Why the future of clean energy investment is at the state level (at least for now)

Key takeaways

  • $10 million was recently granted to a clean energy development project in Los Angeles County.
  • Developers kept sharp eyes on state government newsletters so they would be ready to pounce on grant opportunities.
  • California isn’t the only state funding clean energy projects.

In some rare good news for the clean energy sector, Quino Energy and Long Hill Energy Partners, a water-based flow battery developer and a clean energy developer, respectively, have been awarded a $10 million grant from the California Energy Commission. The funding will support the development of an 8 megawatts per hour flow battery energy storage project for the High Desert Regional Health Center (HDRHC) in Los Angeles County.

“Once installed, the flow battery will provide critical energy resiliency and is also projected to save up to $10 million in energy costs for LA County’s hospital,” said Ed Chiao, managing director of Long Hill Energy Partners in a statement.

Funded through the Commission’s Energy Research and Development Division’s Electric Program Investment Charge Program, the battery is expected to last 20 years. The distinguishing feature of flow batteries, which gives them that longer life, is electrolyte tanks. These store energy that can be dispensed as needed.

Discovering the opportunity was simple enough, said Eugene Beh, Quino Energy CEO and founder.

“We are subscribed to news about grant funding opportunities from the California Energy Commission,” said Beh, “so we knew about it and then talked with Long Hill Energy Partners to partner up.”

One factor that drew Quino to Long Hill Energy was their progress regarding a project site.

“The HDRHC was a site we had earlier identified as an ideal candidate to host a technology demonstration project,” said Chiao, explaining that the anticipated long-term economic benefits of the project impressed Los Angeles County enough to secure permitting.

The state-funded project opens doors for other opportunities. Once Quino’s flow battery is installed at the health center, a nearby solar carport will be expanded to connect to the same grid and feed solar energy into the center. Quino and Long Hill Energy’s project provided solar companies and local contractors the additional work.

An attractive funding alternative

In a time when federal monies for clean energy technology is practically non-existent, state-level funding is an attractive alternative. Quino Energy and Long Hill Energy Partners are not California’s first clean energy investment this year. The state awarded $500 million towards a zero-emission school bus program, and its energy commission is accepting applications for a Rural Electric Vehicle Charging 2.0 grant, which will award up to $10 million in funds for light-duty electric vehicle charging infrastructure in rural California.

And California isn’t the only state with funds for clean energy projects. All 50 have various funding opportunities for local businesses. Pennsylvania, for example, has its Renewable Energy Program, which provides grants to promote the use of geothermal and wind energy, while Maryland just closed applications for its FY25 Solar Canopy and Dual Use Technology Grant Program.

And Beh noted that “there are other grants in New York which could be in scope.”

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Kohler and Legrand: 4 ways to embed circularity into product design

Key takeaways

  • Starting early is critical.
  • Sharing methodology is helpful.
  • Scorecards updated at every stage of the process can keep teams motivated and inform future research and development.

Kohler, the 150-year-old bathroom and kitchen fixtures company, and Legrand, a 160-year-old maker of electrical supplies, are overhauling new product design processes to incorporate principles such as longer durability, simpler repair and disassembly and more recycled content.

This takes cross-company collaboration and discipline at the earliest stages of research and development, said sustainability professionals for both companies during a discussion this week at Circularity 25, a Trellis Group conference. 

“The opportunity to influence product attributes happens super early on, oftentimes before engineers are actually involved,” said Jaden Barney, senior sustainability analyst at Legrand. “So it’s a lot of product managers, some salespeople, people who are actually talking to customers.”

For some time, both Legrand and Kohler have had formal programs for reducing emissions from manufacturing and use of their products. But in recent months they have revised those initiatives to include considerations that extend the useful length of time products can be used. This concept is known as circularity, the idea that a physical asset can serve different purposes as it ages or wears — i.e., that there is no end of life.

“We’re kind of in the pilot phase with this new wheel,” said Ashley Fahey, senior manager of global product sustainability at Kohler, referring to her company’s updates. “But, essentially, we wanted to make this more measurable. We wanted to put some KPIs behind this, and we also wanted to make it more valuable, more meaningful to our customers.”

Both Legrand and Kohler publish the methodologies they use to encourage circular design so other manufacturers can emulate them and they can be reviewed by suppliers and customers. Here are four best practices their guidelines have in common: 

1. Consider features early in the design process

One update Kohler is making to its Design for Environment playbook is getting the principle of circularity — including potential for recycled materials and how easily an item can be repaired or disassembled — considered at the conceptual and brainstorming phases rather than later on during the process. 

If suggestions related to materials choices or repairability are made too late in development, they’re likely to be rejected, which will frustrate everyone. “Not only was that not effective at making our products more sustainable, more environmentally friendly or more circular, it was also discouraging to the teams,” Fahey said.

Legrand too holds these conversations during initial research. “That way, when concept studies and iterative design and testing happen, and teams have to make these trade-off decisions, everybody is aware what was to be achieved from sustainability and what impact different design decisions might have on that,” Barney said.

2. Synchronize goals and processes with industry standards

Legrand and Kohler anticipate using emerging third-party standards and certification guidance to inform circular product design. “That gives them confidence in what we’re saying, that we’re being transparent, and they can trust what we’re saying,” said Fahey.

Both companies look to established methodologies from organizations such as the U.S. Green Buildings Council and the International Organization for Standardization, which in March updated some of the foundational guidance for circular product design.

“It’s a way of making sure we’re all on the same page with terminology, what constitutes a circular product, what constitutes a recyclable material, and then also the different stakeholders capabilities,” said Noah Last, scientific partnership manager at the National Institute of Standards and Technology, which participates in the ISO standards development process.

