Why switching to a better supply-chain model can cause emissions estimates to spike

U.S. companies that rely on a widely used but crude method for calculating Scope 3 inventories should prepare to see double-digit increases in supply-chain emissions estimates when switching to a more sophisticated version of the process, according to a recent study.

Difficulties in obtaining primary data from suppliers often prompt companies to employ spend-based models, which use emissions factors to convert the amount spent on a product into an audit-friendly estimate of the emissions associated with that purchase. 

The factors vary widely depending on the model, however. Many models contain emission factors based on a single country. A single-region model based on U.S. data, for example, effectively assumes that everything in a company’s supply chain was manufactured in the U.S. And because goods manufactured outside North America often result in higher emissions, Scope 3 estimates can leap when regional differences are taken in account.

“We’re putting a false ‘made in the U.S. sticker’ on every product and hiding the real story,” said Yohanna Maldonado, an author on the study and head of climate data at Watershed, a carbon accounting firm.

Global data

To increase accuracy, companies can switch to multiregional models that account for local emission intensities. Working with researchers at Stanford University, the WWF and CDP, Maldonado and her Watershed colleagues found that the total upstream emissions of around 5,400 companies that reported revenues to CDP in 2023 jumped by 2 billion tons of carbon dioxide when a multi-region was used. Their study was published last month in Nature Communications.

How this headline figure applies to individual companies is challenging to determine, in part because few companies disclose details of the models they use. But the problem appears to be widespread: Three-quarters of companies that did disclose details said they used a single-region approach. 

Companies that import significant quantities of steel, fertilizer and other emission-intensive products are likely to see the biggest jump when moving to a multi-regional model. Maldonado said increases of 20 to 40 percent are typical among the Watershed clients that have made the switch.

In addition to the misleading Scope 3 numbers, single-region models also hamper companies’ ability to identify potential emission reductions, noted Maldonado. She cited the example of aluminum sourced either from Brazil, where widespread hydropower lowers emissions intensities; or China, where coal-powered electricity is more common.

Free multi-regional model

Ease of access explains the continued widespread use of single-region models, said Maldonado. Until last year, the Environmental Protection Agency maintained a free-to-use model based on U.S. data, and the U.K.’s Department for Energy Security and Net Zero continues to offers an equivalent. 

That will change later this year when Cornerstone, a collaboration between Stanford, environmental consultancy ERG and Watershed, makes its multi-regional model available for free. The model will incorporate the former EPA data and a multi-region model that Watershed acquired in 2023 when it purchased VitalMetrics, a sustainability software provider and consultancy.

Companies considering switching models should ideally do so before they set targets, advised Maldonado. Those with targets will probably need to restate historical Scope 3 data using the new method, she noted. 

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Microsoft’s plan to counter community backlash over AI data centers

Microsoft has responded to the growing backlash over U.S. data center expansion with a set of five commitments meant to win over communities worried about electricity prices, water scarcity and job losses.

More than $64 billion in data center projects were killed over the past two years by villages, towns and cities concerned about surging utility bills, shrinking water supplies and land development deals conducted in secrecy.

The Community-First AI Infrastructure initiative encapsulates the policies that Microsoft will use when approaching new development starting this year, including a promise to bear the cost of electric grid transmission updates and new generation resources.

“We need to stand up and step up as an industry and ensure that we pay the tab for things like the cost of electricity data centers will need,” said Microsoft Vice Chair and President Brad Smith, speaking at a launch event in Washington, D.C.

Microsoft is also pledging to replenish water in communities that host new facilities, to train and hire local residents for jobs at its facilities, and to refrain from requesting special tax breaks. 

Community-First AI Infrastructure doesn’t include specific policies related to land-use conversion, which is another concern for some rural agricultural communities. But Microsoft’s data center development team screens sites for potential impacts on nature and biodiversity.

The Trump administration has adopted sweeping federal-level policies to encourage AI infrastructure development via executive order, but the real decision making comes at the community level, Smith said: “As important as the President of the United States is on almost everything, when it comes to a data center, sometimes it is the president of the village council that is more important still.”

Already in practice

Many approaches or policies promised under the initiative are already used in communities where Microsoft has a presence or seeks to establish one. Likewise, Amazon and Google have orchestrated creative relationships to support their need for new data center capacity, especially those running on clean energy. 

But Microsoft is the first to make broad promises about picking up the tab for electricity and water upgrades needed to support the industry’s billions of dollars in planned AI expansion. Amazon and Google did not respond to a request for comment.

“Not all companies are speaking like them, certainly not all companies are acting like them,” said Mike Monroe, chief of staff for North America’s Building Trade Unions, a labor organization that supports Microsoft’s plan. 

For example, the company is spending $7 billion to build what it bills as the most powerful AI data center in the world near Racine in Mount Pleasant, with the first phase to be complete early this year. The company was the largest single taxpayer in the county in 2025. It’s also supporting a special electricity tariff in Wisconsin for customers with large loads, including data centers, so that the costs aren’t passed on to individuals or smaller businesses.

“If we think about the impact that businesses like Microsoft can have, that leveraging the AI revolution can have, they are real and substantive,” said U.S. Rep. Brian Steil, a Republican who represents the district. “They are real and substantive, I think, in two ways. One, reducing the tax burden, which is always a good thing but also investing in a lot of the resources that communities need.”  

In Wyoming, Microsoft created a first-of-its-kind tariff about 10 years ago, with utility Black Hills Energy, to segregate its needs from traditional rate payers. The arrangement lets Microsoft source wind energy for its data centers and also enables Black Hills to draw from Microsoft’s on-site backup power supplies during times of peak demand.

