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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Watch the Circularity 25 keynotes live today

Tune in starting at 1:30 p.m. MT on Tuesday, April 29, to watch a live stream of the keynote presentations taking place during Circularity 25 in Denver.

The keynotes highlight the schools of thought that led to the current understanding of the circular economy. The aim is to inspire you to imagine solutions for the transition away from linearity toward a regenerative, waste free and efficient future.

Tuesday speakers, from 1:30 p.m. MT to 3 p.m. MT, include:

  • Welcome remarks from Jon Smieja, VP of Circularity at Trellis Group
  • Indigenous knowledge from Lyla June, Musician, Orator, Scientist and Servant to Future Generations
  • Green chemistry from John Warner, President and CEO at The Technology Greenhouse
  • ‘Cradle to Cradle’ design from William McDonough, architect, designer and Chief Executive at McDonough Innovation
  • Biomimicry from Asha Singhal, Communications Manager for the Design for Transformation project at the Biomimicry Institute

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What to look out for at Circularity 25 this week

This week, Trellis Group brings its annual circular economy conference to Denver. At Circularity 25, leaders from corporations, startups and nonprofits will explore ways of doing business at scale that eliminates waste from the equation, starting with product design.

“The circular economy requires a fundamental change to business, not just incremental steps or bolt-ons,” said Trellis Circular Economy Director Kori Goldberg.

The event is built to provide pragmatic knowledge and practical tools for circularity practitioners. (I’ll definitely check out the sheets of fungus-based “leather” dripping from the ceiling of the bar at the “carbon positive” Populus Hotel, near the event at the Colorado Convention Center.)

The full program is here. Below are key moments to watch, according to members of the Trellis editorial team and event organizers.

Watch from anywhere:

Keynote sessions will livestream at Trellis.net. They will replay later, too.

Tuesday, April 29 from 1:30 p.m. to 3:00 p.m. Mountain Time

John Warner, the green chemistry pioneer, often challenges conventional wisdom and agitates for change in business and education. We’re curious to see if he’ll reveal what he’s working on as the president and CEO of the Technology Greenhouse, which has been under wraps for nearly two years.

“Cradle to Cradle” coauthor and architect Bill McDonough returns to the Trellis stage. (He also teams up with Trellis Co-Founder Joel Makower on Wednesday at 3:00 p.m., about passing the torch to the next generation of leaders.)

Wednesday, April 30 from 10:30 a.m. to noon Mountain Time

Hear about the latest from Google’s labs from Rey Banatao. He’s in charge of Alphabet’s skunkworks, which revealed a “moonshot for circularity” in November.

Jeanette Felix discusses her work with Homeboy Industries, a Los Angeles social enterprise that engages formerly incarcerated people in work to repair, refurbish and recycle electronics.

In person:

A three-hour “master class” in circular logistics and business innovation offers a deep technical dive for people seeking to put new business models into practice. Tuesday, April 29, 9:00 a.m.

Target, Keurig Dr Pepper and IDEO will share how to re-think design for circularity, including mapping pain points and tracking materials through lifecycles. Tuesday, April 29, 4:00 p.m.

State and local policies to support materials circularity are moving forward, despite assaults on climate action by the White House. Leaders from the Gap, ThredUp and Goodwill will explore efforts in California and New York to regulate end-of-life textiles. Wednesday, April 30, 1:30 p.m.

The right-to-repair movement for consumer electronics has inspired thriving online and offline communities. Leaders from iFixit and Google share the latest. Wednesday, April 30, 1:30 p.m.

Changemakers in fashion share how pre-competitive collaborations drive climate and circularity-related progress. The lessons can apply to any industry. Wednesday, April 30, 4:00 p.m.

The outdoor industry and insurance companies explore financial innovations for climate resilience. Thursday, May 1, 9:00 a.m.

In the field:

Recycle Row in Boulder, Colorado, will open for a tour the morning of Tuesday, April 29. Visitors will see inside a materials recovery facility that sorts city waste, and learn about new life for challenging items at the Center for Hard to Recycle Materials and ReSource Central.

That same morning, a tour of the Red Rocks Ampitheatre will feature waste-diversion efforts at the legendary venue.

