How to future-proof water systems in an era of extreme weather

From my home in Los Angeles, I witnessed the devastation of wildfires earlier this year and how they underscored the rising urgency to modernize water infrastructure. A slew of dangerous chemicals were released into Los Angeles’ drinking water and stormwater systems during the wildfires, leaving many communities concerned about whether their water was safe to drink. 

These wildfires shone a light on whether our water systems are equipped to handle disasters. As wildfires grow more frequent and intense, it becomes even more urgent to adapt our water infrastructure to meet this new reality. Much of the nation’s water infrastructure is nearing the end of its lifespan. And yet, modernizing drinking and wastewater systems could exceed $744 billion in costs over the next 20 years.  

Between the urgent need to upgrade decades-old systems and the rising impacts of climate-driven weather extremes, the vast networks of pipes, treatment plants, and drainage systems across the U.S. are under immense strain. 

Uncertainty around legislation and funding

Federal and state legislation and funding could put a significant dent in addressing critical water infrastructure needed to support economic growth and communities. The Bipartisan Infrastructure Law, for example, earmarks $50 billion for water, wastewater, and stormwater infrastructure upgrades. As of November, about $41 billion had been awarded for the measure, which garnered broad business support. 

States, meanwhile, also have pushed for water infrastructure improvements. Last year, California voters authorized $10 billion in spending on environmental projects, with nearly $4 billion for projects dedicated to improving water quality and protecting the state from floods and droughts and restoring rivers and lakes.  

But there is rising uncertainty surrounding such funding due to the dynamic situation in Washington. As this plays out, it’s crucial for companies and investors to take advantage of private sector opportunities to drive innovation, partnerships and investments in climate-resilient water infrastructure. 

This work strengthens water supplies for businesses and fuels economic activity: investments in new and improved water systems could annually contribute more than $220 billion to the U.S. economy and create about 1.3 million new jobs.

Private sector opportunities

For many decades, municipal bonds have been a critical tool for shoring up water infrastructure. Today, green bonds can offer investors a powerful opportunity to finance water and wastewater management projects that promote climate adaptation and resiliency. Certification frameworks such as the Climate Bonds Initiative provide criteria ensuring these investments go toward water infrastructure projects aligned with environmental goals. 

Companies — from data centers to agriculture — that need clean water to operate also have a role to play in ensuring the water systems they depend on are reliable and built to endure weather extremes. This shared interest in resilient water infrastructure presents an opportunity for businesses to work with peers, governments and other stakeholders on projects that prevent water service disruptions and higher costs to businesses and communities. 

Moving past traditional approaches

As we work to strengthen our water infrastructure system to meet a new climate reality, we must also think beyond traditional approaches. Nature-based water systems and solutions can play a critical role in managing water and restoring and protecting ecosystems within watersheds that help filter and transport clean water. Holistic approaches such as wetland protection and restoration help strengthen water systems against the growing pressures of extreme weather.

Some companies are leveraging partnerships to accelerate and broaden the impact of these solutions. Olam, a food ingredients and agri-business company, has partnered with the USDA Forest Service, National Forest Foundation, and Knorr (a Unilever Brand) on restoration projects to improve resilience, including potential impacts of severe wildfire, in California’s Pine Flats watershed.

Through the California Water Resilience Initiative, companies such as Ecolab and General Mills are working with the Pacific Institute to build corporate support for projects and policies addressing strained water resources in the state, including efforts to restore ecosystems. 

Companies can also support federal policies that help modernize water infrastructure. Global water technology company Xylem, for example, lobbied for the 2016 passage and implementation of the Water Infrastructure Improvements for the Nation Act (WIIN Act), which provides grants to improve infrastructure resiliency in disadvantaged communities. 

The Los Angeles fires are just the latest example of how climate disasters are pushing America’s aging water systems to the brink. We need an all hands-on deck approach, with innovative solutions and funding, to upgrade and replace the nation’s network of water infrastructure at the pace and scale that ensures the long-term health and safety of communities and the economy.

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Assessing the environmental fallout as Europe lurches rightward

Many Germans voted for change in the country’s February 23 elections, following a second consecutive year of economic contraction. In defeating Chancellor Olaf Scholz’s centre-left Social Democratic Party (SDP), Friedrich Merz’s right-wing Christian Democratic Union (CDU) party secured 28.52 percent of the vote and 208 seats in the Bundestag.

The election, though, will likely be remembered not for Merz’s victory but for what happened down ballot: 

  • Alternative for Deutschland (AfD), an extreme far-right party that openly espouses neo-Nazi sentiments and denies the existence of human-caused climate change, came in second, with 20.8 percent of the vote. AfD now holds 152 seats, up from 83 in 2021.
  • A socialist left party, Die Linke party, also won more seats, with eight percent of the vote.
  • Die Grünen, the German Greens, lost seats; only 11.61 percent of voters backed the party.

For business, these results are significant. As Europe’s largest economy falters, and climate is becoming a polarizing issue in a country long considered a leader on clean energy, right-wing German politicians frequently pit environmental action against economic growth. For CSOs and others on the sustainability front lines, this evolving situation will likely require changes in strategy and tactics.