“In order to make this successful for the community, I think that Microsoft saw early on they wanted to make sure they were a long-term, viable partner,” said Wes Ashton, vice president of South Dakota and Wyoming utilities for Black Hills. The company has been candid about its growth needs and vision, which was essential for success.

Microsoft’s new strategy for water also has roots in past experiences. In Quincy, Washington, an 8,200-person agricultural town in the center of the state that has hosted Microsoft data centers for two decades, the company funded a water reuse facility, rather than relying on groundwater, and it pays for ongoing upgrades. 

The tech company is likewise paying for water and sewer improvements near its data center in Leesburg, Virginia. Identifying the needed upgrades and developing an investment plan took many meetings and candid communication, said Brian Stone, deputy director for the Leesburg department of utilities, who manages these relationships for the community. 

Once the difference between Leesburg capacity and Microsoft’s needs was quantified, a plan to address it was captured in a formal agreement that was executed in late 2025. Microsoft is paying 100 percent, or about $2 million, for a capacity upgrade that serves its facility along with a large portion of other upgrades and maintenance projects.  

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Why Levi’s is teaching high schoolers how to mend jeans

Levi Strauss and Discovery Education are picking up where home economics classes left off. Which is to say, they are teaching high schoolers basic sewing skills.

The “Levi’s Wear Longer Project,” launched Jan. 14, starts in San Francisco with workshops at Levi’s Eureka R&D center. A global campaign will follow to share virtual and in-person lessons for tasks like adding buttons, patching jeans and altering hems.

Thirty-five percent of members of Gen Z polled by Levis’s said they would keep their clothes for longer if they knew how to address tears and other flaws — but 41 percent reported having no way to do so. (Levi’s noted similar things about Millennials when it launched repair tutorials in 2014.)

“By building up repair skills within the next generation and emphasizing the idea of durability, we’re helping spark a culture of creativity, sustainability and pride in taking care of the things we value,” Levi Strauss President and CEO Michelle Gass said in a statement.

Levi’s also appears to be vying for youth brand loyalty to carry forward an identity of durability, which originated with its outfitting 1850s gold miners.

“Some brands claim that offering repair creates continued engagement after the point of sale and drives traffic into their stores, which is then converted into new sales on top of the repair,” said New York-based sustainability consultant Liz Alessi.

Indeed, Levi’s is among a small yet growing number of brands advancing repair. That often-neglected pillar of the circular economy movement counters the industry treatment of clothes as perishables. Signs of growth include the rise of apparel-repair startups including Revive and Alternew, which recently signed a deal with Primark.

Globally, the market for mending services will expand by 9.4 percent each year to 2035, growing to $1.18 billion from $.53 billion in 2026, according to Business Research Insights.

Tersus Solutions, which provides resale logistics, cleaning and repair services to apparel brands including The North Face and Eileen Fisher, is seeing significant growth in brands’ warranty and repair programs, according to CEO Peter Whitcomb. “Many brands are shifting from replacement-first models to repair-first approaches as a way to better serve customers, extend product life and reduce environmental impact,” he said.

Levi’s other repair plays

In addition to its longtime focus on design for longevity, Levi Strauss has been advancing other circular economy programs within its sustainability strategy. The 173-year-old company offers tailoring services at certain stores, including free hemming for its Red Tab loyalty program members.

Part of Levi’s push for net zero by 2050 includes the 2030 goal of cutting down Scope 3 purchased goods and services emissions by 42 percent over 2022 levels. The use of Levi’s products, including laundering, makes up 31 percent of the company’s overall emissions, according to its 2024 Climate Transition Plan. 

Efforts to address that include Levi’s Secondhand branded resale program, which is entering its sixth year. It also enables customers to exchange used Levi’s for a coupon of up to $30 at certain retail stores. Buying used items requires 53 percent of the carbon that would be emitted from buying something new, according to the company.

Patagonia, Uniqlo, Primark and Neiman Marcus are among the other companies expanding a mix of repair services, alterations guides or in-house workshops in the United States. Comparable efforts are relatively more normalized in Europe, which has a longtime culture of product aftercare and restoration, particularly among luxury houses such as Hermès, Dior and Burberry.

A Uniqlo repair event in Asia in 2025. Credit: Uniqlo

Other fashion brands repair plays

Here’s a sampling of approaches by other brands to make repairs mainstream:

Patagonia

The fleece jacket giant’s network of free, lifetime repairs is part of its Worn Wear program, launched in 2017 with the idea that “repair is radical” and generating $13 million in revenues in 2025. Patagonia offers simple patching or seam-closings in stores and from repair vans at special events, as well as more complex mail-in fixes. Its Reno, Nevada, repair center counts tens of thousands of repairs each year. A partnership with iFixit produces virtual repair guides, which Patagonia has kept 583,000 items out of the trash.

Uniqlo

Repair counters are spreading at fast-growing Uniqlo stores, owned by Fast Retailing of Yamaguchi, Japan. An upcycling workshop at one of its shops in Germany has grown into Re:Uniqlo Studio repair and “remaking” services at 70 stories in 23 international markets. The brand introduced Re:Uniqlo to certain U.S. stores several years ago, charging $5 to close fabric holes or replace buttons.

Primark

In May, Dublin retailer Primark began expanding repair workshops to the U.S. in Staten Island and Tysons, Virginia. The company has held more than 730 such events across Europe since its “Love it for longer” program began in 2021. The company also shares online tutorials for mending and hemming.

