carry economic consequences.

According to Aii, carbon-related costs could increase the cost of goods sold by nearly 13% by 2040 for organizations that make limited progress in reducing supply-chain emissions.

The analysis estimates that carbon pricing alone could reduce operating margins by more than six percentage points under certain scenarios. In an industry where margins are often measured in single digits, changes of that magnitude have the potential to influence competitiveness, valuation and long-term profitability.

Raw materials represent a second source of exposure.

Cotton remains one of the industry's most widely used fibers and is highly sensitive to changing climatic conditions. Drought, water scarcity, shifting rainfall patterns and extreme temperatures can affect both yields and quality. Consequently, volatility in agricultural production can translate into volatility in sourcing costs.

Aii projects that climate pressures could reduce global cotton production over the coming decades, contributing to higher prices and greater uncertainty across procurement strategies. For companies heavily dependent on virgin cotton, these dynamics introduce an additional layer of exposure that extends well beyond commodity markets.

Energy creates a third pathway through which climate-related pressures can affect business performance.

Many manufacturing hubs continue to rely heavily on fossil fuels for thermal energy and electricity generation. Therefore, fluctuations in fuel prices, evolving regulations and future carbon costs can all influence production economics. Facilities that remain dependent on coal and other carbon-intensive energy sources may face increasing cost pressures as policy environments evolve and energy systems transition.

Viewed individually, each of these factors may appear manageable. However, their combined effect begins to reshape the economics of production across the apparel value chain.

The Aii analysis also highlights an important point. Climate-related costs rarely arrive in isolation. A drought can affect crop yields. Higher temperatures can influence labor productivity. Flooding can disrupt transportation networks. Energy shortages can affect manufacturing output. Regulatory responses can create additional compliance costs. As these pressures interact, they can amplify volatility throughout sourcing, production and distribution systems.

Why finance teams are becoming central to climate resilience

One of the most interesting aspects of this work is its intended audience.

Rather than targeting sustainability practitioners, the analysis is written primarily for CFOs, finance teams and business leaders responsible for capital allocation and financial performance.

That distinction is important because many of the decisions that influence climate resilience involve investment choices, procurement strategies, supplier relationships and long-term planning horizons.

Aii estimates that approximately 99% of apparel brands' emissions sit within Scope 3 categories, including material production, manufacturing, processing and transportation. As a result, a significant portion of climate-related exposure originates outside direct corporate operations.

This reality changes the conversation around decarbonization.

Reducing emissions increasingly requires engaging suppliers, supporting technology upgrades, improving energy systems and strengthening resilience across the value chain. In many cases, the discussion becomes less about reporting emissions and more about determining where capital should be deployed to reduce future exposure.

The analysis repeatedly returns to supplier investment as one of the most effective levers available. Electrification, renewable energy deployment, energy-efficiency improvements and supplier financing mechanisms all emerge as strategies capable of reducing long-term cost exposure while strengthening operational resilience.

Importantly, these investments are framed through a financial lens. Delaying action may avoid short-term expenditures, but it can also increase future costs associated with carbon pricing, energy volatility and supply-chain disruptions. Conversely, earlier investments can help stabilize costs, improve predictability and reduce exposure to future regulatory changes.

Although the analysis focuses specifically on apparel and footwear, the broader implications extend much further.

Agriculture, food production, consumer goods, manufacturing, transportation and other sectors are encountering similar dynamics. Physical climate impacts increasingly affect operations and supply chains, while policy responses create additional economic signals that influence business decisions.

Consequently, climate adaptation, scenario analysis, transition planning and supply-chain resilience are becoming increasingly relevant within enterprise risk management frameworks.

The Aii analysis contributes to this conversation by translating climate-related pressures into metrics that business leaders routinely use. Cost of goods sold, operating margins, profitability and enterprise value provide a common language for discussing risks that often originate far from corporate headquarters.

As the body of evidence continues to grow, the conversation is becoming increasingly practical.

Companies are assessing how changing climate conditions may affect sourcing decisions. Investors are evaluating exposure across portfolios. Financial institutions are incorporating climate considerations into lending and risk assessments. Procurement teams are examining supplier resilience with greater scrutiny.

The apparel industry provides a useful case study because its supply chains are extensive, globally distributed and closely linked to climate-sensitive inputs. Yet the underlying lesson reaches beyond fashion.

Climate-related impacts are increasingly influencing costs, investment decisions and competitive positioning. The organizations that understand these connections early will likely be better positioned to navigate a business environment shaped by both environmental and economic change.

Yet many sustainability challenges continue.

Food waste. Climate resilience. Supply chain transparency. Biodiversity loss. Sustainable procurement. Circularity.

The reason may be simpler than we think.

Many sustainability challenges are not organizational problems.

No food processor can solve food waste alone.

No grower can solve supply chain resilience alone.

No retailer can solve sustainability verification alone.

Yet we continue to approach sustainability one organization at a time, even though the challenges themselves are created by interconnected decisions made across value chains and entire industry sectors.

These challenges require coordination among many actors who influence one another but rarely work together. And that is where industry associations become integral.

Industry associations occupy a unique place in the economy. They convene competitors. They provide education and guidance. They establish norms and standards. They engage regulators and policymakers. Most importantly, they can mobilize entire sectors.

Yet industry associations remain one of the most overlooked players in the sustainability movement.

A recent pilot project commissioned by the City of Vancouver offers an example of what becomes possible when associations are engaged intentionally (see Advancing Sustainability in the Food Value Chain).

Five industry associations representing different parts of the food value chain participated in a structured sustainability assessment and peer-learning process using the Canadian Standards Association's ESG Guidance for Associations (CSA SPE #116). The associations represented growers, produce marketers, food service organizations, tourism organizations, and food manufacturers.

The objective was straightforward: strengthen the sustainability capacity of the participating associations and explore how greater collaboration across the value chain could help address shared challenges such as food waste.