Tersus Solutions performs the “dirty work” of spiffing up used Doc Martens boots and REI jackets for secondhand sales. The Englewood, Colorado, company serves fashion and footwear brands as well as reverse logistics companies, such as Trove, that run their online branded resale portals. A site tour the morning of Thursday, May 1 will trace the journey of a garment by The North Face through the facility.

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3 strategies for 2 crises: Tackling carbon emissions and packaging waste together

If you’re tuned into corporate sustainability, you probably hear companies talk about net-zero targets all the time. You probably also hear companies talk about efforts to prevent plastic pollution and improve packaging recyclability. But how often do you hear companies try to link these efforts together?

It’s a huge missed opportunity. Packaging waste and carbon emissions are two sides of the same coin — the materials used for transport and disposal carry a carbon cost across its life cycle. Understanding this connection is key for making meaningful progress on both fronts. 

While the sustainable packaging community has been busy setting sustainability goals to hit recycling or sustainable sourcing targets, it can feel like the industry has forgotten where these goals are supposed to take us: to a world where we have carbon emissions and waste under control. 

Understanding packaging’s contribution to carbon emissions 

Packaging, as most of us know, heavily contributes to the climate crisis. 

In 2019, plastics contributed more emissions than the aviation and shipping industries combined. According to the OECD, the supply chain of plastics generated 3.4 percent of all global greenhouse gas emissions, and 90 percent of this came from production and conversion from fossil fuels. 

If plastics were a country, they would have the fifth-largest share of global emissions as of 2022, just below China, the U.S., India and Russia. Although many plastics go into products that aren’t packaging, if we look at the rest of the packaging value chain — glass, aluminum, fiber, bioplastics — the total carbon footprint of packaging would be even larger. 

Right now, the consequences of packaging’s waste and carbon emissions are treated in siloes. Waste is framed as a pollution problem, carbon as a climate one — and companies are left to piece together fragmented strategies instead of unified solutions. But we can tackle climate change by using sustainable packaging efforts through the following strategies. 

Fold your packaging goals and wins into your climate strategy

Too often, sustainable packaging does the hard work of decarbonizing without getting credit for it. It’s time to change that. Reducing packaging material avoids emissions, and this should be counted towards emissions targets. Redesigning packaging so that it doesn’t go to landfills is a win for your carbon goals, too. 

Embedding packaging goals and calculations into your climate strategy is the first step. If you don’t know where to start, use Life Cycle Assessment tools and packaging calculators to calculate the avoided emissions of a packaging change.

Make it clear — to colleagues, consumers and investors — how your packaging efforts are part of your climate strategy. Unilever’s Scope 3 GHG reduction plan, for example, shows how packaging is helping them to meet their 2030 target of reducing absolute Scope 3 emissions by 30-40 percent.

Think differently about tradeoffs

Right now, when we design packaging to be recyclable and the change creates more emissions, this is called a tradeoff. Companies feel they have to pick one direction, and based on pressure from consumers, they often choose recyclability. If a package has no good end-of-life option but a lower carbon footprint (like a not yet recyclable plastic bag, for example), this is considered another unfortunate, but necessary tradeoff. 

Instead, what if we thought about tradeoffs like we think about flying with a layover? Layovers aren’t your final destination — they’re just a sometimes necessary stop along the way. Making short-term sustainability tradeoffs is a layover on our path toward a future with reduced waste and carbon emissions in packaging. 

Companies don’t have to wait to address both crises, either. Already, companies such as Prana are adopting practices — such as using seaweed-based compostable packaging — to address both waste and carbon emissions. 

Go for the big swings

What’s the single biggest swing companies can take to address both climate and packaging waste? Reduction. While switching to a “better” single-use material — renewable feedstock or recycled content — may seem like a step forward, it’s ultimately only an incremental change. 

The future of sustainable packaging hinges on whether companies truly understand and embrace the importance of reduction and system redesign. By reducing the amount of packaging used in the first place and redesigning packaging to be reusable or refillable, companies can significantly lower resource use, carbon emissions and environmental impact. And you can take comfort knowing that your company won’t be the first to do this. Companies such as beverage giant Diageo are already finding ways to scale circular, reusable packaging.  