Neiman Marcus

Former Dallas-based department store Neiman Marcus, now based in New York under Saks Global, belongs to an old world or high-end, in house repairs. All of its three-dozen locations offer tailoring, alterations, repair and restoration, including for clothes, shoes and handbags bought elsewhere. Simple adjustments for full-price goods are free. The brand began marketing decades-old services as a circularity play around 2021. It met a 2025 goal to extend the lives of 1 million products two years early.

However, repair is harder to monetize than resale, according to “Untangling Circularity” podcast host Cynthia Power. “These are the companies with loyal customers who will shop at the brand for decades. These companies have much to gain from offering repair services and repair education programs because they are strengthening the foundation of their existing value proposition to their customer.”

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How companies can lessen legal risk in carbon markets

The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.​

Offset integrity problems have led to a crisis of confidence in the voluntary carbon market and legal woes for companies in recent years. In the U.S., for example, Apple and Delta Airlines have faced lawsuits under state consumer-protection laws related to the integrity of offsets used to support their emissions-offsetting claims. Other large companies have lost similar cases in other countries. Some U.S. federal agencies may also have authority to bring enforcement actions to address certain types of misleading claims by corporate buyers, as discussed in a recent Institute for Policy Integrity report. 

Overall, there seem to be unbridgeable gaps between skeptics of offsets and those who see them as an effective climate mitigation tool. To move the debate forward, stakeholders need to address a critical but often overlooked aspect of the problem: The emissions removals or reductions that underlie carbon credits are inherently uncertain and their risks cannot be completely eliminated. Acknowledging and incorporating these risks and uncertainties would enhance transparency and clarify the role of imperfect removals or reductions in carbon markets and climate mitigation. 

A misalignment in definitions

Let’s start with the fundamental concern of permanence: Removed or reduced emissions can be re-emitted (for instance, if a wildfire incinerates a forest grown for an afforestation project). For certain projects, crediting programs maintain buffer pools to compensate for such reversals, and market participants can also purchase insurance to address this risk. 

Crediting programs typically only require project developers to make “permanence commitments” of a few decades to a century. Seeking to provide guidance to market participants, the Integrity Council for the Voluntary Carbon Market calls for permanence commitments of 40 years for projects with a “material risk” of reversal. At least in practice, the voluntary carbon market has thus defined permanence to mean “lasting a few decades or a century.”

Yet the market’s definition of permanence doesn’t align with the science. Carbon dioxide can remain in the atmosphere for hundreds if not thousands of years, contributing to climate change throughout that timeframe. From a scientific standpoint, the duration of an emissions removal or reduction should roughly match the lifespan of the emission it’s meant to offset. An emissions removal or reduction that lasts for 40 or 100 years cannot cancel out an emission that lasts for hundreds or thousands of years. Yet it would be unreasonable and unrealistic to expect project developers or crediting programs to guarantee emissions removals or reductions on so long a timescale. 

So here’s the problem: The market must either: 

  • Use an unscientific definition of permanence and permit offsetting claims with math that doesn’t add up in the long run (and with inaccuracy that might expose participants to greater legal and reputational risk).
  • Admit that it can’t guarantee permanence on a timescale that would justify using carbon credits to offset emissions. 

Moving past the current impasse

Honesty about these risks and uncertainties may be the best way to move past the current impasse between proponents and skeptics of this market. 

One option that some market participants seem interested in is adopting an “equivalence framework” to compare and value emissions removals or reductions of different durations by calculating how many “imperfect” (risky or temporary) credits equal a “perfect” one. Unlike the market’s current approach, an equivalence framework can embrace imperfect yet beneficial credits that don’t meet the market’s current standards without overvaluing or misrepresenting the imperfect credits that do. 

How best to measure equivalence requires careful consideration. At least one crediting program uses ton-year accounting for certain project types, comparing emissions removals or reductions of varying durations in terms of physical climate impacts (such as global warming potential) over a selected timeframe. But ton-year accounting creates a similar bind to the market’s current approach: It can distinguish between short-lived removals or reductions only if one picks a timescale that cannot truly support offsetting claims. 

As discussed further in another recent Institute for Policy Integrity report, a more recently developed approach is the “social-welfare equivalence” framework. Under this framework, a perfect offset is valued at the social cost of carbon, an estimate of the damage (in present value) caused by emitting one ton of carbon dioxide. This equivalence compares imperfect removals or reductions in terms of the monetary present value of avoided damages — a measure of social welfare rather than physical climate impacts. 

As future impacts are discounted and therefore worth less than present impacts, even temporary removals with no long-term physical climate impact have social value, and removals or reductions of different durations will be valued differently even if their long-term physical impacts are the same. Unlike current market approaches, social-welfare equivalence can incorporate reversal (and other) risks across the scientifically correct timescale of hundreds or thousands of years.

Adopting social-welfare equivalence would necessitate changes to claims that buyers of carbon credits commonly make. Instead of claiming to have offset their emissions, they may tout that they’ve counteracted the social damages of their emissions. Although admittedly less catchy, these modified claims could be more accurate, and potentially less legally (and reputationally) risky, than the claims of today’s voluntary carbon market. 

Equivalence and legal risk

In the United States, the Federal Trade Commission (FTC) Act prohibits “deceptive acts or practices in or affecting commerce.” Relying on low-integrity offsets to make net-zero, carbon-neutral or other claims could potentially expose corporate buyers to this liability. The act empowers the FTC to bring enforcement actions against companies it views as having potentially violated this law. Meanwhile, many states have “Little FTC Acts” that also allow private parties to file lawsuits, as in the Apple and Delta cases. 