3. Check progress at each design phase

Kohler uses a scorecard to track how well proposed designs meet criteria related to circularity and emissions reductions at several phases during the development process. For example, designs can win points for the percentage of recycled content used or whether they lend themselves to repair. 

Products can achieve recognition tiers ranging from basic to platinum, based on points earned. Kohler uses this information to market them, but there are no official incentives for reaching those milestones. “We build up a kind of performance competition between different teams,” Fahey said. “We also are highlighting the most impactful strategies by adding the most points or incentivizing the most impactful strategies for our customers and the most impactful strategies for the environment or circularity.” 

Legrand uses a similar points-based system to gauge success against its Eco-Design Index, which assesses things such as a product’s repairability, how much certified recycled metals and other renewable content it contains and how the life might be extended. 

The goal of both companies is to get designers and engineers thinking about these issues all the time, not just when nudged by the sustainability team.

4. Take cues from customers

Legrand trains customer-facing employees to probe for information during encounters, and that data is given to designers, who can integrate it with the company’s goals. 

As one example, the company was able to simultaneously address Legrand’s commitment to eliminating single-use plastics and complaints about lost screws for electrical outlets by coming up with a way to snap them onto the back of the product before they’re used.

Similarly, Kohler refurbished and re-enameled 40 cast-iron bathtubs and 100 pedestal sinks for the historic Many Glacier Hotel in Glacier National Park, at its request. That way, the manufacturer was able to study the processes involved with product take back and refurbishment; it already supports a similar process for handling repairs. Ultimately, Kohler chose not to offer this as a standard service, but the encounter provided valuable feedback.,

“When you’re designing products and when you’re designing circular services, think about that consumer behavior and the touch points,” Fahey said.

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Soil carbon credits emerge from the ‘trough of disillusionment’

Key takeaways

  • After years of slow growth, issuances are on a tear.
  • More data and better models are helping win over skeptical buyers.
  • Soil carbon credits are now a viable option for many, but some environmental groups remain wary.

Just five years ago, the idea of locking away carbon dioxide in farmland soils was one of the hottest areas in carbon markets. New startups were entering the field and major companies, including JPMorgan Chase and IBM, were purchasing soil carbon credits.

That momentum all but disappeared as questions surfaced about the science behind the idea and projects took longer than expected to be approved. But the work quietly continued and the field appears to have turned a corner, with a flurry of credits issued in recent months. Indeed, 2025 might be the year when soil carbon begins to deliver on its promise.

“The sector has gone through its own Gartner hype cycle,” said Aadith Moorthy, CEO of Boomitra, a soil carbon project developer. “2024 was probably the trough of disillusionment. We are recovering from the trough right now.”

Moorthy was referring to the cycle of inflated and then dashed expectations that emerging technologies often pass through as they mature. In the case of soil carbon, the hype rested on the enormous promise of regenerative agriculture techniques, including cover crops and reduced tillage, to sequester carbon. In 2019, scientists estimated that farmland soils in the U.S. alone could draw down 250 million tons of carbon dioxide annually. 

Scalable solution

Carbon markets promised to provide the funding farmers needed to deploy those techniques, prompting a burst of startup activity around the start of the decade. But getting projects validated by Verra and other major registries took longer than expected. Some environmental organizations, notably the World Resources Institute, also questioned the mitigation potential of regenerative agriculture. Amid the delays and doubts, Nori, a prominent soil sequestration startup, shut down last September. CIBO, another company that sold coil carbon credits, is now pursuing different lines of business in agriculture.

But other project developers have been able to ride out the downtimes. Although the scientific debate continues, it’s widely agreed that the models used to estimate soil carbon levels have improved, in part because project developers are continually collecting soil samples to help ground the estimates. “It’s gone from science fair to a scalable kind of solution,” said Ewan Lamont, head of sustainability solutions at Indigo Ag, one of the original project developers.

Indigo’s first batch of soil carbon credits, issued in 2022, totaled 20,000 tons of CO2 removed from the atmosphere. It’s third crop, released in 2024, received an important vote of confidence when Microsoft, by far the largest buyer of removal credits, purchased 40,000 tons. The company’s most recent issuance, announced last month, was for 630,000 credits, bringing the total the company claims to have stored in U.S. farmlands to almost a million tons. The most recent credits cost between $60 and $80 per ton, said Lamont.

One of Indigo’s rivals is Boomitra, which works with farmers in lower-income countries. The company issued its first batch of 47,000 cropland credits from smallholder farms in India last month. A second issuance of around 300,000 will follow later this year, added Moorthy. Because costs are lower in India, Boomitra’s credits sell for less than $40, he noted.

Beyond the ‘regen curious’

Both companies are now targeting scale. Lamont identified $100 per ton as a “catalytic” price that would unlock interest that goes beyond the “regen curious” U.S. producers that have been the first adopters of cover crops and other techniques. Indigo currently has around 1,000 farmers and 7 million acres enrolled, which leaves huge potential for expansion. Lamont noted that cover crops, as an example, are planted on less than 10 percent of U.S. cropland: “So you’ve got a phenomenal opportunity to really drive that as an economic practice.” 

Moorthy agrees. “We see significant volumes coming to market from India, East Africa, Brazil and Argentina over the next few years,” he said. “We could scale to 20 million tons per year.”  

New entrants are also aiming high: Agreena, a startup working with more than 2,000 farmers in Europe, plans to make its first release this summer and hopes to issue 2 million credits from its first two years of projects, said Michael Bertelsen, Agreena’s head of pricing, structuring and broker distribution.