Right now, we’re wasting our time in transit. If we meet these opportunities — by folding our packaging and climate goals together, rethinking tradeoffs and taking big swings — we’ll reach that future with reduced waste and carbon emissions.

For more on reducing and eliminating waste in the global economy, stay tuned for Circularity 2025 starting Tuesday. 

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Hèrmes and Stella McCartney embrace a leather alternative: fungus

  • Material made from the “roots” of mushrooms mimic the feel and durability of leather.
  • Startups like MycoWorks, Hydefy and Ecovative have each raised nine figures.
  • Sustainability advocates are pushing mainstream apparel giants to provide even more support for biodegradable options.

Leather remains the go-to material for high-end purses, couches and car interiors. Its petroleum imitation, “pleather,” serves mortals on a budget.

But fungus-focused biotech startups want the world to consider a third option. They are brewing materials that mimic the feel and durability of leather, without the grim costs to nature from exploiting animals or fossil fuels. The key ingredient is mycelium, found in the thread-like “roots” of mushrooms.

More brands are working with these younger companies to test the biomaterials and gauge consumer interest for purses, apparel, shoes and furniture. These partnerships include Mycoworks with Hermès, Hydefy with Stella McCartney and Ecovative with Calvin Klein parent PVH Corp.

The three startups share several things in common. Each has raised nine figures in funding and advertises a leather-like look and feel for plastic-free, biodegradable products on the brink of reaching commercial scale.

The mycelium “leather” market, which reached $12 million in 2024, will soar up to $336 million by 2033, according to research by Market Intelligence.

“There’s a lot of energy in this space right now,” said Katrin Ley, managing director of Fashion for Good, an Amsterdam nonprofit that seeks to accelerate sustainable materials. “We’re seeing continued interest in exploring alternative materials — especially among brands looking to meet ambitious sustainability goals. Some are deepening their R&D efforts; others are partnering directly with innovators to co-develop products.”

Stella McCartney x Hydefy bag made of mycelium composite material.
Stella McCartney x Hydefy bag made of mycelium composite material.
Source: MycoWorksSource: MycoWorksSource: Hydefy

Mushrooms in action

Mycelium companies insist their creations are maturing past the “gee-whiz” phase and readying to scale. Industry experts cite MycoWorks of Emeryville, California, as the most advanced player. With roughly 250 employees, it has attracted more than $187 million in capital. MycoWorks’ 136,000 square foot plant in Union, South Carolina, uses artificial intelligence and robotics to automate most production. The factory is in a forested region close to sources of sawdust, a main input. The company ships its material for tanning to Igualada, Spain, which has a long heritage of tanning hides.

MycoWorks’ biomaterial, Reishi, recently debuted in a Ligne Roset couch and on the inner door panels of a concept electric General Motors Cadillac. The company’s Fine Mycelium technology was included in an Hermès travel bag in 2022.

Reishi meets or exceeds furniture industry benchmarks for flexibility, abrasion resistance, colorfastness and aging, according to MycoWorks. And for every 11 square feet of material made, only 6 pounds of carbon dioxide or its equivalent are produced — far less than is the case with animal and synthetic leathers.

“MycoWorks has focused on refining the material’s unique properties rather than attempting to imitate leather,” said Fred Martel, the company’s senior vice president of sales and business development. “We are building enduring relationships with partners ready to scale with us—those who recognize that Reishi is not an alternative material, but a new category altogether.”

Chicago startup Hydefy also promotes its biomaterial as being in a class of its own. Its version, called Fy, appears in a purse that Stella McCartney will flaunt in its summer runway show.

Hydefy is also working with several other large apparel and footwear brands.

MycoWorks sends its mycelium material to Spain for "Rei-Tanning" processes.
MycoWorks sends its mycelium material to Spain for “Rei-Tanning” processes.
Source: MycoWorksSource: MycoWorksSource: Hydefy

The company’s work emerged from NASA-supported research that found fungi flourishing around the acidic geothermal hot springs of Yellowstone National Park. The fungi grows in three days in a plant in the former meatpacking district of Chicago, according to Hydefy.