In light of these legal risks, corporate offset buyers need to be careful about the claims they make. A company that adequately qualifies its claims or that has a reasonable basis for them doesn’t violate the FTC Act. But to the extent that the government or a private party could still argue that offset integrity problems make a corporate buyer’s claims deceptive, a framework that more fully and honestly accounts for the risks and uncertainties affecting the underlying removals or reductions could provide an extra line of defense.

To be sure, equivalence may not be the best or only way forward. Even if the market adopted an equivalence framework, participants may still have incentives to misrepresent projects’ risks and uncertainties. Nonetheless, reimagining how the voluntary carbon market deals with risks and uncertainties could move the conversation forward and clarify the role of private efforts in advancing much-needed global climate change mitigation goals. Just like we shouldn’t let the perfect be the enemy of the good, we also shouldn’t pretend the imperfect is perfect.

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Biodiversity VC fund focuses on seaweed, fungi and invasive species

A venture capital firm devoted exclusively to backing startups working to restore nature and biodiversity has closed its first funding round.

Superorganism has already used some of the $26 million it raised to back startups creating leather from invasive species, rebuilding fungal networks in forests and generating plastic from seaweed.

“You could think of us a lot like a climate tech fund,” said Kevin Webb, an investor and one of the fund’s managing directors. “But instead of looking at business opportunities to draw down CO2 or emit less of it, we’re doing the same thing for nature loss.”

The fund is premised on three areas of opportunities, explained Webb and conservation technologist Tom Quigley, his co-director: 

  • Industries historically tied to nature loss. Superorganism backs startups that can help reinvent these industries, reducing the pollution, habitat loss and other negative impacts they cause.
  • Intersection points between nature and climate. This could include technology for nature-based solutions, or using nature as an adaptation to rising sea levels. 
  • Enabling technologies. “We’re looking at the next generation of satellites, remote sensing, biotech, AI,” said Webb. “We’re looking for things that can be really useful in the hands of conservationists that allow them to do new things or do more with fewer resources.”

The fund has made 20 investments to date in the $250,000 to $500,000 range, with the focus on startups in the seed and pre-seed stage. The longer-term aim is a portfolio of around 35 companies. Backing for the initial round came from AMB Holdings, Builders Vision, Cisco Foundation and others.

Here are three startups that illustrate the fund’s goals:

Funga

Funga rewilds soil microbiology to accelerate forest regeneration, leading to faster growth and additional carbon sequestration. The startup says it has sequenced DNA in soil samples collected from hundreds of forests and used machine learning to discover which microbes correlate with healthier forests. It uses that data to inoculate seedlings in commercial tree nurseries prior to planting in forest regeneration projects.

The startup generates revenue by selling carbon credits issued for the forest growth made possible by the inoculations. Funga has enrolled 28,000 acres and last year revealed Netflix as the first purchaser of its credits.

Inversa

Interested in a pair of python loafers? How about a silverfish-skin wallet? Inversa has you covered. The startup pays hunting and fishing cooperatives to supply it with invasive species extracted from wild ecosystems, which it then turns into different kinds of leather. Current targets include the iguanas that have invaded coastal habitats in Florida, pythons in the Everglades, silverfin carp in the Mississippi River Basin and lionfish from coral reefs in the Caribbean.

An Inversa partnership with Florida wildlife services “supercharged” the removal of pythons from the Everglades, governor Ron DeSantis said in October: “The new program accomplished more removals in July 2025 alone than in the entire year before.”

Sway

Sway processes sustainably farmed seaweed from partners in Indonesia, Chile, Puerto Rico, Mexico and Madagascar into TPSea, biopolymer pellets that can be integrated into industry-standard plastic production systems. Current end products include films that can be used as wrappers, bags and windows in packaging. 

Fashion brands using Sway’s bioplastics include Burton, Faherty and Florence Marine. The product is also available through Atlantic Packaging, the largest privately held packaging company in North America, and was named a Best Invention of 2025 by Time magazine. 

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Sustainability tools to use in 2026

Welcome to the Trellis roundup of new products and services for sustainability professionals. Check out the new arrivals directly below, or click to jump to a specific category. We’ll be adding new sections as the list grows.

  1. Emissions reductions 
  2. Reporting and target-setting
  3. Carbon markets
  4. Circular economy

Do you have a favorite new tool you think should be on the list? Or have feedback — good or bad — about something we’ve featured? Email [email protected] with details.

New arrivals

Earned an EcoVadis badge? You can now display it on Amazon Business (Added Jan. 7, 2026)
Companies with Bronze, Silver, Gold, Platinum or Committed ratings from EcoVadis can showcase their achievement on Amazon Business stores in the EU and U.K. The impact could be significant if the dynamics seen on Amazon’s core consumer marketplace apply: Sellers operating there saw a 12-14 percent jump in sales after earning the company’s Climate Pledge Friendly badge.

Google’s open-source playbook on how to use AI in sustainability reporting (Dec. 15, 2025)
Sustainability leaders at Google have condensed two years of trial-and-error research on AI and sustainability reporting into a playbook with answers to questions such as “I know AI can help, but where do I even begin?”, “Which parts of the reporting heavy lifting are actually doable with AI?” and “Where can I find the copy-paste prompts to get this done?”

Sharper data on emissions from consumer use of products (Dec. 9, 2025)
Scope 3 emissions are often the toughest to measure — and within that scope, emissions from product use can be particularly challenging. Retailers’ end-use estimates should now get a little sharper thanks to an upgrade to the Direct-Use Product Emissions Database, a project of carbon management firm Optera and the Retail Industry Leaders Association. The resource contains data on emissions generated by consumer use of appliances, electronics and other products.