Growth will depend on drawing more buyers into market, some of whom will likely remain wary of soil carbon credits. Carbon can be released from soils if farmers abandon regenerative methods or suffer floods, and monitoring millions of acres for such “reversals” is challenging. “I don’t think soil carbon makes sense as an offset mechanism because of the longevity,” said Christophe Jospe, a Nori co-founder who left the company in 2021 and now consults for food and agriculture companies.

Insurance measures

The industry’s answer to Jospe’s criticism rests in large part on remote sensing and scale. It’s impractical to monitor millions of acres through site visits, so soil carbon project developers use satellite imagery to check if a producer’s claim to have used cover crops is legitimate or to determine whether a no-till commitment has been maintained. 

The companies and the carbon credit registries they use also create “buffer pools” to protect against reversals. In Indigo’s case, said Lamont, the registry it works with — the Climate Action Reserve — holds on to 14 percent of the credits it approves. If a reversal takes places and carbon is released back into the atmosphere, those tons are removed from this buffer. Indigo holds back another 5 percent as additional insurance, said Lamont.

Those measures appear to be winning over some previously skeptical buyers, but many environmental organizations remain unconvinced. “Companies present soil carbon sequestration as a key component of regenerative agriculture, although its potential in agricultural soils is heavily debated, and permanence of such removals is limited,” the non-profit NewClimate Institute concluded in a report published last year. 

Those doubts might be addressed by better data on the impacts of regenerative methods, together with evidence that insurance mechanisms such as buffer pools prove effective. But the ongoing concerns suggest project developers still have much to do. In the Gartner hype cycle, technologies that get past the trough of disillusionment reach the “plateau of productivity.” “I don’t think we’re at the plateau yet,” said Moorthy. “I think there’s some heavy lifting to be done to get us in that.”

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What kind of company is yours? 6 sustainability archetypes

Key takeaways

  • Understanding how the C-suite and company leaders view sustainability within the archetype framework will help you find ways to engage leaders as champions and allies.
  • Often, sustainability efforts go wrong when there’s misalignment among archetypes and a misunderstanding of how they operate.
  • Companies can have more than one type of archetype, providing a more nuanced approach to sustainability.

Not long ago, a chief sustainability officer from a global consumer goods company told us about a product launch that touted positive environmental and social attributes. The launch was one of the most successful in the company’s recent memory.

Yet the C-suite was dismissive about the product — so much so that the strong sales seemed to make them uncomfortable. What was going on? Wasn’t this, the CSO wondered, exactly what the C-suite wanted? Why weren’t they happy to see sustainability supporting growth in revenue and market share?

This story shows the influence of what we call sustainability archetypes. Through our research and interviews with more than 40 chief sustainability officers, we’ve found six core archetypes — akin to personality profiles — that shape how leaders and employees define the purpose and role of sustainability for their company.

Even apart from the volatility of today’s world, understanding your company’s archetypes will help create alignment among the C-suite, board and sustainability team about the core purpose of sustainability for your business. It will point toward the outcomes sustainability can deliver for profit, people and planet and explain why some sustainability efforts, no matter how successful, don’t garner the attention or reaction from the C-suite that sustainability leaders expect.

The six archetypes of sustainability

Since we started to help companies map their archetypes, we’ve found sustainability teams improving the way they engage with a variety of stakeholders. Suppliers, for example, are using the archetypes to better understand how their B2B customers expect to see sustainability integrated into products, services and reporting. They also help improve the materiality assessment process by framing which ESG topics are most relevant to organizations.

Impact and purpose focused. This archetype uses sustainability to express the company’s purpose and values and follows up with efforts to reduce footprint and expand positive impacts. Patagonia is a classic example of a company driven by impact and purpose. Sustainability team members frequently live by this archetype, which can lead them to advocate for adopting every social and environmental issue, standard, framework and disclosure requirement to the fullest. Leaders — often the majority of the C-suite — who don’t share this archetype can grow frustrated and confused by it.

But some C-suite members do live by this archetype — a notion our CSO friend who launched the sustainable product missed. They wanted the product launch to focus on making an impact in the world. To them, using sustainability to support the business — even if it helped people and planet as well — seemed crass and improper because they viewed sustainability in a rudimentary, traditional way for the company to “give back.”

This illuminates an important lesson: archetypes exist on a continuum. It’s important to determine whether individuals have a sophisticated or rudimentary view of their preferred type.

Box checker. This archetype does only what it absolutely must. Many CFOs and general counsels, and some CEOs embrace the box-checker type. That’s a mistake. IMPACT ROI’s Project ROI business case finds that box-checking is the worst strategy a company can adopt. They get no love from Wall Street, which punishes companies that engage in sustainability with no rationale or plan, nor from customers, employees and communities, which have no respect for them.

Nevertheless, box checkers have their place. No organization can say “yes” to everything, and having a little box checker in you can help improve strategic focus.

Risk reduction driven. This is the box checker’s cool, hip cousin. Here, the purpose of sustainability is understood as mitigating risks. Traditionally, C-suite leaders saw sustainability supporting hard to quantify, lower-priority risks such as the “social license to operate,” PR risks, legislative risks and risks from environmental and social incidents.

In today’s world, with climate, biodiversity and social risks intensifying, sustainability’s value for risk reduction is growing. One CSO told us, “Showing how sustainability helps support enterprise risk management is our way in to show we are a vital partner for the business.” Another tech company sustainability leader goes a step further: “We’re getting all of our business line leaders real-time climate data in visual form and tied to a risk assessment tool so they can improve their overall risk management and planning.”