“We set out on this mission because we wanted to give consumers options,” said Rachel Lee, head of business at Hydefy. “Ultimately, we just want consumers to have alternatives to animal and synthetic leathers to reduce reliance on petroleum.”

Hydefy has used liquid air fermentation technology to multiply its fungi. Now, though, it’s moving toward submerged fermentation, a process similar to brewing beer. The company dries and combines the mycelium with crop waste, such as sugarcane husks, to create blocks of material. Next, laminated vinyl flooring machines, customized by the company, churn out sheets of Fy. Hydefy’s use of common polymer industry equipment in an uncommon way offers a scalability advantage, according to Lee.

Hydefy claims to meet brands’ leather-based performance expectations. In any event, some big names are buying what the company is selling. “I am constantly exploring plant and fungi-based, regenerative alternatives that do not harm animals and heal Mother Earth,” Stella McCartney said in a March 31 press statement. “Harmonious to this philosophy, the innovators behind Hydefy are developing materials with fresh thinking and a focus on sustainability.”

This may sound familiar to longtime observers of next-gen materials. Back in 2016, another Stella McCartney bag featured Mylo, a mycelium material cultivated by startup Bolt Threads. However, even after raising more than $300 million, the company paused its fungus-fashion efforts in 2023, citing high costs.

How to scale?

Initial high overhead, infrastructure limitations and supply chain immaturity all contribute to the harsh realities of scaling new materials. That’s why the innovators working with Fashion for Good are taking a long-term, strategic approach, according to Ley. “By working together with brands, suppliers and investors, they’re collectively mitigating financial risks and building the infrastructure necessary to scale sustainably, making sure that the materials are actually market ready and can meet the industry’s quality standards.”

For the moment, though, mycelium materials best suit high-end products rather than mass market goods, according to Tiffany Hua, an analyst at Lux Research in Boston. 

The biotech developers rely heavily on co-development partnerships with brands to overcome the strength, flex resistance and durability shortcomings of the new materials, Hua added. In addition, the fermentation process is resource-intensive and finicky. “Even with efforts to automate and integrate robotics, as MycoWorks is attempting, development timelines remain slow and expensive,” she said.

Another mycelium player, Ecovative, announced March 27 that it was receiving $11 million in funding. The Green Island, New York, venture has raised a total of $120 million. Last year it completed a three-year collaboration with Fashion for Good, exploring how its Forager material could function in products created by Bestseller, PVH Corp. and others.

Ligne Roset's Kobold Sofa uses Reishi material from MycoWorks.
Ligne Roset’s Kobold Sofa uses Reishi material from MycoWorks.
Source: MycoWorksSource: MycoWorksSource: Hydefy

“That pilot helped us better understand the practical challenges of scaling mycelium leather,” Ley said. “It gave the innovators feedback from real brand use cases — how the material performs, how it fits into existing processes and where the friction points are.”

That said, sustainability experts argue that the apparel establishment needs to do more to provide stability and growth to biomaterials innovators.

Cynthia Power, a fashion circularity expert and owner of Molte Volte Consulting in New York, says that brands and retailers should ink long-term investments with startups. “It is rarely helpful to a material innovator to get a brand to use their material for one season and then drop off,” she explained. “If anything, that can be damaging to their smaller and more fragile company ecosystem.”

Power added that fashion businesses should also identify the largest environmental and social “offenders” among their materials, then support the startups formulating less-harmful alternatives. “Most of these startups are waiting for their phone to ring with a big order or big name brand to sign an off-take agreement,” she said.

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What Canada’s pause on climate-disclosure requirements means

Key takeaways

  • The intent is to lessen the financial burdens on domestic businesses in the wake of current tariff chaos.
  • But at least 1,300 Canadian enterprises remain bound to submit reporting to the EU in the next three years.
  • Opponents of the decision believe that the demand for credible sustainability information will continue.

Canada announced that it has paused all mandated corporate climate disclosures, citing the unstable global economy.

“In recent months, the global economic and geopolitical landscape has rapidly and significantly changed, resulting in increased uncertainty and rising competitiveness concerns for Canadian issuers,” said Stan Magidson, chair of the Canadian Securities Administrators and the Alberta Securities Commission. “In response, the CSA is focusing on initiatives to make Canadian markets more competitive, efficient and resilient.”