We missed the deforestation deadline. Now let’s get back on track (Dec. 8, 2025)
Demand for beef and other commodities derailed plans to end deforestation by 2025. Now, new guidance from the Accountability Framework initiative, a coalition of WWF and Ceres and other environmental organizations, is available for companies working to eliminate deforestation from supply chains. The Science Based Target initiative’s deforestation guidance, which is currently being revised, is designed to align with the framework.

1. Emissions reductions

Six steps to cut carbon and support climate action (Added Oct. 2025)
Most emissions-reduction frameworks focus on large companies. Not so the Climate Contribution Hub, a free-to-use site from the German nonprofit NewClimate Institute that provides a six-step process businesses and civil society organizations can use to cut carbon footprints and take responsibility for ongoing emissions. Successful companies will not, however, receive a certification (maybe not what your marketing team wants to hear).

2. Reporting and target-setting

Now the robots can read your sustainability report (Added Nov. 2025)
Actually, many companies will have to let robots read their reports: The EU’s Corporate Sustainability Reporting Directive will soon require metadata tags that allow machines to extract data from disclosures. Brisk AI is a new tool that simplifies the tagging process.

Run a double materiality assessment in minutes at no cost (Nov. 2025)
Should we file this one under too-good-to-be-true? Upright, a Finnish tech company, is offering double materiality assessments, free of charge and delivered within minutes after providing no more than a company URL.

A more holistic methodology for measuring net-zero efforts (Nov. 2025)
Traditional carbon accounting tools focus on efforts to reduce emissions. But what about a company’s influence on climate policy, or its financing for emerging net-zero technologies? The Climate Contribution Framework from software firm Sweep and the Mirova Research Center considers all three metrics. The methodology was developed by BearingPoint and Winrock International; corporate supporters include EDF, Renault Group and Veolia.

Find a target-setting expert — or become one yourself (Oct. 2025)
The Science Based Targets initiative has launched a directory of professionals that possess “advanced expertise in science-based target setting.” The list, currently 63 strong, includes employees at Quantis, Arup and elsewhere who have completed the initiatives’ SBTi Academy, earning them the right to register as SBTi Certified Experts.

3. Carbon markets

How not to miss the next issuance of removal credits (Added Oct. 2025)
Companies seeking offtakes of high-quality carbon removal credits sometimes issue requests for proposals — a good way to discover what’s out there, but not the most efficient of processes. The Nasdaq Carbon Issuance Calendar, a collaboration with consultancy Carbon Direct, aims to more easily connect buyers and sellers by listing projects with offtake availability. Registration is open now; listings are due to go live early next year.

Easy access to credits from the world’s largest biochar producer (Oct. 2025)
Biochar carbon credits are reasonably priced by the standards of “durable” carbon removal, a label earned by projects that lock carbon away for hundreds or thousands of years. Supercritical, a carbon credits marketplace, is now trying to smooth the sometimes-cumbersome purchase process and allow smaller buyers to access credits from Exomad, the world’s largest biochar project developer. “You don’t need a 100,000-tonne budget to access 100,000-tonne pricing,” says Supercritical.

4. Circular Economy

The missing manual for circular business practices (Added Nov. 2025)
The Global Circularity Protocol wants to be the Greenhouse Gas Protocol for the circular economy — a single interoperable framework for all sectors to align with. The 236-page playbook walks businesses through the steps needed to embed circularity in operations and supply chains.

What did we miss? And are these products as useful as advertised? Share your thoughts via [email protected].

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Toxic chemicals risks that companies need to address now

As scientists better understand the harms of industrial chemicals to nature and people’s health, lawsuits multiply and policies advance, while businesses face escalating, long-tail risks to bottom lines and reputations.

“We are seeing a lot more discussion of the need for better transparency on what chemicals are in products and the need for public data on their potential harms,” said Richard Wielechowski, a senior analyst at Planet Tracker in London.

The firm warns that 350,000 synthetic chemicals have been produced faster than they can be controlled, potentially triggering trillions of dollars in economic losses. “Forever chemicals” and plastics increasingly pose multiplying risks for businesses using or making them.

Despite federal backsliding on chemicals regulation in the U.S., regulations are advancing in numerous states and the EU. Fears about chemicals may cut across the political divide more than climate concerns do.

One potential tipping point for global action across industries and governments: In November, the United Nations will hold its first International Conference of the Global Framework on Chemicals in Geneva.

“Whether you’re an electronics, apparel or shampoo manufacturer, I see increasing alignment around getting better and more reliable information from your supply chain so you don’t get surprised,” said Bill Walsh, director of the Safer Chemistry Impact Fund in Los Angeles.

The financial case

Investors are watching how companies handle these risks. Hazardous chemicals disrupt shareholder value and consumer trust, according to the Investor Environmental Health Network, part of the nonprofit advocacy organization Clean Production Action.

The Investor Initiative on Hazardous Chemicals, a consortium of 75 firms with trillions of dollars under management, is urging chemical makers to disclose phase-out plans for persistent pollutants.

Policy snapshot

Global businesses will need to comply with an anticipated update in 2026 or 2027 by the European Commission to its sweeping Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) rules.

Gridlock in the U.S. leaves federal chemical regulations stalled as the Trump administration aggressively seeks to diminish the EPA. Nevertheless, the agency is supposed to tackle a backlog of chemical risk evaluations by 2027 under the Toxic Substances Control Act, which could lead to chemical belt-tightening by business.