Already, CSOs are seeing fewer sustainability roles advertised and environmental work increasingly absorbed into other departments. And, as far-right parties gain influence, some think businesses will have to become more publicly political. Indeed, some German companies are abandoning traditional positions of neutrality to voice political opinions.

Across the continent

Many think this wave of “greenlash” in Germany and the European Parliament was inevitable.

More right-wing politicians joined the European Parliament last summer, many campaigning on the promise of rolling back the EU’s environmental regulations. Some were responding to the protests of European farmers, who blocked city streets with tractors to challenge elements of the European “Green Deal,” a set of policies intended to make the bloc carbon neutral by 2050.

Environmental policies are already being reassessed and weakened. The phase-out of the internal combustion engine, originally set for 2035, has been called into question; the EU Deforestation Regulation is delayed and the EU Emission Trading Scheme is expected to be reevaluated this year. 

At the end of February, the European Commission published proposed changes to the Corporate Sustainability Reporting Directive (CSRD) that would see 80 percent fewer companies required to report and sector-specific reporting scrapped.

That said, not all European far-right parties deny climate change to the same extent as the AfD. Rather, their problem is with carbon taxes, green energy subsidies and emissions regulations, which they deem to be the agenda of the “global liberal elite,” said Peter J. Bori, a PhD candidate in environmental politics and a researcher at the Democracy Institute of the Central European University.

“They accept that environmental degradation and some climatic changes are taking place,” Bori said. “But they tend to downplay the extent to which it is caused by human economic activity or understate the urgency of taking action against it. When they do see humans as responsible, they tend to externalize the blame to ‘others’ — such as immigrants, foreigners, neighboring countries.”

Climate denial gaining

Although extreme-right politicians on the continent have been successful — think: Le Pen in France, Salvini in the Netherlands, and Meloni in Italy — Germany was for a long time the exception. “This is now changing,” said Daniel Freund, a Green MEP in Germany.

The AfD is now a far more influential parliamentary force, with the power to water down Germany’s climate policies. The party’s leader, Alice Weidel, has suggested she wants to “tear down” Germany’s wind farms and rejects the European Green Deal. And AfD’s official federal election program says, “The alleged scientific consensus on ‘man-made climate change’ has always been politically constructed.”

Cuts, closures and continued action

In any event, sustainability professionals are “one step before panic” following the German election, said Philippe Birker, co-founder of Climate Farmers, a European regenerative agriculture education company based in Berlin. “We have just decided to close our carbon credit arm in the organization, and this is largely due to the shift in the political landscape.” 

“I know qualitatively that more than 10 different sustainability actors [in Europe] are either closing or downsizing their teams,” Bicker said.

That’s the worrying news. More encouraging is that many companies continue to move forward on climate action.

“The BMW Group has a clear plan and a long-term sustainability strategy that we consistently implement, independently from political movements,” said Cornelia Bovensiepen, BMW Group’s sustainability spokesperson.

Alina Arnelle, CSO of BeCause, a Danish sustainability data company for the travel, tourism and hospitality sectors, is one of the CSOs who has noticed fewer sustainability job openings. But she also sees evidence that environmental work at the corporate level continues, albeit in different forms. 

“I see sustainability being dispersed and integrated into roles that have been there forever,” Arnelle said. “For example, marketing is responsible for communicating how sustainable the company is; procurement is responsible for having criteria for making supplier choices. Then you have risk and legal departments, which integrate ESG risk into their overall risk assessment of the company.”  

Going forward

Some observers note that German companies and leaders seem more inclined to voice political opinions. “Five or 10 years ago, many business leaders tried to be silent around political topics,” said Matthias Ballweg, co-founder of Circular Republic, a Munich-based company helping other businesses adopt circular economic models.

“I’ve never seen so many business leaders actively voice political statements, mostly around geopolitical topics and against the AfD,” Ballweg said. “But obviously it’s on both ends of the spectrum—we’ve also seen quite a number of [large] donations from business leaders to the super right-wing party in the recent weeks.” 

“We need to get a bit more political at a moment when the chips are down in Europe,” said Martin Stuchtey, a professor at University of Innsbruck and the founder and co-CEO of the Munich-based Landbanking Group, which enables farmers and other land stewards to earn income based on the ecosystem services their lands provide.

Stuchtey argues that any idea that politics is beyond the concern of business leaders is outdated. “There’s now an almost corporate political responsibility to say, ‘Look, we can only be successful and profitable as a company if we live in an open society where minorities are protected, where labor migration is possible, where you can trust your newspapers and where there is public debate.”

Going forward, then, individual CSOs will have to decide if and when to speak up as Merz consolidates his climate agenda and the EU reveals the extent of its regulatory re-openings.

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Inside BASF’s insetting project that cut agricultural emissions by 90 percent

“This has the potential to be very big.”

That was agriculture sustainability expert Andy Beadle’s conclusion after wrapping up the first insetting project executed by his employer, chemicals giant BASF. 

The project, which funded the production of crops with a dramatically reduced carbon footprint, is an example of the surge of interest in the use of insetting in food and agriculture. The process, which allows companies to help suppliers cut emissions and claim an associated emissions reduction, is taking off after years of work to formulate the rules that govern it. 