The announcement is in response to the slew of tariffs levied against Canada by President Trump, including a 25 percent tax on goods related to the fentanyl crisis and on steel and aluminum. Canada also announced $21 billion in retaliatory measures against U.S. goods. But whatever the cause of (potentially) thinner profit margins, the costs of climate disclosure have been deemed unaffordable, at least for now.

Not everyone in Canada, though, is fully aligned with the decision.

“We recognize that regulatory approaches may evolve in response to market conditions, but the demand for credible, comparable sustainability information continues to grow — both globally and at home,” said Wendy Berman, incoming chair of the Canadian Sustainability Standards Board. The Board finalized its sustainability disclosure standards in December 2024.

Canada’s pause is the latest in a global trend. In March, the U.S. Security and Exchange Committee (SEC) halted all court arguments in favor of its own corporate climate disclosures, and a month earlier the EU introduced an omnibus package that scaled back the reach of its own CSRD and Corporate Sustainability Due Diligence Directive.

How Canada’s decision will actually impact businesses is unclear. At least 1,300 Canadian businesses remain bound to submit reporting to the EU in the next three years. And as recently as the EU’s omnibus scale back, experts recommended that companies continue to gather emissions data for shareholders, and mandated corporate climate reporting in effect in California.

“Postponing requirements for businesses to get prepared for climate change and align with positive climate action will only leave businesses less prepared, investors less informed and Canada’s economy less competitive,” said Julie Segal, senior manager of climate finance at Environmental Defence Canada, in a statement.

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Who’s optimistic about renewable energy? People in Africa and the Middle East

How much progress is being made on the shift to renewable energy depends on whom you ask. If you’re talking to North Americans, less than half will say it’s going well. But in Africa and the Middle East, a whopping 80 percent will tell you the transition is in the near future.

That’s what Trellis data partner GlobeScan found in its latest public opinion research, which surveyed more than 30,000 consumers across 31 markets and asked them how likely they thought most people would use renewable energy in the next 10 years.

The optimism in Africa and the Middle East is likely a reflection of more centralized policy action in countries such as South Africa, which has made bold renewable energy commitments. Optimism in the energy transition is also strong in Latin America and the Asia-Pacific region, where around two-thirds of people believe the transition will probably or definitely happen.

In contrast, only 46 percent of North Americans feel the same. This skepticism may stem from ongoing political polarization, slower federal-level momentum, and continued cultural and economic reliance on fossil fuels. Europeans are less confident than the global average (59 percent compared to 65 percent globally), likely due to a range of factors, including the recent energy crisis triggered by the war in Ukraine.

What this means

Companies operating across multiple markets can recognize that public expectations around clean energy differ greatly by region. In optimistic markets such as Africa, Asia-Pacific and Latin America, companies have an opportunity to lead boldly and visibly on renewables. In markets with lower confidence, such as North America and Europe, companies may need to focus on building trust, demonstrating feasibility and aligning with local realities, showing how they are part of turning widespread renewable energy use into an achievable reality.

Based on an online survey of more than 30,000 people conducted in July-August 2024.

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Unpacking Microsoft’s mega-purchases in durable carbon removal

Key takeaways

  • The company has shifted to large purchases that deliver over many years — many in 2030 or later.
  • Recent buys focus on biomass projects, but the company is targeting a broad portfolio in the longer-term.
  • Many other large companies will need similar amounts of removals to hit net zero, experts told Trellis.

When news broke last week that Microsoft had agreed to a deal for an eye-popping 6.7 million tons of carbon removal credits, the reaction was relatively muted. Why did the largest-ever purchase of durable credits not make a bigger splash? 

The answer might be that record-breaking buys have become the norm for the tech giant. Just a few days earlier, Microsoft announced a 3.7 million ton deal. In less than a week, the company’s two agreements exceeded the durable credits purchased by all companies in 2024. And they build on around 8 million tons of additional durable removals Microsoft bought in smaller deals over the past two years, according to data from Allied Offsets, a carbon markets intelligence firm.

This extraordinary spree raises important questions. Why has Microsoft, far more than any other company, made so many big bets on removals? And what does it mean for the future of the market?