As companies continue to pay for remediation and class-action lawsuits from chemicals banned decades ago, the following categories are emerging as the most acute business risks on the horizon:

‘Forever chemicals’

A major flashpoint: “forever chemicals” known as PFAS, short for per- and polyfluoroalkyl substances, popular for stain-proofing and waterproofing clothes, shoes and furniture. Linked to cancer and infertility, they are difficult to destroy.

As chemical giants including 3M and BASF are dropping PFAS, liabilities also loom for companies still using them, which may represent half the global economy.

Out of roughly 10,000 types of PFAS, only dozens are well studied. The compounds pollute more than 9,500 sites across the U.S., and 17,000 more in Europe.

Movement is building to eliminate the substances from consumer products, and the issue has gained traction in rural America and across party lines.

Maine and Minnesota are mulling sweeping PFAS bans. In 2026, Illinois and Vermont, followed by New Hampshire in 2027, will block PFAS in cosmetics, food packaging and cookware. About a dozen states, including California, already restrict PFAS in food packaging and other goods.

Plastics, plastic additives and microfibers

The 16,000 chemicals associated with plastics include hormone-disrupting phthalates and bisphenols, which are already banned in baby bottles and toys in the U.S. and Europe. However, substitutions are proving to have unanticipated consequences.

Lawsuits and tighter policies are expected around single-use plastic packaging and synthetic textiles as consumers learn about health hazards from microplastics.

“We need better ways for brands to test for and understand how packaging and microplastics can enter their products and how to get them out,” said Lindsay Dahl, author of “Cleaning House: The Fight to Rid our Homes of Toxic Chemicals,” and chief impact officer at vitamin maker Ritual.

Flame retardants

Fireproofing chemicals in furniture were supposed to save lives, but they’ve likely sparked countless cancers. From IKEA to Pottery Barn, dozens of brands no longer infuse couches with certain flame retardants. That’s partly the result of activism by safer chemistry pioneer Arlene Blum. The Green Science Policy Institute in Berkeley, California, which she co-founded and directs, is now campaigning for the auto industry to cease using the same chemicals.

Antimicrobials

The watchdog’s latest target is less on the public’s radar, at least for now. Antimicrobial chemicals, which proliferated during the COVID-19 pandemic, appear in everything from hand soaps to cutting boards to pens.

Marketed as hygienic, these substances can cause health problems and weaken the immune system’s germ-fighting powers. The FDA banned antibacterials triclosan and triclocarbon in soaps in 2016, but Blum believes their alternatives remain problematic.

Legacy chemicals persist

Even products off the market for decades can spook insurers and investors. Despite longstanding regulations, asbestos, lead, PCE, methylene chloride, PCBs and DDT circulate in nature.

Epidemiologists are better able to connect substances with disease, and courts are more open to delayed claims of harm.

Failures to test for and disclose contaminants that slip into products can haunt companies later. A California bill is advancing to regulate heavy metals in vitamins.

The “Make America Healthy Again” movement is targeting artificial dyes and colorants in food and cosmetics. Safer alternatives are widely available, unlike with PFAS, where some companies are fighting to preserve existing formulations, according to Walsh.

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Pride, hide or slide: 3 sustainability strategies for 2026

The era of effortless ESG signalling has ended. We’re deep into a “downwave” of media and investor interest in sustainable business. So many businesses sustainability plans are fragmenting in response to different regulations, expectations and swirly political realities across the world. 

The big question is how to respond. And the way I see it, there are three pathways through this messy landscape — pride, hide or slide.

These three approaches have little to do with the existential challenges that keep us awake. Nor are they necessarily what corporate leadership believes should be their priorities in response to those world-changing trends. They are about how organizations continue to function in a deeply polarized world, with intensifying scrutiny of claims, growing litigation risk and unpredictable markets. 

Pride: louder, clearer public commitment

You double down on your goals, you defend your commitments and you talk about them. You advocate, you market, you show your progress to nearly everyone.

Pride means continuing, and often expanding, public commitment to environmental and social goals. Prideful companies keep or upgrade their targets, publish progress, market their sustainability credentials and are willing to advocate publicly. They speak about climate, equity and responsibility not as side issues but as part of their brand and purpose.

Patagonia remains the archetype here, treating activism as integral to its business model rather than a reputational accessory. REI has similarly refused to retreat into silence, connecting its commercial offering to climate action, renewable energy and community investment. And Ben & Jerry’s, despite governance tensions with its parent company, still operates as if values-led advocacy is non-negotiable. I expect to see more pride positioning in Asia and South America as new middle classes catch the sustainability vibe. 

Pride can be a valid and powerful choice in 2026, but only under specific conditions. In disrupted markets, sustainability can still differentiate, provided it’s specific, provable and tied to the product or service itself. 

Talent dynamics also matter: Despite the noise of backlash, many employees still see environmental and social values as a signal of long-term seriousness and cultural safety. There’s also a legal logic to pride when it’s done properly. As greenwashing enforcement sharpens, companies with detailed data, clear methodologies and transparent progress may be better protected than those relying on vague promises.

Hide: Keep doing the work, change the language

Same commitments with different nouns. Like many companies already operating in this way, you move away from “ESG,” “DEI,” perhaps even “net zero,” and you talk instead about risk, resilience, efficiency, responsibility, local impact, nature, health, reliability or energy security.

Hide is a subtler and more widespread pathway. Hide means changing the language, but not the goals. I’ve helped shape so many of these “new” narratives over the past months, with a brief to avoid “hot button” language such as climate, justice, diversity and ESG. And I’ve done so with a clear conscience and all the creativity I can muster, because keeping the action matters more than the words. 