Immediate returns driven. This type uses sustainability to improve financial performance and competitive advantage. Often, leaders evaluate environmental and social activities with the same quarterly-to-18 month ROI expectations as any other part of the business. The CSOs we interviewed found it unsettling at first to embrace the profit and loss expectations this archetype demands. Now, they love it because they get clear, quick decisions backed by meaningful investment, headcount and resources.

Sustainability teams under this type often use sustainable thinking to create better products, new offerings, new business models, more attractive brands and better margins through cost reduction. They become comfortable setting bold impact goals as well. While any industry can adopt the immediate returns type, we observe that this type is more prevalent in the chemicals and life sciences sector, materials companies focused on circularity and increasingly in the tech sector.

Brand and reputation driven. This is an especially common archetype, which uses sustainability to differentiate the company and its brand with key audiences and stakeholders. For many years Starbucks and Unilever, along with Patagonia, assertively incorporated environmental and social messages into advertising and in-store experiences.

Many executives gravitate to this type. Some will take a rudimentary view, seeing sustainability as part of good PR. This makes the current era of backlash more problematic, because if companies feel too skittish to communicate about sustainability, then brand and reputation driven types may wonder, “What’s the point?” For this type, finding the right way to feature authentic commitments to sustainability in brand communications without tripping over polarizing issues and language is the challenge to navigate.

Innovation driven. This final archetype uses sustainability to innovate new business model(s) and processes to drive revenue growth, profitability, long-term competitive success and footprint reduction. Launching a circular blue jean is an example of sustainable innovation. At their best, innovation-driven types take responsibility to reduce their footprint today and invest in transforming their business models tomorrow. However, this type can use the idea of product or process innovation as a shield from taking more meaningful steps to deal with major sustainability footprint or business model concerns.

In a time of growing tension, conflict and backlash, sustainability teams need to build trust with and gain support from their leaders and internal partners. Understanding sustainability archetypes will help find ways to engage leaders as champions and allies.  

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Alphabet and Dow are building an AI database to sort complex plastics

Key takeaways

  • An estimated 7 million tons of plastic film and flexible packaging winds up in landfills because recycling systems haven’t been built to handle it.
  • Training AI to improve sorting will increase the volume of plastic feedstock that consumer products brands can reuse in packaging.
  • The technology requires recyclers, haulers and packaging producers to rethink existing collection, sorting and recycling processes.

Google parent Alphabet’s research division X is collaborating with Dow Chemical to address a thorny recycling challenge: identifying films and other flexible plastics and separating them from landfill-bound waste streams so they can be recycled and reused.

Their approach was announced April 30 at Trellis Group’s Circularity conference. It will use real-world materials data from Dow’s plastics recycling ventures to improve an artificial intelligence-powered system for detection that was developed by X’s moonshot for circularity.

The goal is to encourage higher collection and recycling rates for films and flexible plastics, so they can be turned into new types of packaging used by consumer products companies, according to X and Dow executives. 

“We’re working toward more precise recycling to restore the value,” said Rey Banatao, director and project lead for X’s moonshot for circularity. The mission: “Let’s demonstrate you can make a high-performance material again.”

An estimated 7 million tons of multi-material, film or flexible packaging is tossed annually in the U.S. alone, but the current recycling rate is less than 5 percent because most curbside recycling programs can’t handle it, Banatao said. One big sticking point is the inability of recycling equipment to recognize and separate clear films from other materials on conveyor belts. There is also uncertainty over the most effective options for collection.

X is building a database using generative AI and sensors to identify thousands of pieces of plastic at the molecular level every minute — including an additive often used in films and flexible packaging that can’t be easily detected. 

The venture is running a pilot at an Oregon recycling plant, where sensors scan pieces of plastic, identify their makeup at a molecular level and sort the materials into specific categories for processing. Dow’s data will expand the materials that can be detected. 

X and Dow created a proof-of-concept at Dow’s packaging lab (Dow Pack Studios) that recognizes multi-layered packaging made of plastics, paper and metals such as bags used to keep granola, potato chips or pet food fresh. The next phase of work will take place at recyclers, collection and sortation facilities and other locations where the approach can be put to the test in real-world situations, said Jill Martin, global sustainability fellow at Dow.

“We’re very focused on the film and flexible plastics unlock, and how we make these streams more recyclable,” Martin said. “We understand the materials we want to have.”

Partnership goal: boost plastic recycling rates

One of Dow’s corporate sustainability goals is to recycle 3 million tons of plastics waste annually by 2030. That requires increasing the sorts of plastic that can be processed. 

It bought plastics recycler Circular in 2024 for an undisclosed sum to support that commitment. Circulus has two U.S. facilities with expertise in film recycling — in Ardmore, Oklahoma, and Arab, Alabama — which currently can handle 50,000 metric tons a year.

Dow’s work with X will benefit companies across the system, informing new processes for baling, collection, sortation and recycling. It will also help packaging design decisions of consumer brands, by suggesting materials that can be more easily sourced or recycled.

“The better we can understand, the better we can understand the customer applications,” said Haley Lowry, global sustainability director at Dow.

Dow and X declined to provide details about where their first pilot will take place, in part because they want more companies to offer funding and feedback for the experiments. “Brands need to share their voice on what their needs are, too,” Lowry said.

For example, Dow is collaborating with consumer products company Procter & Gamble on technology to convert the sorts of plastics that can be identified by the X project into recycled polyethylene with “near-virgin quality.” P&G plans to use this recovered material in its packaging. It’s unclear whether P&G will actually be involved with the new project, but the work is likewise focused on bringing down technical barriers to using more post-consumer resin.