The participating associations represented different levels of sustainability maturity and capacity. Assessment scores ranged from 20 per cent to 54 per cent, with four associations achieving a pre-bronze level and one achieving a silver level. Participants found the CSA SPE #116 framework valuable for identifying strengths and gaps, structuring sustainability efforts, and creating a common platform for discussion. Perhaps most importantly, the process revealed how few opportunities typically exist for associations across the food value chain to engage with one another and how much insight can be gained when they do.

Participants discovered that sustainability pressures are increasingly cascading through value chains. Retailers, banks, institutional buyers, regulators, and customers are creating new expectations that move throughout the system, ultimately affecting organizations at every stage of production and delivery.

At the same time, participants identified a surprising lack of mechanisms that connect different parts of the food system.

Associations often understand the concerns of their own members but have limited visibility into the priorities, expectations, and challenges of organizations upstream and downstream in the value chain.

When the associations came together, they gained a broader perspective on the system as a whole.

They identified shared concerns around climate risk, supply chain resilience, sustainability standards, verification of ESG claims, and food waste. They recognized that many of these issues cannot be effectively addressed by individual organizations acting independently--that a common framework is needed.

CSA SPE #116 provides one such framework. Developed specifically for industry and professional associations, it offers a practical roadmap for assessing sustainability maturity, identifying priorities, strengthening ESG practices, and supporting members on their sustainability journey. Equally important, it creates a common language that can help associations learn from one another and collaborate across sectors and value chains.

Industry associations can help build sustainability literacy across sectors. They can help establish common standards and benchmarks. They can help identify sector-level risks and opportunities. And they can create the conditions for collaboration across value chains.

Governments also have a role to play.

The City of Vancouver's pilot demonstrated how public sector convening can bring together those who might not otherwise collaborate. By engaging industry associations as implementation partners rather than simply as stakeholders, governments can amplify the reach and impact of sustainability initiatives.

The implications extend far beyond food.

Every sector faces challenges that no single organization can solve alone. Manufacturing, construction, transportation, tourism, health care, technology, and finance all operate through interconnected systems where sustainability outcomes depend on collective action.

If sustainability challenges are systemic, then our solutions must become systemic as well.

If we want to accelerate sustainability, we need scalable mechanisms that reach beyond individual organizations.

The sustainability movement has spent decades helping organizations improve their performance. The next frontier is helping sectors improve theirs.

Industry associations have the reach, credibility, and convening power to accelerate sustainability across entire value chains. What is often missing are the frameworks, resources, and partnerships to activate them at scale.

If we are serious about tackling complex challenges such as food waste, climate resilience, circularity, biodiversity loss, and supply chain security, we need to move beyond organization-by-organization solutions and begin mobilizing sectors.

Every industry association should have a sustainability strategy. Every sector should understand its ESG risks and opportunities. And every value chain should have mechanisms for collaboration.

The question is not whether industry associations have a role to play in sustainability. The question is that, because we cannot achieve sustainability at scale without them, how do we mobilize industry sectors to play their part?

In the sustainability context, these standards are often referred to as sustainability systems or certification schemes.

The World Development Report 2025 describes standards as part of the infrastructure that supports modern economies. Yet as sustainability expectations, due diligence requirements and reporting obligations continue to grow, the systems surrounding sustainability standards are becoming more complex.

Across global supply chains, businesses are being asked to navigate an expanding mix of voluntary standards, corporate commitments, reporting frameworks and regulation. Producers and SMEs are often expected to comply with overlapping requirements, audits and data requests in order to participate in international markets.

These themes were explored during a recent ISEAL dialogue on the World Development Report 2025: Standards for Development. The discussion brought together Xavier Gine, Director of the World Development Report 2025 at the World Bank; Lauren Shields, Sustainability Initiatives Lead at the OECD Centre for Responsible Business Conduct; and Sugumar Raman, Chief Programme Officer at Fair Trade USA, along with ISEAL's Director of Policy and Engagement, Vidya Rangan.

Navigating a more complex sustainability landscape

Sustainability standards are deeply embedded within global markets and play a key role in integrating sustainability considerations into supply chains. They shape market access, support transparency and traceability, and enable businesses to respond to evolving stakeholder and regulatory expectations.

However, as sustainability expectations have expanded across global markets, standards, reporting frameworks and regulation have become more fragmented.

The World Development Report 2025 describes a growing "spaghetti bowl" of sustainability requirements, where businesses and producers often navigate multiple standards, audits and reporting expectations simultaneously.

For businesses operating across multiple markets and commodities, this can create duplication, inefficiency and rising implementation costs. SMEs and smallholders often have fewer resources to manage these additional demands.

Shifting requirements are also reshaping the role of sustainability systems themselves. The focus is moving beyond simply verifying compliance towards helping businesses and producers put sustainability commitments into practice, strengthen resilience, build capacity and improve over time.

Building more inclusive sustainability systems

Sustainability standards can support market access and drive sustainability improvements across supply chains. At the same time, compliance costs and increasingly complex requirements can create substantial barriers for producers and SMEs with more limited capacity.

As sustainability regulation accelerates, there is growing recognition that credible sustainability systems must combine ambition with practical support for implementation across supply chains.

This is particularly important where producers and SMEs face structural challenges, including limited technical assistance, constrained access to finance and rising reporting obligations. Without adequate guidance and support, increasingly demanding compliance processes can unintentionally exclude those with fewer resources from international markets.

Supporting progress, not perfection

Excluding producers who cannot immediately meet the highest thresholds may ultimately limit sustainability progress.

More progressive and tiered approaches that recognise different starting points and capacities across supply chains are therefore gaining attention. Rather than treating sustainability as a fixed threshold, these models create pathways for organisations and producers to improve over time as capacity develops.

The discussion around the World Development Report also reinforced a wider point: improving sustainability outcomes may depend less on creating new standards and more on connecting existing systems more effectively.