Targets, investments and programs are protected, but the vocabulary shifts. ESG disappears from report titles. DEI becomes “community culture” or “people strategy.” Climate becomes “energy resilience,” “valuing nature” or “risk management.” Net zero quietly recedes in favor of efficiency, reliability and cost control.

Many U.S. companies have moved in this direction, particularly in response to state-level political pressure and legal uncertainty. Across large-cap U.S. firms, the acronym ESG itself has been systematically scrubbed from public-facing documents, even as much of the underlying content remains. Constellation Brands, for example, publicly reframed its DEI efforts, renaming teams and redirecting attention toward local suppliers and community investment. Hide can be a rational strategy in 2026 for several reasons. First, it reduces noise. When sustainability language becomes a lightning rod, execution suffers if internal energy is consumed by messaging debates rather than delivery. Second, it lowers political exposure. In parts of the U.S., certain words function less as descriptors and more as ideological triggers. Removing them can be a form of operational risk management rather than ideological retreat. Finally, it aligns with a quieter investor shift. Serious capital is increasingly less interested in moral theatre and more focused on whether companies understand long-term risk, resilience and competitiveness.

Slide: An actual retreat

You drop commitments, weaken targets, leave alliances, cut programs and sometimes you do it loudly as a signal to politicians or a particular customer base. 

Slide is a retreat. Wells Fargo’s decision to step away from net-zero commitments is a clear example. Meta’s dismantling of core DEI initiatives, justified by legal and political risk, reflects a similar calculation.

Slide is often framed as realism and perhaps, in some narrow circumstances, it can be defensible. Some companies set targets they never resourced and are now choosing the uncomfortable honesty of withdrawal over the slow bleed of under-delivery. Others are prioritizing short-term regulatory access or political capital in highly exposed sectors. In industries facing severe margin pressure, sustainability is sometimes still treated as discretionary, particularly where it was never embedded into capital planning or operations.

But slide is the most dangerous option in the medium to long term. Reputational damage is only the first cost. Talent loss, reduced innovation capacity and vulnerability to physical climate risk follow. More importantly, retreat doesn’t stop the underlying forces driving our global energy transition. Climate impacts, insurance constraints, supply chain disruption and future regulation don’t disappear just because a company has stopped talking about them. Sliding away from preparedness today almost always means paying more to catch up tomorrow.

So which approach should companies choose in 2026? The answer for many will be a hybrid scenario. Pride where performance is real and measurable. Hide where language has become a distraction from delivery. And extreme caution around slide, reserved only for situations where commitments were hollow to begin with and a credible alternative strategy exists.

Yes, you can mix-and-match these responses. But the three archetypes are useful because they force a brutally practical question: are you going to signal, soften or surrender in 2026?

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Is the chief sustainability officer becoming irrelevant? It’s debatable

For much of the past two decades, the chief sustainability officer was a corporate avatar of progress. If a company had one, it signaled seriousness — about climate, social impact, governance, transparency, resilience and more.

That’s changing. In some circles, the CSO is now seen less as a vanguard and more as a vestige, a bureaucrat more than a builder. The question, still largely whispered, is blunt: Is the CSO increasingly irrelevant?

The answer, inconveniently: yes and no.

On the one hand, sustainability strategy and implementation have been pushed into business units and functions — procurement, finance, legal — leaving less need for a singular department. On the other hand, a dedicated someone at the executive level needs to “own” an organization’s sustainability strategy, goals, commitments and transparency.

That is, it’s subject to debate.

We’ll be holding that debate on stage next month at GreenBiz 26 in a 90-minute plenary session devoted to airing both sides of this existential question. I’ll be co-hosting the debate along with Sophie Lambin, CEO of Kite Insights, who has staged such debates at Davos and Climate Weeks and alongside COP conferences, among other places around the world.

I’ve had the good fortune to participate in two Kite debates on other topics, as a debater (at COP28 in Dubai in 2023, arguing the motion “We can upskill our way out of the climate crisis”) and as co-host (at Climate Week NYC in September — “AI will do nature’s work”). Employing the Oxford debate style — two teams of three, volleying back and forth — they are as entertaining as they are enlightening.

The winner, as determined by the audience, is not which team is “right” but which is more persuasive.

The format encourages thoughtful consideration of both sides. In Dubai, for example, I was tasked with making a case that was counter to my belief. (My team won.)

What are some points likely to be raised at GreenBiz 26? Here’s my take on the arguments you’ll hear, although I’m quite certain that the debaters will each bring their own special sauce to the occasion.

The case for irrelevance

In some companies, sustainability has become everyone’s job or no one’s. Climate risk sits with finance. Supply-chain emissions live in procurement. Product sustainability belongs to R&D. Investor disclosures are owned by legal. Strategy is handled by — well, strategy. The CSO, meanwhile, often floats above it all, coordinating, cajoling and translating, but with little direct authority.

That made sense when sustainability was marginal. It makes less sense now that it is material.

As sustainability has matured, the CSO role has often failed to evolve at the same pace. Too many CSOs still lack direct control over capital allocation, product design or operational decisions. They focus on reporting, frameworks and reputation rather than on value creation. Their power is influence, not imperative.

Add to this the political backlash that is pushing companies to keep their sustainability initiatives sotto voce, plus the regulatory uncertainty and ESG fatigue of the past few years, it’s no wonder the CSO’s role has become a lightning rod — responsible for navigating a culture war with fewer tools, less air cover and smaller budgets than even a couple years ago.

Then there’s the talent paradox. CSOs, deeply knowledgeable about climate science, human rights or stakeholder engagement, may be less fluent in finance, operations or P&L trade-offs. In an era when sustainability must compete head-to-head with growth, resilience and margin pressure, that gap matters.