AI and recycling

X’s moonshot for circularity is one of several ventures pitching AI-powered identification systems as essential for boosting plastics recycling rates. 

Another is Amazon-backed startup Glacier, which disclosed $16 million in Series A backing April 28. The round was led by Ecosystem Integrity Fund; Amazon’s Climate Pledge Fund was among the return investors.

Glacier is building AI-enabled recycling robots that are made of readily available components, making them more cost-effective and smaller than existing options. The technology can detect more than 30 types of materials including polyethylene terephthalate (PET) plastic, aluminum cans, toothpaste tubes and cat food tins. It works at a sorting rate of up to 45 items per minute. The robots have been deployed at facilities in Chicago, Detroit, Los Angeles, Phoenix, San Francisco and Seattle.

“After seeing Glacier’s technology in action at our other facilities, it became clear they offered a faster, safer and more accurate way to recover valuable materials back into the circular supply chain,” said Sal Coniglio, CEO of waste management company Recology, which has installed the robots in multiple locations.

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Behind Keurig’s bid to make coffee pods without plastic

Key takeaways

  • Years of persistence and experimentation led to a biodegradable coffee pod that improves brewing performance.
  • Keurig Dr Pepper backed the innovation once it proved both sustainable and appealing to consumers.
  • Collaborating with customers and potential competitors were key for development.

Neha Mallik had plastic coffee pods in her crosshairs when she joined Keurig Dr Pepper nearly nine years ago. Now, the biodegradable pods she helped to innovate are poised to overturn the company’s coffee-making market. Consumers are testing them, and a production plant is rising.

“I was really hellbent on disrupting the K-cup,” said Mallik, Keurig Dr Pepper’s director of product management. However, it took several years in her job as a brand manager before she began to tinker with alternatives to single-use, plastic-packed java.

“There was me, one coffee developer and one compliance engineer, and we kind of went for broke and started working on this idea,” Mallik said at Circularity 25 in Denver on April 29.

Inspired by baristas tamping down grounds for espresso, they sought to compact the coffee tightly enough to maintain its patty shape without a container. The notion had floated in the “collective coffee consciousness” for more than a decade, she said. “We went through many, many rounds of prototyping it that way.” Along the way, the new format also yielded a stronger brew. “That was the first happy accident.”

However, the team realized those naked coffee pods would not survive distribution. The team tried beeswax before landing on an algae-based coating that kept the pods intact. Their prototyping advanced in 2021 in the company lab with a small pilot line of coffee pods. The team used a hand crank to encapsulate roasted and ground coffee in a layer of alginate.

Another happy accident

Visits to the R&D lab in Burlington, Massachusetts, which were scarce during COVID-19 lockdowns, ramped up as the pandemic faded.

“That was happy accident No. 2, where we were playing around with different pressure levels and brewing through this algae coating, and found that it can tolerate up to like 200 pounds per square inch,” Mallik said. “So we can now brew espresso. It was like, Whoa, man, this is opening up an entire new world, which we’re not playing in today at all.”

K-Rounds come in different sizes, including ones for single and double-shot espresso drinks as well as coffee cup sizes. Credit: Keurig Dr Pepper

After some unfruitful internal lobbying, the team pitched the pods to the C-suite with a hands-on demonstration. “That’s when the CEO was like, ‘That’s the future, period. That’s what we need to be doing,’” Mallik recalled.

The organization galvanized to disrupt how Keurig had brewed coffee since 1998 — and Mallik’s team grew.

Today, about 200 consumers are beta-testing the pods, called K-Rounds, in their homes, providing daily data that helps with product refinement.

“What we found was the ability to brew multiple types of coffee with the same system but with improved extraction,” Mallik said. “That’s actually what people are going to open their wallet for. And then this sustainable pod is really this wow factor, the point of differentiation.”

Asking competitors for help

Collaborating outside the company also helped Keurig Dr Pepper tweak the emerging product, Mallik said. She mentioned reaching out to a Swiss company, CoffeeB, about the alginate formulation it uses for its coffee balls.

Keurig Dr Pepper expects to win third-party certification for pod compostability.

One drawback, for now, is contending with limited supplies of alginate, which the brand orders from France.

The company is bracing to scale the new pods with a new plant in Spartanburg, South Carolina.

“That’s the North Star,” she said, acknowledging that replacing the 40 million Keurig machines will take time. “But that would be the ultimate goal, that eventually this becomes synonymous with Keurig.”

Keurig has about a 30 percent share of the coffee pod market in the U.S. Nespresso, which introduced coffee pods to the world in the mid-1980s and is more popular in Europe, uses aluminum pods rather than harder-to-recycle plastic. In 2023, after three years of research and development, the brand rolled out home-compostable, paper-based pods in several European countries.

The market for coffee pods will grow from $38 billion in 2023 to nearly $58 billion in 2030, according to Grand View Research.

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Proposed code allows for use of carbon credits to address Scope 3 emissions

Key takeaways

  • Credits can be used to address the gap between Scope 3 targets and actual emissions, the code proposes.
  • The global Scope 3 emissions gap is already greater than a gigaton of carbon dioxide equivalent and is expected to grow.
  • The code offers companies more flexibility, but risks fracturing the limited consensus on net zero rules.

Companies should be allowed to make limited use of carbon credits to address Scope 3 emissions, a group of sustainability organizations has proposed.

The suggestion runs counter to existing rules from the Science Based Targets initiative (SBTi), the most influential net zero standard-setter in the private sector. The SBTi is also considering loosening its rules on use of credits, which at present it only allows to address residual emissions that remain at the end of a company’s net zero journey. The proposal from the Voluntary Carbon Markets Integrity Initiative (VCMI), however, goes further than those recent proposals. 