Net zero by 2030

When Microsoft committed in 2020 to becoming carbon negative by the end of the decade, removals were always intended to be used to address emissions it could not eliminate. After making its commitment, the company supported the then-nascent removals market by sharing lessons learned from its discussions with project developers and by buying credits from a number of early-stage companies. “Durable” projects, usually defined as storing carbon for hundreds to thousands of years, were a focus, albeit not an exclusive one.

Microsoft reaffirmed its carbon-negative goal earlier this year, despite its emissions increasing from 12 million tons of carbon dioxide equivalent (tCO2e) in 2020 to 17 million tCO2e in 2023, in part because of the need to build more data centers to power AI products. And by the time 2030 arrives, Microsoft expects to need “single-digit millions” of removal credits annually to meet that commitment, said Brian Marrs, the company’s senior director of energy and carbon removal.

That’s a big requirement for a single company by the standards of today’s carbon markets. But it’s also the kind of volume that many large companies may need to purchase in order to hit net zero. What makes Microsoft stand out, noted Robert Höglund, co-founder of CDR.fyi, a provider of carbon removal data, is that the company is moving faster than others: “This is what a major company would need to meet these kind of early net zero targets.”

Long-term portfolio approach

The roughly 18 million tons of durable removals that Microsoft has purchased over the past two years is concentrated in three project types: direct air capture, and capture of emissions from both bioenergy power plants and the pulp and paper industry. The biomass projects are notable because they involve combining carbon removal equipment with proven technologies, which can speed up development times. 

Marrs cautioned against reading too much into the recent focus on large purchases from biomass-based projects, noting that the company has also invested in earlier-stage removal approaches, including enhanced rock weathering, which was the method used by two of the recent winners of XPRIZE Carbon Removal. 

“We’re very clear-eyed that there are limits to the amount of sustainable biomass and limits to the amount of traditional industry that we can augment in that way,” he said. “So we’re going to need to take more bets.”

The company bases its due diligence for removals on four quality criteria: whether a project genuinely requires credit revenue to proceed, the ability to accurately measure the quantity of carbon removed, the permanence of the removals and community benefits. In parallel, the tech giant also weighs commercial considerations, including cost and time to delivery. Over time, those criteria will push Microsoft to create a portfolio of large investments, said Marrs.

Many of Microsoft’s recent agreements are also long-term and due for delivery years from now. The deal with the pulp and paper mill project, for example, spans 12 years. “Nearly 100 percent of the carbon removal purchases announced in our current fiscal year will be delivered between 2030 and 2050 via long-term offtake agreements,” said Marrs. “We’re not looking at this sustainability report to sustainability report.” 

Will others follow?

Microsoft has long dominated the carbon removal market when measured by volumes purchased. With its most recent deals, the company has now bought five times more durable credits than the next nine largest buyers combined, according to CDR.fyi.

It’s also likely to be far ahead in terms of dollars spent. The next largest buyer on the CDR.fyi leaderboard is Frontier, a coalition of companies that has committed to spending at least $1 billion on durable carbon removal by 2030. Microsoft does not disclose what it pays for removals, but publicly available pricing data for similar projects puts the cost of its two largest projects alone at more than $2 billion.

“If they decide that they want to stop making these purchases,” said Peter Minor, CEO of Absolute Climate, a removals standard-setter, “then it’s unclear what happens to the industry after that.”

That said, other companies are stepping in. Recent first-time removal buyers include Lego, TikTok and two large Japanese companies, which may be followed by others in the country due to government incentives. But Höglund described the pace of new arrivals as a “trickle.” He and others have pointed out that a recent proposed revision to the Science Based Targets Initiative’s net-zero standard will do little to push companies to invest more in removals in the near term. And the fate of U.S. government funding for removals, which surged under President Biden’s administration, is in doubt under President Trump.

These developments leave removals advocates with mixed feelings about the future, praising Microsoft for its leadership while wondering when others will step up. “What Microsoft is doing is what every company should be doing,” said Noah Deich, a former deputy assistant secretary for carbon management at the Department of Energy who is now a climate fellow at Stripe, the payments company. “It shouldn’t be seen as extraordinary.”

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