Seen through this lens, the role can look like a transitional one — useful for a chapter but destined to dissolve as sustainability is absorbed into core functions.

The case for relevance

Writing off the CSO is not only premature, it misunderstands the moment we’re in.

Sustainability has become more complex, more interconnected and more consequential. Climate risk is now systemic. Supply chains are geopolitical. Water scarcity is local and acute. AI and data centers are impacting energy systems, aquifers and land use. Nature loss is impacting food security and insurance markets.

This is not a coordination problem that solves itself.

What the best CSOs do — and what few other executives are positioned to do — is integrate across silos. They link climate science to capital planning, human rights to procurement, regulatory risk to product strategy, and long-term planetary constraints to near-term business decisions. That connective tissue doesn’t form by accident. It requires a systemic role and mandate over a sustained period.

Moreover, a growing number of CSOs do bring deep business experience to their roles, some having already served in supply chain, finance and other mission-critical parts of the company. They can play a critical role in bridging the all-too-common gap between sustainability and more traditional business goals.

Without a senior executive whose job it is to keep asking uncomfortable questions — about tradeoffs, time horizons and externalities, among other things — sustainability tends to lose gravity.

So, what do you think? I can assure you that whatever your current leanings, you’ll come away from this debate with new insights and inspiration. You might even think differently about your job.

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Climate tech investment in 2026: bigger checks, fewer bets and the AI wave

Sightline Climate’s fifth annual Climate Tech Investment Trends Report landed last week with a clear message: Climate tech investment is maturing, consolidating and increasingly tethered to AI’s voracious appetite for power. Despite policy whiplash and market uncertainty, 2025 delivered a modest but significant rebound — $40.5 billion in worldwide venture and growth capital, up 8 percent from 2024, marking the first increase since the boom years of 2021-2022.

Overall deal count fell 18 percent while half of the top 10 deals exceeded $1 billion. In other words, investors are writing bigger checks to fewer companies, with growth-stage investment up 78 percent while seed and Series A dropped 20 percent and 7 percent, respectively. The climate tech market isn’t just recovering — it’s recalibrating around proven winners and energy security.

Flight to quality 

One significant shift in 2025 was the distribution of capital. Growth-stage investment (Series D+) spiked, with deal count up 41 percent, while Series C hit an all-time low — down 32 percent with just 45 deals completed. This isn’t just a funding gap; it’s a strategic repositioning. Investors have essentially declared winners in emerging sectors.

Looking forward to 2026, I expect the trend to continue, with the Trump administration’s “Big Beautiful Act” creating policy certainty, limited partners demanding returns and the AI buildout providing tailwinds for several climate technologies.

The AI tailwind 

The AI boom created an interesting paradox for climate tech in 2025: the sector’s biggest environmental challenge became its most powerful investment driver. Data centers consumed 78 percent of the built environment’s funding in 2025, driving investment in grid hardware, energy management software, batteries, nuclear power and next-generation geothermal. Fission and fusion funding reached all-time highs as utilities scramble to meet gigawatts of new demand projected over the next two years. As a result, clean-energy investment grew 31 percent to $14.4 billion, reaching a three-year high.

The big question for 2026 is whether this massive investment in AI is sustainable. Is it a bubble marked by excessive debt and overblown demand? I suspect the buildout will continue through 2026, although investors will demand clearer paths to monetization and watch for signs of overcapacity. 

Security over sustainability 

In 2025, the language of climate tech shifted — and I believe that’s cause for optimism. “Decarbonization” gave way to “energy security.” “Emissions reduction” became “resilience.” Rather than signaling retreat, this rebranding revealed that the market values climate solutions for cost savings and security, not just environmental impact.

The shift paid off for startups aligned with domestic manufacturing priorities. Defense applications proved particularly lucrative, with the Pentagon paying premiums for advanced batteries and grid technologies. That climate tech entrepreneurs and investors could find market validation simply by reframing their pitch demonstrates the technologies’ innate value — they were solving real-world problems all along, not just boosting environmental goals.

The liquidity crunch continues

The exit environment in 2025 remained challenging, albeit nearly flat from 2024. Exits dropped 5 percent overall, with acquisitions making up 89 percent of all exits — 191 compared to 202 in 2024. It’s still a buyer’s market, with larger companies cherry-picking smaller players for capacity and project access rather than paying premiums for innovation. Notable bankruptcies — Northvolt, Li-Cycle, Sunnova, Mosaic and Powin — served as stark reminders that capital intensity and technology risk remain unforgiving.

The silver lining? Bankruptcies fell 50 percent compared to 2024, suggesting that the weakest players have been cleared out. Investors sought “tidy acquisitions and select IPOs,” according to the Sightline report, as LPs increased pressure for liquidity.

I expect exits to tick upward in 2026 as “vintage funds” (from 2020 to 2021) push portfolio companies toward profitability rather than growth at all costs. The flight-to-quality dynamic means investors are maturing select startups toward exit rather than spreading bets, and corporations will stay acquisitive as long as ROI is significant.

The bottom line

Climate tech’s 2025 rebound reveals selective optimism tempered by reality. Investors bet big on proven technologies solving AI’s power demands, while early-stage innovators struggled. Nuclear power will continue attracting massive funding despite interconnection bottlenecks, and a warming world should drive M&A in climate adaptation technologies that assess risk and build resilience.

Corporate appetite for energy-efficient technologies remains strong despite policy blowback. Whether the AI tailwind is sustainable will help determine whether 2025’s rebound marks the beginning of climate tech’s mature growth phase or merely a temporary lift.

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