Like the SBTi, the VCMI insists that companies set science-based targets and prioritize decarbonization of their own emissions. But the VCMI’s Scope 3 Action Code of Practice says that companies can also use high-quality credits to address the Scope 3 “emissions gap,” defined as the difference between a company’s Scope 3 emissions and where those emissions should be if the company were on track to hit its science-based target. 

Growing to gigatons 

Globally, the total Scope 3 emissions gap is 1.4 billion tons of carbon dioxide equivalent, the VCMI said in a statement announcing its new code — which was backed by the Environmental Defense Fund and the We Mean Business Coalition and welcomed by the U.K. government. That’s equivalent to the combined 2023 emissions of Germany, the U.K. and Italy. It is expected to grow fivefold by 2030.

Companies following the VCMI’s Scope 3 code will not have a free hand to use credits. To align with the code, a company must:

  • Disclose its Scope 3 emissions gap and the steps taken to close it.
  • Provide details on the barriers it faces in further closing the gap, tactics for overcoming them and the expected timeframe to close it, which must occur no later than 2040.
  • Retire high-quality carbon credits in an amount equal to at least its entire gap. 
  • Limit use of credits. In the simplest mechanism offered by the VCMI, credit volume cannot exceed 25 percent of the company’s Scope 3 emissions in a given year.

Welcome news …

Additional flexibility in addressing Scope 3 emissions is likely to be welcomed by many companies. Scope 3 emissions often make up the majority of company emissions and are the most challenging to control. In a draft update to its net zero standard released in March, the SBTi gave companies more options for setting Scope 3 targets. It also suggested that companies be “recognized” for using credits to address ongoing emissions, but did not specify what this would entail.

… but not for all

By introducing a rival code, the VCMI risks splintering the already limited consensus on the rules companies are meant to follow to hit net zero. 

“The VCMI’s intention is not to create divergence, but to offer a pragmatic, high-integrity solution to the difficulty many companies face in reducing scope 3 emissions at the required pace,” the organization wrote in response to questions from Trellis. The initiative also noted that the SBTi appears open to similar use of credits and, in the code itself, recommended that “target-setting frameworks adopt this approach.” 

The SBTi did not immediately return a request for comment.

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Don’t make us duplicate disclosures, companies tell California regulators 

Key takeaways

  • Ideas differ on what should define “doing business in California.” 
  • Many companies would prefer to avoid the new requirements altogether.
  • Emissions and climate risk disclosure will help spur companies to better manage risk. 

In more than 240 comments on California’s new climate disclosure laws and their implementation, companies, investors, trade groups and others urged regulators to base their requirements on already widely used reporting standards. 

A review by Trellis of about 100 comments, submitted in response to a request from the California Air Resources Board, showed that businesses overwhelmingly prefer that the rules follow Task Force on Climate-related Financial Disclosure (TCFD) recommendations. Many commenters specifically asked California to employ the International Sustainability Standards Board standards, which follow the Task Force guidelines and are required in the European Union’s new Corporate Sustainability Reporting Directive. 

But on another major implementation question — what constitutes “doing business in California” — commenters were all over the map.

Bottom line: Most big companies are well on the way to preparing for climate risk and emissions disclosure requirements, as Europe and other jurisdictions are also soon to mandate them. But many companies would be just fine, thank you, if the California rules didn’t apply to them. 

‘Avoid unnecessary burdens’

California’s Climate Corporate Data Accountability Act requires any company with annual revenues of more than $1 billion and doing business in California to annually report its Scope 1 and 2 greenhouse gas emissions starting in 2026 and Scope 3 emissions starting in 2027.

The Climate-related Financial Risk Act requires any company with more than $500 million in annual revenues and doing business in California to report climate-related financial risks and any measures it might be taking to reduce or adapt to them. Companies must start filing reports in 2026 and then every two years thereafter. Both laws require third party assurance. 

The two laws were passed in 2023 and slightly amended last year. Even as the federal government abandons the idea of climate disclosure requirements, laws in California — the world’s fifth-largest economy — will affect many businesses in the U.S. and overseas. 

“This ground-breaking legislation is set to reshape corporate reporting standards, with ripple effects outside California,” said the Mayer Brown law firm in guidance to companies. Since the U.S. Securities and Exchange Commission in March dropped its plans to mandate climate risk disclosures, California is the only U.S. jurisdiction requiring them, although several other states are considering similar legislation. 

The California Air Resources Board asked specifically if it should mandate a strict set of standards based on the Greenhouse Gas Protocol and TCFD guidelines, and what should constitute “doing business in California.” It received an earful.

“We encourage all standard setters, wherever they are located, to set globally harmonized and aligned reporting legislation that avoids unnecessary burdens for businesses — interoperability with each other is a prerequisite,” wrote IKEA USA Public Affairs Leader Doug Murray. “A parent company reporting to EU CSRD standards should not have to disclose the same information in a different format and/or in another jurisdiction on behalf of one of their subsidiaries.”

California-based eBay, which operates everywhere, concurred. “The most important goal of CARB’s implementation should be to ensure interoperability with other reporting standards,” wrote eBay Chief Sustainability Officer Renée Morin. “EBay is already reporting climate risks and greenhouse gas (GHG) emissions voluntarily and is subject to mandatory climate reporting requirements in jurisdictions such as the European Union.” 

Credit: CarbonChain

Asset managers applaud

Numerous asset managers — including Generation Investment Management, Impax Asset Management, Boston Walden Trust, Parnassus and Trillium Investment Management — recommended adoption of the Financial Reporting Standards Foundation’s International Sustainability Standards Board Standards, which also are the basis of the European rules. The asset managers also applauded California for requiring disclosure, because investors strive to assess climate-related financial risk when making decisions.