From spaghetti bowl to smart mix

Greater alignment, coordination and mutual recognition between systems could help reduce duplication, lower costs and improve participation across supply chains.

This is where voluntary sustainability systems continue to play an important role.

While regulation can establish baseline requirements and accountability, voluntary systems often provide the infrastructure needed to translate sustainability commitments into practice. Increasingly, the two are being viewed as complementary tools within a broader sustainability governance landscape, where regulation establishes minimum expectations and credible voluntary systems support implementation, innovation and continuous improvement.

As sustainability expectations evolve, credible sustainability systems can help businesses strengthen sustainability performance across value chains.

What comes next for sustainability systems

Sustainability systems are now expected not only to verify compliance, but also to enable participation and help drive more effective sustainability transitions.

Their future effectiveness may depend less on creating new requirements and more on ensuring existing systems work better together, particularly for those with the least capacity to participate.

Credible sustainability systems can help businesses strengthen resilience, build trust and translate sustainability commitments into practical and measurable action. Central to this is supporting meaningful participation across supply chains and ensuring systems remain workable and accessible for producers and SMEs, which has long been part of credible practice.

In the current environment of heightened scrutiny, evolving regulation and growing expectations around supply chain performance, businesses are under increasing pressure to demonstrate credible, measurable outcomes. They're also expected to show how sustainability efforts are driving real-world improvement.

The evolution of sustainability standards

Emerging in the 1980s to address governance gaps where legislation was weak or absent, sustainability standards have evolved beyond certification. They are now part of a broader system of voluntary and mandatory tools shaping how sustainability is understood, implemented and measured - from corporate reporting and due diligence to smallholder inclusion and climate resilience.

By providing credible frameworks that help companies respond to stakeholder expectations, systems like these have become recognised benchmarks for corporate responsibility. Today, over 300 voluntary sustainability systems exist (according to the ITC Standards Map), from agriculture to textiles to extractives.

Across many industries and markets, sustainability systems are no longer seen as a 'nice to have' but as a requirement for doing business. Many have also expanded their scope to tackle broader sustainability challenges, while helping to drive progress through collaboration, capacity building, advocacy and innovative tools.

Beyond certification

Certification continues to play a critical role within most sustainability systems, but achieving lasting sustainability improvements requires going beyond compliance and verification alone. Audit and assurance processes assess whether requirements are being met, but do not necessarily capture whether conditions or outcomes are changing in practice. It is possible, for example, for a farm to meet certification criteria while farmers still earn below living income levels.

Evidence highlights this nuance. Whilst certification can lead to higher prices for specific crops, this doesn't always translate into meaningful gains in overall household income, particularly where those crops account for only a small proportion of total earnings.

Achieving lasting sustainability outcomes therefore depends on more than verification alone. Despite smallholder farmers producing around 70 percent of the world's food, they face huge structural barriers, including limited access to finance, training and markets. Without addressing these constraints, improved practices can be difficult to adopt and sustain over time.

Local context is also critical. Approaches that are effective in one region may not translate easily to another. In many producing countries, land tenure structures are unclear or contested, often shaped by gender and social dynamics, while cultural norms and governance structures influence what's feasible in practice. Driving meaningful change therefore requires sustained engagement with producers, communities, civil society and governments, grounded in an understanding of these realities.

These realities are pushing sustainability systems to evolve beyond verification towards more adaptive, context-specific approaches focused on continuous improvement.

Role of standards within a smart policy mix

Sustainability systems are most effective when they operate within a wider ecosystem of policy, market incentives and collective action to drive change. As governments are taking a more active role in sustainability, voluntary sustainability standards are increasingly recognised as part of a broader 'smart mix' of policy and market-based tools.

Whilst regulation sets the floor, voluntary systems raise the ceiling. Often moving faster than regulation, they can provide companies with clarity and direction, supporting implementation across global supply chains and creating space for innovation.

Initiatives supported through the ISEAL Innovations Fund, for example, range from improving wage transparency for cotton farmers and establishing mechanisms for community verification to helping auditors respond to evolving regulatory requirements through continuous learning approaches. For companies operating across multiple jurisdictions, this global and cross-commodity reach is critical. Voluntary systems can help businesses align practices across markets, manage risk, support due diligence, strengthen data and reporting practices, and pilot new approaches where regulation is still emerging.

Sustainability systems also provide platforms for collaboration. Approaches such as landscape and jurisdictional initiatives are gaining traction, enabling companies to work collectively on systemic challenges such as deforestation, water management, land tenure rights, which cannot be addressed through supply chains alone.

Standards are shaping development outcomes

Recent analysis from the World Bank Development Report 2025: Standards for Development, highlights the growing role standards play in shaping trade and development outcomes. As Xavier Gine, Director of the report, noted in ISEAL's recent dialogue on the topic: standards influence almost every aspect of economic activity.

As standards become more embedded in how markets function, their influence extends beyond individual supply chains to shaping access to investment and market participation. Sustainability systems are no longer niche tools for responsible businesses. They are increasingly part of the infrastructure that helps translate sustainability commitments into practice, helping to link ambition to action across global supply chains.

As expectations on business continue to rise, greater emphasis is being placed on whether standards can deliver meaningful results in practice. The systems most likely to succeed will be those that remain grounded in real-world conditions, responsive to context and focused on delivering credible outcomes at scale.

Find out more about what makes sustainability systems credible on ISEAL's podcast.

I recently read CDP's report Disconnected Defenses, published a few weeks ago, which analyzes how extreme weather affects companies, cities, insurers and financial institutions. The report puts numbers behind issues that many business leaders have already seen in practice. Floods, storms, heatwaves, droughts and heavy rainfall can disrupt production, delay logistics, damage assets, change insurance conditions and affect access to capital.

According to CDP, companies reported US$2.9 billion in losses from extreme weather events in a single reporting year. Heavy precipitation was the largest driver, accounting for US$1.5 billion across companies from the real economy and financial sectors.