To learn more about how this project worked, Trellis asked Beadle to walk us through the key steps.

Customer demand

BASF’s insetting work is motivated by demand from customers and partners that want to cut Scope 3 emissions, said Beadle. The Science Based Targets Initiative does not allow offsets to be used to meet interim net-zero targets, so companies are looking instead to invest in emissions reduction projects within their value chains. 

BASF is well placed to help deliver such projects because it’s connected to farmers through its work selling fertilizer and other agricultural inputs. It has also developed a life-cycle assessment tool known as AgBalance, which can be used to model the impact that a specific intervention on a farm — a reduction in fertilizer use, for example —  will have on the carbon footprint of the crops grown there.

In this case, the on-farm work took place on barley fields in Ireland and was funded by Belgium-based Boortmalt, a leading provider of malted barley to whiskey distilleries and other food companies.

Generating the credits

Many regenerative agriculture techniques have the potential to cut farmland emissions. After talking to barley farmers, Beadle’s team settled on a cover crop, which is planted after the barley has been harvested; and straw retention, which involves leaving a fraction of crop residues on the field. Both practices are known to increase soil carbon and, as a co-benefit, limit soil erosion.

Before asking farmers to get involved, BASF needed to be confident of two things: that the company could accurately measure the carbon savings and that the credits generated would be registered and tracked. “We can’t have that ton of carbon being sold multiple times because it’s a real reputational risk,” explained Beadle. “Not just for the BASF brand; it would also be a reputational risk for any of the customers we work with.”

To ensure the credits withstood scrutiny, BASF aligned the project with a methodology developed for the voluntary carbon market — titled VM0042 Improved Agricultural Land Management — by Verra, a key standard-setter for the market. Among other things, the methodology includes rules for how soil carbon levels should be measured before and after regenerative practices are applied. In this case, representative soil samples taken at the beginning and end of the project were fed into software developed by Regrow, a company that models agriculture supply chains, to estimate soil carbon across all the fields involved.

The whole process — from the project plan through to the credits that BASF claims were generated by the interventions — then needed to be audited and approved by SustainCERT, a non-profit that verifies carbon projects. “They will randomly select farmers and ask them, ‘So you said you grew, show me the receipt that you bought cover crops that went from here to there’,” said Beadle. Once SustainCERT had signed off, the credits — which BASF calls “Verified Impact Units” — were placed on the auditor’s registry.

Assessing the potential

The monitoring period for the intervention wrapped up in late 2023. Earlier this month, BASF and Boortmalt announced the results: 722 tCO2e saved by the 12 participating farmers. That alone isn’t significant; Ireland’s agricultural sector emits around 20 million tCO2e annually. But at a farm level, emissions associated with the crop were cut by nearly 90 percent. Most of the change came from carbon dioxide was captured from the atmosphere and stored in the soil, said Beadle.

BASF now has a slew of other insetting projects in the works, including a project with a major European bakery, rice farms in Japan and another barley company. Given the tight margins and unpredictable nature of farming, producers are cautious about adopting new techniques. But there is potential for huge growth, noted Beadle.

“No farmer is going to immediately say to me, ‘Here, have my whole farm, let’s do it,” he said. “Everybody wants to start small. They want to really see what they’re getting. They want to see how they can then use that. But if I look at the projected plans, we are talking over hundreds of thousands of hectares in Europe moving forward.”

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The sleep gap: How social inequality affects good rest

We all know a night of good rest can be the difference between being ready to face the day or struggling to focus and counting down the hours until you can get back under the covers. But new research shows a stark inequality in good sleep for more vulnerable groups.

Using a range of 0 to 100 based on five key factors, Trellis data partner GlobeScan asked more than 55,000 consumers how well they slept for the IKEA Sleep Uncovered report. The survey asked respondents to rate their:

  • Sleep quality (overall)
  • Sleep time (average number of hours)
  • Drift-off time (how long it takes to fall asleep)
  • Sleep flow (how often you wake up)
  • Wake-up state (how often you wake up feeling tired)

Results show financially insecure individuals, the LGBTQ+ community, people with disabilities and women with young children all score below the global average sleep score of 63. Women, in general, consistently scored lower than men (60 vs. 65), with one in three women rating their sleep as poor. The research showed financial stability, bedroom sharing and stress are key determinants of sleep quality.

What this means

Sleep, a basic human need, has become a privilege rather than a given. These findings reveal how deeply inequalities — whether financial, gender-based or social — permeate all aspects of life, even shaping something as fundamental as rest. Poor sleep is both a symptom and a driver of inequality, affecting physical and mental health, productivity and overall well-being. The consequences extend far beyond the bedroom: When vulnerable groups are deprived of quality sleep, it exacerbates economic hardship, widens health disparities and reinforces cycles of disadvantage. 

Based on the IKEA Sleep Uncovered report, which surveyed 55,221 adults across 57 markets between August and September.

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Lessons from Eileen Fisher’s newest circular collection

Moth holes and merlot stains usually send shirts to the trash, but these imperfections are leading to new creations at Eileen Fisher. The company’s Mended collection of blatantly repaired, patched or merged clothes is launching March 27, selling new white linen shirts concocted from pre-worn ones.