“As investors we seek consistent, reliable and comparable global reporting of climate-related risks and opportunities in order to make sound investment judgments,” wrote Generation Investment Management.

‘Unwarranted and costly’

The California laws do not define “doing business in California” despite using those words. CARB asked if the definition should be the same as the one in the California Revenue and Tax Code. But experts maintain that the state code’s definition is too wide, since it could cover companies with as few as one employee in the state or minuscule sales.

“The current approach to business identification represents an unwarranted and costly expansion of regulatory oversight that fails to consider the existing compliance burdens on businesses,” said the Manufacturers Council of the Central Valley.   

The Western States Petroleum Association opposes using the tax code definition, saying “the provision’s thresholds are incredibly low.” Instead it says CARB should adopt a definition “based on the entity’s GHG emissions levels from direct emissions in California.” 

“There’s a lot of pressure to establish a de minimis definition,” noted Jake Rascoff, director of climate financial regulation at the Ceres Accelerator for Sustainable Capital Markets. 

Mind the gaps

For CSOs at companies affected by the California laws — or in states, such as New York, likely to pass disclosure requirements soon — these responses indicate that the reporting rules are likely to mirror Europe’s CSRD, although what entities they apply to is an unsettled question. Nonetheless, companies should prepare, as they’ll need to measure Scope 1, 2 and 3 emissions and therefore institute measuring systems with suppliers and customers. The laws also require third party assurance of the reported data.

“These California climate laws add to the growing body of ESG reporting standards that are affecting U.S. companies — either directly by virtue of being in scope, or indirectly via a company’s value chain,” advised KPMG in a guide to the laws. 

The U.S. Chamber of Commerce, which has fought numerous climate policies at federal and state levels, filed a lawsuit to stop the laws from taking effect, arguing California is trying to regulate emissions beyond its borders and violates the First Amendment by allegedly compelling speech. The U.S. District Court for Central California threw out part of the complaint but has yet to resolve the First Amendment claim.

Major consulting firms, meanwhile, are preparing their clients. PWC said that while many public companies already measure emissions and climate risk, thousands of private companies will also need to comply. PWC recommends they prepare by taking these steps: 

  • Assemble a cross-functional team. 
  • Determine scope.
  • Understand the requirements.
  • Create an inventory of existing climate commitments and related data.
  • Assess the gaps between existing and required data.
  • Develop a project plan for reporting climate data across their value chain.

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10 wise remarks overheard at Circularity 25

Optimism. Pragmatism. Realism. Nuggets of wisdom from the first day of Trellis Group’s annual gathering of circular economy professionals.

1. “The business opportunity in front of us is shockingly amazing.” — Steven Bethell, president, Bank & Vogue

In the last five years, Ottawa-based Bank & Vogue has doubled the amount of used textiles it picks up from charities and private collectors for recycling. ”I’m drunk on the idea of circularity being a job creator not just locally but globally,” Bethell said. 

2. “If you want manufacturing in your state, what better way to start than with feedstock that’s already available in your state?” — Alice Havill, founding partner, Fractal Climate

Speaking in a tutorial on “Lessons from Colorado: A Proven Model for the Circular Economy,” Havill and other panelists discussed the potential for in-state and regional circular systems to foster economic development and job creation. 

3. “It’s a false idea that anything in the past was automatically more primitive. I don’t know that we’ve ever been more primitive as we are today.” — Lyla June, Indigenous musician, author and community organizer 

During the mainstage keynotes on April 29, June spoke about the potential for learning from Indigenous cultures to inform circular principles in the modern world. 

4. “We started looking at making highway barriers. The gentleman who ran the Colorado Department of Transportation said, ‘I’d buy everything you make.’ I went ‘There’s a business — let’s go!’ Turns out it wasn’t that simple.” — Eric Davis, CEO and founder, Pretred

Colorado-based Pretred recycles used tires and transforms them into highway blocks and barriers.

5. “When you go into a building and can’t tell whether it’s recycling or manufacturing, then that’s sustainable.” — John Warner, president and CEO, The Technology Greenhouse, and one of the fathers of the field of green chemistry

Warner’s keynote remarks focused on the need to rethink our entire approach to circularity and sustainability, noting that “Ninety percent of the technologies we need for a circular economy haven’t been invented yet,” and that only diversity and inclusion can enable us to invent them. 

6. “When we’re talking about regenerative agriculture, it really is referring to a process and a set of principles — both of those being quite holistic in nature — to focus on livelihoods, the well-being of communities and a variety of different environmental outcomes, as opposed to specifically looking at just carbon or just soil.” — Lauren Dunteman, senior associate of regenerative supply at Terra Genesis International

Dunteman discussed the issues she considers in helping global brands engage with regenerative supply networks.

7. “The opportunity to influence product attributes happens super early on, and oftentimes it might be before engineers are actually involved.” — Jaden Barney, senior sustainability analyst at Legrand

Legrand, a manufacturer of switches and other home design products, eliminated the single-use plastic packaging for one of its outlet covers by including small insets where screws can be wedged into the back of the plate.  

8. “The world has a certain biophilia and a certain chemophobia to it.” — John Warner  

Warner reminded the keynote audience that reusing carcinogenic materials or substances that don’t biodegrade over time is at odds with the goals of circularity. Yet, most chemists aren’t trained to consider these issues. He cited an optimistic sign: nonprofit Beyond Benign develops green chemistry curriculum for schools. So far, 240 universities have signed up to support its mission.