For companies, those losses rarely appear in a single obvious place. A facility can remain standing while the business absorbs the impact through lower output, delayed deliveries, higher costs, damaged assets or more expensive insurance. A flood can affect a warehouse. A storm can stop production. A drought can put pressure on water availability. A heatwave can increase energy demand and reduce productivity.

The weather event is the trigger, but the business impact appears through operations, costs, assets and people.

From climate events to business impact

CDP's analysis points to a much larger exposure ahead. Across the planning horizons defined by each organization, 3,890 companies anticipate US$898 billion in financial impacts from extreme weather events. The largest expected impacts are linked to flooding, with approximately US$528 billion. Cyclones, hurricanes and typhoons follow with US$161 billion. Heavy precipitation represents US$83 billion, and drought represents US$53 billion.

The timing deserves attention. CDP notes that 48% of disclosed extreme weather event risks are expected in the short term, defined as up to two years, the same window most companies use for budgets, insurance renewals, capital expenditure, procurement planning and business continuity reviews. Physical climate risk is not a long-range scenario.

But many businesses still assess it too narrowly. They may know where assets sit on a hazard map, yet the analysis often stops before reaching margins, contracts, suppliers, logistics, insurance and investment decisions. The more useful question is what happens next.

What happens to revenue if production slows down? What happens to costs if logistics routes are interrupted? What happens to inventory if suppliers cannot deliver? What happens to financing if insurance coverage becomes more limited? What happens to a project if the surrounding infrastructure becomes less reliable?

CDP identifies several ways in which losses can materialize, including lower revenues, reduced production capacity, operational disruption, higher costs, asset impairment, supplier-related problems, increased insurance premiums and more limited access to capital or financing. Those categories should push companies to connect climate risk with the decisions that already shape business performance. Location strategy, procurement, water management, logistics, insurance, financing and capital allocation all belong in the same conversation.

Even a company with strong internal controls can face significant losses if the systems around its operations fail. Emergency protocols and business continuity plans help, but exposure can still come through flooded roads, electricity interruptions, unavailable suppliers, water stress, damaged public infrastructure or changes in insurance coverage. Climate exposure extends beyond a company's own facilities, it depends on the infrastructure, logistics networks, emergency services, insurance markets and response capacity of the places where they operate.

What companies should do with this information

After exposure has been identified, companies need to test whether the decisions behind growth plans, investment cases, insurance coverage, operating budgets and continuity plans would still hold under disruption. Many still depend on infrastructure working as expected, suppliers recovering quickly, water and energy remaining available, and insurance acting as a reliable backstop. Extreme weather is making those assumptions less dependable.

Making those assumptions visible changes the role of adaptation. It becomes a way to identify where the company needs more flexibility, which dependencies are fragile, where safeguards are too weak and where investing earlier costs less than recovering later. That requires naming who is responsible: who has the data, who understands the exposure, who controls the response, who approves the investment and who is accountable when a climate scenario becomes a business problem.

Sustainability teams can help connect the dots, but the decisions that determine resilience sit elsewhere. Finance, risk, operations, procurement, insurance, internal audit, strategy and boards all need to understand how physical climate risk affects the plans already under their responsibility.

Resilience will not come from good intentions. It will come from seeing real exposure before it reaches the balance sheet, and from having already decided what to do about it.

A lot has changed in two decades. And yet, as we prepare to gather for our 20th anniversary flagship conference this June, I find myself thinking first about how far we've come (this can get lost in the challenges of the moment) and then, about the weight of the time we're standing in and where we go from here.

We find ourselves in an in-between moment -- ripe with both uncertainty, and always alongside it, possibility.

The Patterns History Teaches

If you study the lead-up to major historical shifts -- revolutions, collapses, paradigm changes -- a remarkably consistent pattern emerges. Rising instability, eroding foundations, and economic inequality fracture social cohesion. Institutions lose their legitimacy, and old solutions simply stop working.

These transitions are not quick. Scholars describe paradigm shifts as "wrenching" processes that typically span 25 to 30 years -- long stretches during which the old order can no longer solve critical problems, but the new order has yet to take shape. Public uncertainty runs high, but the outcome is never predetermined. Sound familiar?

For anyone paying attention, it seems clear we are living through such a time. We are witnessing increasing geo-political and economic instability. We are watching trust in institutional legitimacy erode across sectors. We are experiencing the ideological and cultural disorientation that comes when shared values become deeply contested. And we are feeling the external pressures -- climatic stress, technological disruption, the sudden shocks that can push fragile systems past their tipping points.

The question is not whether we are in a paradigm shift. The question is: What choices will we make now that define its outcome?

Twenty Years of a Profession Finding Its Footing

It's fitting that the 20th anniversary of the launch of a global SB community coincides with the 20-year mark of sustainability management becoming a recognized profession.

-- In the 1980s, "sustainability" was about compliance, meeting regulatory requirements for waste, water, and air.

-- By the 1990s, some companies began moving beyond compliance toward proactive environmental management.

-- In 2004, when the groundwork was being laid for the launch of SB, DuPont appointed the first known Chief Sustainability Officer in the U.S.

-- By 2009, over 60% of large firms had dedicated sustainability leads, double the number from three years earlier.

-- And in 2015, after the Paris Agreement, the CSO role moved from the server room to the boardroom.

Over 90% of CEOs now consider sustainability critical to their company's success, which is extraordinary progress by any measure. And yet, while conviction remains high the pace of progress has slowed.

Macroeconomic uncertainty, high investment costs, and a thicket of complex and ever changing local and global regulations have created what some are calling a "maturity plateau." At the same time, we're facing a backlash of skepticism about ESG, political pushback, and fatigue among leaders who've been fighting for better for all of us for decades.

This all raises an uncomfortable question: What did we miss?