These and other Mended items — which will only be produced by the tens and sold online — will make up a small fragment of Eileen Fisher’s robust repair and recycling efforts. But they are part of the company’s grander ambitions: to reduce its footprint, inspire change in the industry, cater to customer preferences and continue to set the pace in this burgeoning sector.

“The work that we do is leading the way for other brands to follow us,” said Carmen Gama, Eileen Fisher’s director of circular design. “Right now, it does not contribute to the bottom line but we’re building customer loyalty.”

Another benefit, Gama explained, is that because Eileen Fisher handles so many products after use, it enjoys a competitive advantage over other companies scrambling to satisfy California’s new extended producer responsibility (EPR) law, which requires brands to manage worn apparel.

Setting a slower pace

“In Eileen Fisher’s case, repair is a signal that its clothing is worthwhile, well made and timeless,” said Ken Pucker, an advocate for sustainable fashion and former Timberland executive who teaches business at Dartmouth and Tufts universities. “It is a throwback to how clothing used to be worn and reworn.”

Eileen Fisher’s concept of “a simple wardrobe” generally seeks to encourage consumers to buy a small number of long-lasting items and to influence other businesses to slow their pace of material waste. The privately held B Corporation doesn’t share sales figures but has withstood the winds of fast fashion for 41 years by espousing circular economy concepts. Three years ago, the Eileen Fisher Foundation issued a 135-page, anti-waste playbook for the industry.

The Irvington, New York, company hopes to popularize creative reuse, repair and deconstruction of clothes, just as it was a pioneer in branded resale. Eileen Fisher was among the few brands offering consumer takeback and resale in 2009, Gama noted. The effort, later called Renew, expanded nationally in 2013. With branded resale normalizing, Eileen Fisher began exploring how to manage unsellable inventory, according to Gama. She joined the brand a decade ago to oversee managing damaged takeback items, from design to production. Her approaches included mending, over-dyeing and remanufacturing “special collections.”

Last year, the company took back 300,000 items, up nearly 10 percent from two years earlier. From 2009 to 2023, the Renew program collected more than 2 million units of apparel and re-sold 660,885 of them. Taken-back goods also wind up warehoused, donated, repurposed or downcycled into shoddy fibers for auto carpets or seating. In addition, Eileen Fisher works with partners Re-Verso in Italy and Hallotex in Spain to create fiber-to-fiber recycled sweaters.

The Mended collections

The Mended collections focus on garments that can’t be fixed or laundered but are otherwise serviceable. Most garment repairs strive to restore to “good as new” condition, which Eileen Fisher also does for customers. By contrast, the Mended approach draws attention to the former flaws with visual mending, such as paneling or patchwork. It echoes the wabi-sabi concept in Japan of finding beauty in flaws. 

The clothes can be made whole again, but there is such a thing as too many moth holes. “The team really does try their best to cover them all,” Gama said. “They try to match the exact same color of the sweater, and that’s why sometimes these things take a lot of time.”

For upcoming Mended collections, Eileen Fisher will make about 75 white linen shirts in March, followed by 120 dyed linen shirts in May. It’s overdyeing shirts for April, with partner Botanical Colors of Seattle, to hide stains. October will feature outerwear and November will see a cashmere sweater. “These collections are very small right now, but if we see a lot of interest from our customers, we can start scaling volume,” Gama said.

Eileen Fisher’s latest creation is merging two linen shirts into one. “For these white shirts, we are grabbing one that is very damaged, and then just cutting some of those panels and adding them to the next one,” Gama said. “They’re very simple and elevated. And actually, you can’t tell that this is a repaired garment. It looks new by itself.”

A unique appeal, and costs

Most businesses that make mending and reconstruction a feature, rather than a bug, do so on an even smaller scale, such as Eva Joan in Brooklyn or Suay in Los Angeles. The Welsh brand Toast offers a visual repair program. One corporate example is The North Face, which sells Remade puffer jackets that mix the non-matching sleeves and bodices of used jackets.

“I see so many people looking for customized, one-of-a-kind items, especially younger kids, teenagers,” said Cynthia Power, a consultant to apparel companies who worked for more than a decade at Eileen Fisher. “When you combine a quality item with a beautiful, visual mend, you all of a sudden have an incredibly high quality item that no other person has. That’s an incredible feeling and experience.”

Sometimes fixing one garment takes an entire day, which adds costs, Gama added. “It does take a lot of resources to do that, but it’s part of our value to offer these types of services to our customers, because we really want to tell the story that we are here to try to extend the life cycle of this garment as much as we can,” she said.

Making items last as long as possible has real environmental consequences. For example, a single cotton shirt may require hundreds of gallons of water to make. Repairing a T-shirt instead of buying one new saves about 17 pounds of CO2, roughly equivalent to driving a gas-powered car for 20 miles, according to a February report by the nonprofit Waste and Resources Action Program (WRAP).