9. “What’s the frontier? Killing drycleaning and water-based cleaning.” — Peter Whitcomb, CEO, TERSUS Solutions

TERSUS uses CO2 captured at an ethanol plant to clean and refurbish used clothing. Last year the company saved 5 million gallons of water and kept 1.5 million garments out of landfills.

10. “Less bad is still not good. It’s by definition bad. This whole pursuit of ‘net zero’, it’s just more strange language for the kids. Do you send your kids out in the morning and say, ‘Try to be less bad today’?” — William McDonough, CEO of McDonough Innovation and author of Cradle to Cradle: Remaking the Way We Make Things (2002), widely recognized as a seminal text of the sustainability and circular economy design movements

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The state of fleet electrification: Why 87% of companies plan to add EVs in the next five years

Over the past five years, corporate America has steadily replaced its gas and diesel-powered fleets of rental cars, delivery vans and freight trucks with cleaner alternatives.

Even amid today’s uncertain landscape — from shifting tariffs to evolving U.S. policy — many companies remain committed to their goals for electric vehicle adoption. A survey by Cox Automotive found 90 percent of fleet owners who have EVs plan to buy more, while 87 percent of fleet owners overall (those with and without EVs) expect to add them to their fleets over the next five years.

Despite higher acquisition costs, fleet owners are more satisfied with EVS than with internal combustion vehicles, according to the survey. They deliver lower costs over the lifetime of a vehicle, higher efficiency and cleaner operations.

But the allure of EVs goes beyond balance sheets. The transportation sector is the largest source of climate pollution in the U.S., with light-duty vehicles responsible for 57 percent of that pollution. Medium- and heavy-duty vehicles — delivery vans, freight trucks and box trucks — account for just 5 percent of vehicles on the road but contribute a staggering 23 percent of U.S. transportation air pollution.

From discussions with companies that are part of the Ceres-led Corporate Electric Vehicle Alliance – a group of 30 major fleet purchasers that account for around $1 trillion in annual revenue and about 1.5 million fleet vehicles on the road – we’ve noted certain progress.

Global delivery and logistics company DHL, for example, is on track to electrify 66 percent of its pickup and delivery operations worldwide and operate 30 percent of its supply chain North America freight transportation using zero- or near zero-emission vehicles by 2030. 

Similarly, Element Fleet Management, the largest pure-play automotive fleet manager in the world, has achieved 27 percent of its target to transition 350,000 client vehicles to electric by 2030. As part of its science-based targets, the company has made considerable progress towards its goal to fully electrify its global internal fleet, with operations in Australia and New Zealand already reaching this milestone. 

And as of 2023, Merchants Fleet, which helps companies scale their electrification strategies, had contributed to a 65 percent annual growth in its clients’ EV deployments, of which 85 percent are full battery EVs and 15 percent are plug-in hybrid EVs. 

The potential impact of supply chain disruption

Corporate fleets rely on dependable production plans and volumes from automakers so they can plan long-term purchases and replacements. That’s why the latest round of U.S. tariffs on imported vehicles and parts — up to 25 percent — could be especially disruptive. (The Trump administration may offer some reprieve, in which automakers could receive partial reimbursements for tariffs paid on imported auto parts tied to the value of their U.S. vehicle production.)

Cox Automotive estimates the tariffs could raise the cost of imported vehicles by about $6,000, and even U.S.-assembled vehicles may see a $3,600 increase due to higher prices on imported parts. These impacts stand to disproportionately drive up the costs of EVs based on today’s supply chain structure: last year, more than a third of the EVs Americans purchased were imports, and even U.S.-produced EVs tend to rely heavily on battery materials from China. 

But the full story is more complex and it’s not cut and dry that all EV options will be more expensive. That’s because of two key factors: the $224 billion wave of domestic EV investment since 2009 and trade exemptions for Canada and Mexico.

As a result, more EV manufacturing is happening on U.S. soil or with close trading partners, which could cushion the blow. The Chevrolet Equinox EV, for example, is assembled in Mexico, but its battery and other components are made in the U.S. Only the non-U.S.-made portions will be subject to tariffs. Meanwhile, EVs such as the Tesla Model Y, produced in Texas and California, contain a high percentage of U.S. parts and are more insulated from the new tariffs.

What companies still need

In many ways, commercial fleet operators want the same things consumers do: lower vehicle costs, a widely available charging network and a broad selection of SUVs, trucks and sedans. 

Progress has been made on bringing the price down—in 2020, the average price of an electric car was 42 percent higher than today’s market average. At the end of 2024, it was 12 percent. 

Nationwide expansion of EV charging stations continues as well. An analysis of operational charging stations, based on Department of Energy data, showed a record 766 new high-speed charging stations came online in the fourth quarter of 2024 — an 8 percent increase from the prior quarter. This brought the total number of charging stations in the U.S. to around 10,200 at the end of last year, or about one charging station for every 12 gas stations, making it much easier to not get stuck in a charging desert. 

Lighter, more efficient battery packs are also making EVs increasingly practical for commercial fleets. Electric vehicle battery costs have dropped 40 percent over the past five years and innovations — such as integrating batteries into vehicle structures — are helping reduce weight while improving range and cargo capacity. These advances are expanding EV adoption across fleet types, from sprinter vans to heavy-duty freight trucks.

Despite current market and policy hurdles, leading companies are staying the course in their commitment to transitioning to EVs over time. For businesses looking to reduce costs, improve efficiency and stay ahead of market shifts, investing in fleet electrification isn’t just about sustainability — it’s a strategic business decision. The companies that act now will be the ones that reap the rewards in the years to come.

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