What might we have done differently over these 20 years that could have helped us avoid, or at least better weather, the resistance we're facing now?

From Sustainability to Thriveability

One of the most important evolutions in our field is the growing recognition that there is a fundamental difference between an ESG strategy and a sustainability strategy. ESG is a financial tool, a way to manage risk and meet investor expectations. Sustainability strategy is a long-term transformation roadmap aimed at aligning business activities with environmental and social boundaries. Both matter. But conflating them has cost us.

When sustainability is reduced to risk management or maintaining the status quo, it becomes something companies do defensively -- but defensive strategies are ill equipped to lead us through to better. The real frontier -- the one that will carry us through this paradigm shift, is what lies beyond "less bad." What lies beyond is a vision for a thriveable future where all systems align with nature and a healthy planet.

How do we get to a future we can be inspired by and hopeful for? Instead of responding to pressure and fear by falling back to defensiveness, we must move beyond settling for sustaining what we have, to recommitting to our quest to create conditions where business, society, and nature can genuinely flourish together. We must continue designing products and business models backed by stories that demonstrate that prosperity and planetary boundaries aren't in tension. We need to continue retooling our economic ecosystems so that they create opportunity for all and thrive in harmony with nature.

An Invitation to the Conversation

During our opening plenary session of SB'26, I'll be moderating a panel with four leaders who have lived this 20-year journey from different vantage points:

• Andrew Winston, whose work on the business case for sustainability has shaped how a generation of executives think about the intersection of profit and purpose
• Sol Salinas, Global Sustainability Practice Lead at Capgemini, who brings the perspective of advising the world's largest organizations through transformation
• Sheri Flies, CSO at Costco, who operates at the scale of one of the world's most consequential retailers -- one that is proving how to successfully navigate the challenges of our time
• Jenn Huffstetler, CSO at HP, who sits at the nexus of technology, supply chains, and global impact

We'll explore the questions that are relevant for all of us right now: What have we collectively learned that is unshakeable? What did we miss? Where might we find ourselves 20 years from now if we build a shared vision and march together toward it? And perhaps most importantly -- what can each of us focus on right now to create the most potential for the future we want?

I don't pretend we'll answer all of these in a single conversation. Our dialogue is just the beginning of an activation that will take place throughout SB'26 -- to build a shared vision for the future and to recommit as a community of future-focused innovators to making that vision real. I deeply believe that the quality of the questions we ask in moments like this determines the quality of the path we walk next.

During our 20th flagship conference, under the banner theme All Rise, our goal is to make sense of where we've come from, where we are now, and where we see the potential to go on our journey. The outcome of the moment we are in will be defined by the choices we make now, and in the coming days. I hope you'll join committed leaders from national and multi-national companies like Walmart, Amazon, Target, Proctor & Gamble, Sephora, Petsmart, Henkle, The Walt Disney Company, disruptive innovators like Oatly, Ben & Jerry's, Silver Fern Farms and Babcock Ranch, enabling eco-system contributors from organizations like WWF, IDEO, Capgemini, Biomimicry 3.8, Finn Partners, Kantar, and hundreds more. Together we'll develop a deeper understanding of where we are now, and how we got here -- but most importantly, we will re-imagine the next 20 years together and recommit to the journey ahead.

And then there is the version that shows up on a beach at sunrise, pulls plastic out of the water, and counts every pound.

The Sustainable Brands community has always understood the difference. It's why this community exists: not to celebrate the pledge, but to pressure-test the proof. And it's exactly why 4ocean is proud to be partnering with SB'26 this June in San Diego.

50 million pounds. Here's what that actually means.

On February 20, 2026, 4ocean crossed a milestone that once felt impossible. At Spanish River Park in Boca Raton, Florida, surrounded by cleanup crews, partners, and the community members who have made this movement what it is, we officially surpassed 50 million pounds of plastic and trash removed from the ocean, rivers, and coastlines worldwide.

We're not sharing this number to take a victory lap. We're sharing it because it is the kind of number this audience knows how to read.

50 million pounds means thousands of full-time cleanup operations across rivers, coastlines, and open ocean. It means river interception systems stopping waste before it reaches the sea. It means hundreds of business partners who moved beyond sustainability marketing and into sustainability accounting -- partners who connected their commitments to real, verifiable, traceable removal, year after year. It means the model works.

And it means the ocean doesn't care how good your ESG report looks. It only responds to action.

Why we're here at SB'26

4ocean's partnership with Sustainable Brands '26 is built on a belief we share: that the most important thing the sustainability community can do right now is raise the standard for what impact actually means. The businesses in this room have been building that case for years. This is the place where the pledge gets pressure-tested, and where the proof gets rewarded.

Pledges are table stakes. Frameworks are necessary but not sufficient. What the next era of corporate sustainability demands is accountability, the kind that can be measured, verified, and reported with specificity.

That's the standard 4ocean has operated against since 2017, when our founders stood on a beach in Bali watching plastic wash ashore and asked a different question: what if business could fund cleanup at scale? Not offset it. Actually fund it, pound by pound, operation by operation, in a way that could be tracked and trusted.

That question became the infrastructure behind 50 million pounds. And it's the same infrastructure that powers our partnership with SB'26.

Partnerships are how the pounds add up

4ocean's cleanup infrastructure isn't funded by grants or goodwill. It's funded by businesses that have made a decision to connect their sustainability commitments to real, traceable removal.

When a brand partners with 4ocean, every unit sold, every event registered, every commitment made translates directly into pounds of plastic removed from the ocean, rivers, and coastlines -- verified, documented, and reportable. That's how 50 million pounds happened. Not through one big moment, but through hundreds of businesses showing up consistently, turning their everyday operations into measurable environmental impact.

The businesses in this community are exactly the kind of partners that make the next 50 million pounds possible. And if you're not yet a partner, SB'26 is a good place to start that conversation.