Takeaways

Gama shared tips for other apparel companies interesting in reducing their footprints with circular-economy programs: 

  • Set priorities. “Circularity can be completely overwhelming,” she said. Therefore, Gama advised, it’s important to pick a focus, such as materials or handling at the end of life. “Because if you are an established brand it’s not easy to just switch and become circular. It’s baby steps.”
  • Be open and flexible. “We’ve been able to streamline a lot of these operations because we’re constantly talking to new innovators and service providers,” she said. “And if we find that it doesn’t work to do something outside we bring it back in house.”
  • Consider end of life at the beginning. “The more we know about the end of life solutions, the better it can inform the designers, so by the time that garment comes back to us it’s already kind of thought through.”

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Google now lets marketers measure emissions from online ads

Google has introduced a carbon footprint calculator that lets advertisers measure the emissions associated with running campaigns on the world’s largest advertising platform.

The resource, Carbon Footprint for Google Ads, is only available to a limited number of accounts but access will be broader in an unspecified future.

The tool will help ad agencies track emissions associated with online marketing and advertisements on a client-by-client basis “with greater precision,” Google said. It uses widely accepted accounting methodologies from the Greenhouse Gas Protocol and Global Media Sustainability Framework.

The tool also provides estimates for other online management tools for advertisers, including DV360, an application for running complex, multichannel campaigns.  

Push for detailed disclosure

Google offers similar calculators for other services. For example, corporations that use Google’s cloud computing resources to host their websites or handle their email and other workplace applications can calculate an emissions report that can be used to assess the environmental impact of their information technology operations.     

The new Google Ads carbon reports will be useful as mandatory regulations — including California’s climate disclosure laws and the European Union’s Corporate Sustainability Reporting Directive — take effect.

These laws require detailed data for Scope 3 emissions, which include services and products companies procure to support their business. 

Digital marketing activities fit into that category and the new Google Ads tool will help advertisers and marketing teams prepare for closer scrutiny, said Jason Parkin, founder, president and chief operating officer at advertising agency Compose[d]. “It places more of a lens on the emissions impact of these technologies.”

Few corporations talk specifically about marketing in relation to climate issues. An exception is Seventh Generation, which is now evaluating its marketing and creative partners to better understand how much of their business is linked to fossil fuels companies. It asks marketing partners to sign the “Clean Creatives” pledge, which asks firms to refrain from supporting campaigns that undermine progress toward a clean energy transition.

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What the EPA’s rollback announcement means right now

EPA Chief Lee Zeldin announced what he’s calling the “biggest deregulatory action in U.S. history,” within the EPA by overhauling 31 environmental rules dating back to the Obama-era.

“[The EPA’s] announcement could put millions of Americans’ health in jeopardy and is antithetical to EPA’s core mission, said Conrad Schneider, U.S. senior director at the Clean Air Task Force. “Deregulating emissions from power plants, oil and gas facilities, cars, trucks, and more, is dangerous and erroneous action that will hurt American’s safety and wellbeing.”

Some of the rules facing overhaul include:

  • Power plant emissions regulations (Clean Power Plan 2.0): On May 1, 2024, President Joe Biden’s EPA released the Clean Power Plan 2.0, requiring coal plants set to retire before 2035 and 2040 to reduce emissions by 16 percent; any coal plants operating past 2040 are expected to reduce emissions by 90 percent.
  • Greenhouse Gas Reporting Program (GHGRP): The Obama-era rule GHGRP requires large emitters, fuel and industrial gas suppliers to report greenhouse gas emissions and other relevant information to the EPA.
  • Steam Electric Power Generating Effluent Guidelines: Updated in 2024, the rule places strict guidelines on the level of toxins released in wastewater associated with coal plants.
  • Technology Transition Rule: This rule sets limits on technologies that emit hydrofluorocarbons in specific sectors, requiring businesses to transition to more efficient models of the tech as its developed.
  • 2009 Endangerment Finding: This Obama-era regulation classifies carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride as a public heath threat.

“The EPA will be reconsidering many suffocating rules that restrict nearly every sector of our economy and cost Americans trillions of dollars,” Zeldin said, without offering evidence, in a video posted along with the EPA’s statement.

It’s important to clarify that none of these regulations have been changed as of yet. Zeldin merely announced his intention to “reassess” specific programs in the near future. But even the potential of changing regulations for which corporations and utilities have had to reconfigure their operations is destabilizing. And while some may find it easier to adjust to a change in relatively recent policy, Obama-era regulations have been business-as-usual for more than 15 years.

In any case, there is no definitive timeline for these changes. And it’s likely that dismantling the reported 31 rules will be a complicated process slowed by lawsuits.

“Before finalizing any of these actions, the law says EPA must propose its changes, justify them with science and the law, and listen to the public and respond to its concerns,” said Jackie Wong, senior vice president for climate and energy at NRDC in a statement.

The extent to which the EPA or the Trump administration will follow the law remains an open question.

What’s next

For sustainability professionals, the EPA’s announced intentions — and potential for pushback — promise regulatory uncertainty. That will mean disruption to both day-to-day business operations and long-term planning. Any investments or actions intended to comply with Obama- or Biden-Era rules may be obsolete if the relevant regulations are stripped down or removed altogether. In short, this development leaves many professionals with a giant question mark on their 2025-2026 budgets moving forward.