Your presence at the conference is part of the impact

Here is something concrete: for every attendee who registers for Sustainable Brands '26, 4ocean will remove one pound of plastic and trash from the ocean and coastlines on their behalf.

Not a donation to a general fund. Not a carbon-style offset that disappears into abstraction. One pound, removed by 4ocean's crews, on behalf of your attendance.

When the full SB'26 community shows up, that impact is collective, real, and traceable. It's a small illustration of a larger point: when purpose-driven organizations build systems that connect everyday decisions to measurable outcomes, the results compound.

That is the sustainability story worth telling. Not the aspiration. The result.

June 10, San Diego: come feel what 50 million pounds looks like

We also believe that the most powerful thing a sustainability professional can do is experience the mission firsthand. So on June 10, 4ocean is hosting an exclusive evening in San Diego -- starting with a hands-on coastal cleanup on the beach, followed by a sunset cruise on the open sea.

It's not a networking event dressed up in purpose language. It's the actual work, done together, by the people in this community who are in a position to change how business thinks about environmental accountability.

Spots are limited. If you're coming to SB'26, we want you there. Reserve your spot at 4ocean.com.

The next chapter: verification as the new standard

Reaching 50 million pounds is not the finish line. It is proof that sustained, infrastructure-backed action compounds over time -- and that the businesses willing to commit to measurable impact build something more durable than a brand story. They build trust.

In 2026, 4ocean is launching its Impact Dashboard platform, giving business partners real-time, traceable insight into the pounds they're generating: by geography, by operation, by date. Because the future of corporate sustainability isn't self-reported. It's verified. And the Sustainable Brands community has always been the place where that standard gets pushed forward.

Our next milestone is 100 million pounds. We know what it takes to get there. And we know that the businesses in this community are exactly the kind of partners who make it possible.

The ocean doesn't grade on a curve. But it does keep score.

See you in San Diego.

Political campaigns, economic pressure, anti-ESG rhetoric, changing regulation and a more cautious corporate environment have all contributed to that perception. In some markets, companies are communicating less. In others, investors are asking harder questions. In many boardrooms, sustainability is still present, but the language around it has become more careful, more financial and more directly connected to risk, resilience and long-term value.

There are many signposts that can help understand whether sustainability is actually fading or changing form. Corporate commitments offer one signal. Regulation offers another. Reporting standards, litigation, supply chain pressure, consumer expectations and physical climate risks all tell part of the story.

But one of the most important signposts is still capital.

Following the money does not explain everything, but it does reveal where expectations are becoming concrete. If sustainability were truly disappearing as a business issue, sustainable investing would likely be one of the first places where that shift became visible.

That is why Morgan Stanley's latest Sustainable Signals: Individual Investors 2026 report is useful. The report surveyed 2,250 individual investors across North America, Europe and Asia Pacific to understand how they are approaching sustainable investing in the current market context. The headline finding is that 92% of global individual investors say they are very or somewhat interested in sustainable investing, up four percentage points from 2025.

At the top of the report, sustainable investing still appears to be operating at a very high level of relevance. But the more interesting story sits beneath the headline.

The Gap Between Interest and Allocation Average portfolio allocation to sustainable investments fell from 33% in 2025 to 31% in 2026. That is not a collapse, and it does not suggest that investors have stopped caring. But it does show a small gap between sentiment and behavior. Investors may remain interested, but interest by itself does not automatically translate into higher allocation.

That gap says a lot about where the market is going.

The early phase of sustainable investing was shaped by awareness, values and broad demand. Investors wanted products that reflected environmental and social priorities. Many companies, funds and advisors responded by building offers around ESG, impact and sustainability language. That phase helped expand the market, but it also created a wide range of products with different levels of quality, transparency and credibility.

The next phase looks more demanding.

Investors are still interested, but they are applying more discipline. They want to understand performance. They want to know what is actually inside a product. They want better data, better explanations and stronger evidence that sustainable investing can hold up inside a portfolio.

That comes through strongly in the report's findings on financial returns. More than four fifths of respondents say returns are central to their interest in sustainable investing, either because they want real-world outcomes alongside market-rate returns or because they believe sustainable investments could offer stronger financial returns than traditional investments.

Many individual investors are not treating sustainability as a separate values category or a philanthropic preference. They are treating it as part of financial decision-making.

They want exposure to companies, funds and assets that can deliver returns while also contributing to environmental or social outcomes. That is probably one of the strongest signs of market maturity.

The same logic shows up in allocation plans. According to Morgan Stanley, 64% of investors plan to increase their allocation to sustainable investments over the next year, most often because they are confident sustainable options can offer comparable or better returns. Another 28% plan to maintain current exposure, while 5% expect to decrease allocation, most commonly citing disappointing returns.

In practice, this means sustainable investing is being evaluated like any serious investment strategy. Investors may care about outcomes, but they are still looking at performance, diversification, product quality and the strength of the underlying thesis.

That is healthy for the market, even if it makes the conversation more difficult.

Greenwashing is part of that difficulty. Nearly one third of investors rate greenwashing as a very significant concern, while lack of transparency and trust in reported data also remains a major barrier.

This is often treated as a communications issue, but the consequences go further.

Greenwashing affects confidence. Weak claims affect product selection. Vague definitions make it harder for investors to compare opportunities. When sustainability language becomes too broad or too disconnected from measurable performance, capital moves more slowly.

The implication for financial institutions, companies and fund managers is straightforward.

The market does not need louder sustainability messaging. It needs better evidence. ** From Broad ESG Language to Specific Investment Themes** Another important signal in the report is the range of themes investors are prioritizing.

A quarter of respondents say their top priority is advancing a broad combination of environmental and social goals. Financial inclusion and health and wellness follow, each cited by 15%. Across the full list, the report includes climate action, circular economy, conservation and biodiversity, economic empowerment, diversity and inclusion, and health and wellness. Each theme ranks as a first or second priority for at least one fifth of respondents.