Trellis will continue to monitor the story as it progresses.

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How the next generation will reshape impact investing

I’ve had the good fortune of spending a large part of my adult years in the company of younger people. I’ve raised a son, coached sports, taught university investment classes and run a NexGen-centric network non-profit for three years. Did I mention I also ran a hip-hop record label, too? 

My point is that I’ve been close to young people on the verge of influence for most of my life. And for all the anxiety around the current politicization of how we invest, the truth is most of it is largely in their hands.

The next generation, which I define as Gen Z and Gen Alpha, already are current consumers, current or future employees, and are well on their way to becoming leaders and investors. They have a huge influence on all facets of society, particularly when it comes to money. 

A staggering $84 trillion in wealth is expected to be transferred to younger generations in the U.S. through 2045, according to consulting firm Cerulli Associates. For context, this “Great Wealth Transfer” is almost as much as global GDP was in 2022 ($101 trillion). Approximately $30 trillion of that will be inherited by women in the next decade alone.

The changing face of impact investing

The roots of impact investing began when people passionate about fomenting solutions to social injustices and climate risks figured out there was a market for profit capital to help advance their causes. Leaders from this “do good” place realized that rather than philanthropic giving, a business and profit motive behind investment in solutions that benefited people and the planet might catalyze significantly greater resources needed to make a difference. 

As the cottage industry of impact investing became a larger ecosystem, historic leadership in the space needed to backfill the financial and technical talent needed to structure and manage the investments, and construct market-acceptable terms and vehicles to attract, keep and manage the capital flowing into the space. The new recruits were veterans of “traditional” investment backgrounds, wizened in the ways of financial products and markets. They came to this intersection of doing well and doing good from the “do well” world.

But recent and upcoming practitioners and investors are of generations that don’t distinguish among these worlds. Between increasing impact investing courses at business schools and colleges, and a deluge of media surrounding climate change, NexGen investors perceive the magnitude of impact investing opportunities. They’re sophisticated in both issues of people/planet and the capital markets. The result is a predisposition to action and urgency. 

The NexGen influence 

One of the most important ways current leaders and those with influence and power can hasten change is by helping young changemakers find their way to their own influence and power. As these opportunities unfold for them, here is how their influence will reshape the direction of impact investing:

  • Fewer biases: The next generation of investors and practitioners will lack the biases around investing for transition, resilience and impact. Incessant debates over “isn’t impact investing concessionary” isn’t a point of discussion because NexGen investors and practitioners are conversant in the continuum of risk-adjusted returns – from venture capital to public markets to grants and donations to catalytic investment with objectives to facilitate “crowding in” others. 
  • Values-based approach: Gen Z and Gen Alpha are more likely to align their investments with their personal values, particularly emphasizing climate/earth resilience and social justice. A Stanford Graduate School of Business survey found that the average investor in their 20s or 30s was willing to lose between 6 percent and 10 percent of their investments to see companies improve their environmental practices, compared to the average baby boomer unwilling to lose anything. Further, the notion of “impact” is beginning to evolve. Students I work with each year come up with a vastly more robust list of issues of people and planet such as trust in institutions, veracity of media, holistic medicines, and rights to work in an AI future. These ideas of impact go way beyond the United Nations’ 17 SDGs (a favorite framing of impact for managers), which were written in 2015. 
  • Technology integration: Current and coming practitioners will leverage digital platforms and fintech solutions to make impact investing more accessible and transparent. AI will quicken the pace to allow deep ‘knowledge’ work, and more tangible in-person efforts. Already, we’re seeing AI algorithms that process vast amounts of ESG data to identify investment opportunities and assess company performance; natural language processing that’s being used to analyze company reports, news articles and social media to evaluate reputational risks; and AI portfolio screening to weigh investment opportunities against specific impact criteria or ESG standards. 
  • Innovative and equitable models: NexGen is more inclined to work to conceive structures that enable more ratable, equitable profit-sharing structures among asset owners, employees and/or beneficiaries to increase business, narrow wealth gaps and expand a “missing middle.”
  • Global allocations: NexGen understands that climate and social justice issues are global and require efforts worldwide. Capital is likely to increasingly flow to non-Western opportunities. Less reticent to think of the rest of the world as somewhere else, the next generation understands the interconnectedness of the problems and will hasten investments, particularly in the developing world.
  • Local action: But global allocations and local action are not mutually exclusive, particularly when humans are coded to care about what they see at home. NexGen likely will double down on more purposeful efforts locally, in an effort to affect lives and outcomes where they live. 

We’re in a very fraught and fragile time. But if there’s hope, it’s in the wisdom of all people, and in particular a next generation that inherits a world with problems not of their creation, but who can and will mobilize to save all that we can save. We’re spawning a next generation of better stewards in business and investable markets, and as caretakers for future generations. Benjamin Disraeli once said, “Almost everything that is great has been done by youth.” And as my teenage son told me a few years back, when discussing fixing the world, “Dad, your job is to just get out of the way.” Perhaps so.