Sustainable investing is moving beyond a generic ESG label. Investors are becoming more specific about the outcomes they care about and the types of exposure they want.

This creates a different expectation for the market. A product cannot simply be presented as sustainable and expect investors to understand the strategy. The relevant questions are becoming more specific: what theme does it address, what risk does it manage, what opportunity does it capture, what data supports it, and how does it connect to long-term value creation?

This is where sustainable investing can become more useful as a business lens. The strongest strategies will likely be those that connect sustainability themes to actual market.

The broader message from the report is not that sustainable investing is fading. The better reading is that sustainable investing is being tested.

Investors still show strong interest. Many plan to increase exposure. Sustainability themes remain relevant across regions. At the same time, capital is becoming more selective. Performance expectations are higher. Greenwashing concerns are stronger. Product quality, data and credibility matter more.

That is what a more mature market looks like. The next phase of sustainable investing will be shaped by whether the financial industry can translate interest into credible strategies that investors are willing to fund, hold and expand.

Interest opened the market. Proof will decide where the capital goes.

That's real.

But substitution is just one technique; in my research, I've found more than three dozen. Most organizations default to one, test it once, and write off the whole category when it fails. They never get to the other thirty-five.

Here's a completely different technique: strategic surplus. Build more capability than you need internally, then capture that value externally. I helped a startup restaurant chain do exactly this while growing their social impact.

They built an exceptional training program for people reentering the workforce. It worked; their people were productive and loyal. But that meant they had more training capacity than they needed. So they turned it into a service they offered to others.

They delivered highly trained workers to local hotels and caterers in exchange for a fee. They also became a top partner for the local workforce development agency; the agency helped fund their work, further improving the economics.

They helped more people reenter the workforce. And they turned their cost center into a profit center.

Strategic surplus is just one of the three dozen sustainability techniques. Tailoring (putting only what's needed exactly where it's needed) is another. Time shifting (trading time for effort or capital) is a third.

That means if your sustainability strategy starts and ends with substitution, you're working from 1/36th of the playbook and wondering why the numbers don't work.

Listen to more here: Innovating Out Loud podcast.

Read the full case study.

Find more on how sustainability drives innovation here.

? What capability does your organization have more of than it needs -- and have you ever asked what it might be worth to someone else?

A few years ago, the sustainability conversation around mega sporting events was about compliance and footprint. The work was to reduce emissions and hit the numbers FIFA wanted, and much of that work was necessary. It still is. But the conversation has moved, in part because hosting rights get awarded a decade before the climate conditions they have to operate in can be reassessed.

Stadiums designed five years ago are already operating under conditions they were not built to hold.

Research from MSCI ranked host venues by hazard exposure. AT&T Stadium and SoFi Stadium topped the list for heatwave risk. Levi's Stadium for rain induced flooding, Hard Rock Stadium for lightning, Lincoln Financial Field for subsidence, the slow sinking of ground beneath the building.

Separate analysis from Climate X puts potential cumulative losses facing NFL stadiums at up to $11 billion by 2050. The climate these assets are being built in will not be the climate they operate in over a fifty year lifespan. The harder question is whether the infrastructure being invested in right now is equipped for the climate it will actually live in.

The Planning Assumption Nobody Is Challenging

This is the context in which the 2026 World Cup arrives across the United States, Mexico and Canada. Most current planning is focused on immediate operational challenges, with significant investment going into temporary infrastructure that lives for six weeks and then disappears. During the 2025 Club World Cup, four games exceeded the WBGT postponement threshold, and on one occasion Borussia Dortmund substitutes watched the first half from inside the locker room because the heat outside was too dangerous.

That work is real and necessary. It is also not the conversation that will shape what the 2026 World Cup actually leaves behind.

That conversation is beginning to surface. At an EarthX panel in Dallas, FIFA 26 head of environment Sarah Hussain told city officials that host venues can get better post tournament but said clear data is still the struggle. In Los Angeles, Edith de Guzman of ShadeLA told LAist that the 2026 tournament gives the city a chance to test things out and scale them ahead of 2028. The question is live, but the mechanism for turning stadium investment into lasting value for host communities is not yet in place.

The word legacy deserves scrutiny. Qatar 2022 built seven new stadiums and marketed each as a legacy asset. Three years on, several have been downsized, modified or underused. But the 2026 case is structurally different.

Most North American host venues already exist. They are working NFL, MLS and university facilities receiving tournament overlay, not new builds in search of a post tournament purpose. The question is what the tournament's operational spend leaves behind.

That spend, the hundreds of millions being channeled into stadium upgrades, either flows through to host communities or it does not. Mitigation asks how we host the event. Adaptation asks what the cities inherit. The industry has spent a decade on the first question and almost no time on the second. ** The Two Layers of Adaptation**

There are two distinct layers worth separating.

The first is immediate readiness. Schedule adjustments, cooling systems and player welfare protocols that keep the tournament playable. This is where most 2026 planning sits. Necessary and important, but short lived.

The second is designing infrastructure that keeps working for host communities after the tournament ends. Stadiums that function as cooling centres during heatwaves rather than heat islands radiating warmth into surrounding blocks. Emergency shelters during natural disasters. Green infrastructure that mitigates urban heat and manages stormwater.

Water systems built for a future where, according to the World Economic Forum, nearly 90 percent of 2026 host stadiums will require adaptation measures and one third will see water demand meet or exceed supply by 2050.

There is precedent. The NFL and FEMA launched a national strategy in 2024 to designate venues as Mission Ready Locations during disasters. MetLife Stadium, a 2026 host, is one of them. These buildings were designed to hold tens of thousands of people in climate controlled conditions, already wired into the grid and road network. In most host cities they are the strongest piece of public infrastructure for miles.

Private capital is starting to see the same opportunity. In March 2026, Visa, Street Soccer USA and Bank of America announced the expansion of Visa Street Soccer Parks to all 11 US host cities. These are permanent community assets with learning centres attached. The street pitch outlives the tournament by decades. If that logic holds for a street pitch, it holds for a stadium.

What Paris Already Proved

The Paris 2024 Olympic Games triggered a EUR1.4 billion investment in stormwater and wastewater infrastructure to clean up the River Seine. A year later, sections of the river opened to public swimming for the first time in a century, and the Seine is now a climate resilient refuge during Parisian heatwaves. The tournament paid for something a city government could not otherwise have funded, and the city still has it.

Every dollar spent on a temporary misting station at the 2026 World Cup is a dollar that could have built a permanent cooling centre lasting thirty years. The Seine is the model.

The Playbook for 2030 and Beyond

The decisions being made now set the precedent for what comes after. The challenge gets harder when the World Cup moves to Morocco, Spain and Portugal in 2030 and to Saudi Arabia in 2034. In those regions climate exposure is worse and infrastructure need is larger. If 2026 establishes a playbook where adaptation means temporary operational fixes, future hosts will follow. If 2026 establishes a playbook where mega event investment produces permanent climate resilience for host communities, it redefines what the sports industry is capable of contributing.

Having worked across major sporting events I have had a front row seat to how infrastructure and investment decisions get made. What I never saw in those rooms was climate scenario planning. Every conversation was anchored to current conditions, as though the world these assets were being built for would be the world they operated in for the next fifty years. The climate is shifting faster than that assumption allows. The competitions being planned today need to be feasible in 2040 and 2050.

And beyond feasibility sits a larger question the industry has barely begun to ask: sport has the scale, the infrastructure and the community reach to help society adapt to climate effects faster. A World Cup stadium is built to stand for fifty to seventy years. The question is whether anyone is designing it for the climate it will actually live in.

Antonio Vizcaya is a sustainability consultant and university professor. He is also a LinkedIn creator and TEDx speaker, focused on helping organizations translate sustainability into practical business strategy.

Rigorous Standards: Beyond "BPA-Free" Products in The Unplastic Shop meet a set of wide-ranging stringent criteria developed by OPS in partnership with Grove's internal product standards team, focusing on the following priorities:

• No plastic touches anything people ingest
• Free from BPA and "BP" alternatives (including BPS and BPF)
• Free from PFAS and other "forever chemicals"
• Selected to avoid endocrine-disrupting chemicals and other substances associated with hormone disruption
• Reduced-plastic packaging or plastic-free alternatives whenever possible

It is a smart and necessary response to a shift in consumer consciousness. "People are waking up to the reality that plastic isn't only an environmental issue - it's increasingly personal," said Jeff Yurcisin, CEO of Grove Collaborative. "Our customers want clear guidance and better options they can trust. With OPS, we're proud to launch The Unplastic Shop as a one-stop destination for vetted swaps and education to help families reduce plastic exposure at home - without compromising on performance."

The Shocking Science of Everyday Exposure The science grounding The Unplastic Shop reveals that our most common routines - breathing, eating, drinking and washing - are primary vectors for unwanted chemical ingestion. Endocrine-disrupting chemicals, such as phthalates and PFAS, are linked to a global fertility crisis, rising cancer rates, and cardiovascular issues like early heart attack and stroke. The data found in the campaign's research provides a number of specific "aha!" moments that highlight the urgency of swaps recommended by Grove and OPS. Notable examples include:

• The Infancy Risk: Heating or sterilizing plastic baby bottles causes them to shed big amounts of microplastics. In fact, bottle-fed babies could be consuming 160 times more microplastics than the average adult.
• The Tea Trap: Steeping a single plastic-based tea bag can release up to 1.2 billion microplastic particles per milliliter of tea.
• The Black Plastic Danger: That black plastic lid on your to-go coffee cup is a major red flag. Black plastics may contain toxic recycled materials from electronics that would not be appropriate for food contact.

"We're now finding plastics in our brains, our hearts, our placentas - even in breast milk," said Louie Psihoyos, Co-Director of The Plastic Detox and Founder of the Oceanic Preservation Society. "And a big part of that exposure comes from products we use every day. Once you realize how many plastic-linked chemicals are in those products, you start asking a simple question: what can I do to reduce my exposure? That's why we created this campaign - and why we created The Unplastic Shop."

The "Unplastic Your Life" Educational Ecosystem The Unplastic Shop serves as the practical solution to the problems highlighted in the broader "Unplastic Your Life" initiative, which also includes The Plastic Detox - a Netflix documentary which follows six couples undergoing dramatic home interventions to reduce their chemical body burden. For those ready to perform their own intervention, the campaign offers The Plastic Playbook, a detailed guide to reducing plastic exposure at home, as well as its sister resource "10 Things You Can Do Now" by Grove Collaborative, featuring the following key tips:

• Store food in glass, stainless steel, or ceramic instead of plastic containers and cling wrap. Try beeswax wraps or cloth covers for an easy swap.
• Replace plastic cutting boards and utensils with wood, bamboo, or stainless steel. When possible, swap nonstick cookware for glass, stainless steel, ceramic, or cast iron.
• Choose glass or ceramic for microwaving and food storage, and avoid letting hot liquids sit in plastic containers.
• Use filtered tap water with a glass or stainless steel bottle. Avoid drinking from plastic bottles that have been heated or stored for long periods.
• Opt for digital receipts when possible and wash your hands after handling paper receipts.
• Seek out safer hair and personal care products - look for simpler formulas, fragrance transparency, and lower-plastic packaging where available.
• Consider lower-plastic detergent formats and reusable upgrades like wool dryer balls.
• Choose natural fibers like cotton, linen, hemp, or wool for clothing and bedding.
• Ventilate regularly, vacuum often, and choose lower-scent or fragrance-free home products when possible.

In addition, OPS has also compiled a collection of free educational resources and downloadable tools, available here.