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How ‘insetting’ helps food companies cut Scope 3 emissions red tape

An emerging approach for funding and taking credit for cuts to supply-chain emissions is gaining momentum in the food and agriculture sector. 

“Insetting” enables companies to claim Scope 3 reductions by investing in projects that help suppliers cut emissions. Accounting challenges have slowed the spread of the idea, which has been explored by industry groups for several years. But multiple organizations are issuing Scope 3 credits to projects backed by General Mills, Mars and other food giants.

“They’re highly motivated to make systemic change within the supply chain, which is the crux of insetting,” said Paul Myer, CEO of Athian, a startup that facilitates Scope 3 interventions.

One of the earliest organizations to explore the approach was SustainCERT, a non-profit that verifies carbon projects. SustainCERT approved its first value-chain intervention in 2019 and later co-founded the Value Change Initiative (VCI), a coalition designed to scale the approach. 

The VCI now includes more than 100 businesses that, together with other non-profits, focuses on apparel and food systems. The coalition has rubber-stamped 32 interventions, said Thomas Blackburn, vice president for sales and business development. Others are entering the space, too. Athian, founded in 2022, issued its first credits last year and has contracts to distribute $9 million to producers. Proba, a Dutch agriculture insetting startup, announced a $1.09 million investment round last month.

Traceability challenges

Companies turn to insetting to reign in Scope 3 emissions, and agriculture is a particularly active area due to the sector’s complex supply chains. Insetting rules clarify how companies can measure the emissions savings associated with an on-farm project, trace the resulting goods through the supply chain and make an appropriate reduction to their Scope 3 accounts. 

SustainCERT’s registry of verified insetting credits includes a project in which the agriculture giant Nutrient paid farmers to plant cover crops and implement other regenerative practices. At Athian, funding for Bovaer, a feed additive that reduces bovine emissions, has been one area of focus. Unlike some regenerative practices, which can cut fertilizer use and offer other cost savings if implemented over multiple seasons, Bovaer and other additives increase costs for producers. In an industry where margins are tight, insetting could be a critical means for scaling such solutions.

The rules are designed to allow companies to claim credit even when full traceability is challenging. Consider a producer of breakfast cereal that pays a wheat farmer to implement regenerative practices. After harvesting, the crop will likely be mixed with that of other regional producers. It may also be processed by an intermediary before reaching the breakfast cereal producer. Value-chain intervention rules accommodate this by describing how the company can estimate the fraction of its product that was made from wheat from the regenerative farm, and the size of the Scope 3 reduction it can claim.

Under current rules, funders do not need to trace a direct line between farm and factory if the intervention takes place within their “supply shed.” That is defined by the VCI as a group of suppliers, usually located in the same region, that provides similar goods. This is in contract to the book-and-claim schemes in maritime shipping and aviation, which allow buyers to invest and claim Scope 3 reductions for purchasing low-carbon fuels that could be used on any ship or aircraft.

Banking on collaboration

Insetting also allows multiple companies in the same value chain to partner to fund a single intervention. In the breakfast cereal example, a supermarket could join with the cereal manufacturer to fund the farmer, with each taking a Scope 3 reduction determined by the insetting guidelines. Myer said that his buyers — governed by non-disclosure agreements — are mainly food companies, but earlier this month Athian finalized its first joint intervention, funded by a consumer packaged goods (CPG) company and a dairy co-op.

“We’re banking on that and, frankly, so are the CPGs,” he added. “CPGs cover all the costs of these credits and there’s no way that scales over the long term.”

Despite the progress made in recent years, insetting remains a niche mechanism. “Insetting is in what I call the ‘teenage sex moment,’” said Jeffrey Yorzyk, senior director for sustainability at the meal kit company HelloFresh. “There’s so much talk but there isn’t a whole lot of action.”

Yorzyk is interested in using insetting to cut his company’s Scope 3 emissions, but the challenges he faces illustrate why the practice is not more widely used. “I’ve got over 400 different products and our SKU list is really staggering,” he said, referring to the acronym for stock-keeping unit. Those 400 products come from 1,500 suppliers. Which ones should he target for intervention? “You can call up your suppliers and they will all happily take money from you,” he said. “But how do you qualify those investments properly and vet them?”

Carbon accounting concerns

Like everyone who spoke to Trellis for this article, Yorzyk also noted uncertainties around Scope 3 accounting. The guidelines have progressed to the point where major companies are willing to invest in projects and make Scope 3 claims, but some details of how key industry players, notable the Greenhouse Gas Protocol and the Science Based Targets Initiative, will treat Scope 3 credits remain unclear. 

“It’s a huge concern,” said Yorzyk, working with the consultancy ClimeCo to develop an insetting plan for HelloFresh. The situation was not helped by the protocol’s decision, announced last month, to delay finalizing key guidance on land-use accounting until the fourth quarter of this year.

Progress looks set to continue, however. Alongside the VCI and other groups, the Advanced and Indirect Mitigation Platform, which is being tested by Amazon, ClimeCo and others, began piloting parts of what it hopes will become over-arching insetting rules that can work across multiple sectors. “Companies are tired of waiting and they want to start taking action,” said Emma Cox, executive vice president of commercial at ClimeCo.

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Natural gas is making a comeback. Here’s what to do about it

Solar installations, battery storage and wind farms accounted for the vast majority of capacity added to the U.S. electric grid in 2024. 

But natural gas capacity is growing the fastest it has in two decades, abetted by the voracious energy appetite of data centers operators. Those energy users include Microsoft, which is investing $3.3 billion to build a site in Wisconsin; and Meta, which is pouring $10 billion into its largest site in Louisiana.

Global electricity demand is forecast to grow by roughly 3.4 percent over the next three years. The amount used for data centers, artificial intelligence and cryptocurrency could double by 2026, according to the International Energy Agency.  

The spike in U.S. natural gas demand aligns with those projections, sparking interest in approaches that could throttle related emissions increases. One potential solution: carbon capture and storage technologies installed at power plants.

These solutions — which would suck up carbon dioxide at the source and transport it via pipe, railroad or truck to underground sequesters — could eliminate an estimated 95 percent of their carbon dioxide emissions, according to a new analysis published March 3 by carbon removal advisory firm Carbon Direct. 

The approach is nascent, but the list of sites conducting engineering and cost feasibility studies is growing in states including Alabama, California, Colorado, Florida, Illinois, Texas and West Virginia. Companies working to advance this approach include legacy oil and gas infrastructure players such as Aker Solutions, Fluor, Mitsubishi Heavy Industries and Shell, along with new ventures including Ion Clean Energy and Svante.    

“In locations where power needs are large and sustained, integrating natural gas-fired power generation with [carbon capture and storage] is an important decarbonization strategy,” the Carbon Direct analysts said. “It complements renewable and other low-carbon electricity supplies in fulfilling substantial energy demands.”

Push for ‘capture ready’ projects

Carbon capture and storage projects make sense for natural gas power plants that generate at least 100 megawatts of power on a steady basis, which emit an average of 500,000 metric tons of CO2 annually, suggests the Carbon Direct analysis.

But they wouldn’t be as effective for smaller plants or for facilities built to handle peak energy demand, said Colin McCormick, principal scientist at Carbon Direct. 

Corporations with both large energy appetites and aggressive climate goals should look for “capture ready” features at natural gas plants that might serve their operations, said McCormick. These include:

  • Dedicated valves and pipes to support the process
  • Locations with enough space to accommodate the equipment footprint
  • Transportation methods that can get the capture gases to a site for storage

It doesn’t beat renewable energy 

Adding carbon capture and storage to a natural gas plant could result in a fivefold reduction in climate impacts versus a plant that doesn’t use them, according to the analysis, but solar and wind still offer better emissions reduction potential.

Natural gas with carbon capture and storage would have an impact of 80-120 kilograms of carbon dioxide equivalent per megawatt-hour of electricity, compared with an impact of 10-15 kilograms of CO2e per MWh with either solar or wind.

That scenario doesn’t account for potential methane emissions associated with the natural gas supply for a given project. “If poorly planned and implemented, [carbon capture and storage] could worsen those impacts,” Carbon Direct said.

Deploying carbon capture and storage at natural gas plants also costs more than other options corporations can use to reduce the climate impact of their energy purchases: an estimated $65-$100 per MWh at scale compared with current costs or $40-70 per MWh for natural gas plants without this equipment. 

The calculation for that cost comparison includes tax credits for carbon capture projects under the Inflation Reduction Act, which could be repealed by the Trump administration. 

“The conventional wisdom is that they would support these credits, but we don’t know yet,” McCormick said.

Other considerations:

  • Upstream methane leakage: Natural gas plants outfitted to handle carbon capture will require 20-30 percent more fuel to run that process. Emissions from the supply can add 50-350 kilograms of CO2 equivalent emissions per MWh of electricity produced. The high end of that range would wipe out the benefits from carbon capture and storage. 
  • Local infrastructure: Pipelines will matter for delivery of the fuel. They are also the most efficient way to transport captured carbon dioxide to a place where it can be sequestered. Those costs need to be considered in any investment plan.
  • Sequestration potential: Sites appropriate for sequestration are scattered throughout the Midwest, Gulf Coast, Mountain West and California. States with primacy when it comes to permitting include Louisiana, North Dakota, West Virginia and Wyoming. 

Growth scenario drives discussions

Natural gas is already the most dominant source of generation on the U.S. grid, accounting for about 43 percent of capacity as of 2024, according to government data.

At least 4.4 gigawatts of new natural gas-fired electricity could come online in Louisiana, Nebraska, North Dakota and Utah by the end of 2025, the U.S. Energy Information Administration predicts. That’s roughly the amount of power needed to keep 3.5 million U.S. homes up and running for one year.

The agency predicts total additions of 63 gigawatts for 2025. One gating factor is the long backlog for permits to interconnect new generation sources to the U.S. grid. But the Trump administration’s executive order declaring an “energy emergency” could change that dynamic for fossil fuels projects. Still, Chevron is so bullish on the opportunity that it started a new business partnership with GE Vernova, the biggest U.S. gas turbine company, to deliver up to four gigawatts of new power specifically meant to support artificial intelligence. The venture expects to begin delivering power by 2027.

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