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

Two court decisions in recent months have changed the landscape of the political battle over ESG. In February, a federal court struck down Texas’ flagship anti-ESG statute as a violation of the First and Fourteenth Amendments (American Sustainable Business Council v. Hegar). In May, the Oklahoma Supreme Court invalidated the state’s Energy Discrimination Elimination Act on fiduciary grounds.

In other words, a law passed in the name of protecting pensioners from politicized investing was struck down because it harmed pensioners. The movement’s legal architecture is failing on its own stated principles. But the fight is far from over: Anti-ESG bills still outnumber pro-ESG bills in statehouses by roughly 2.5 to 1.

Defense doesn’t work

Sustainability executives have spent the past few years playing defense —  greenhushing, renaming funds, softening proxy language —  because the opposition had successfully framed itself as the defender of free-market capitalism. Here, I present the offensive strategy: a pro-market, conservative case for sustainability and social justice that relies on the power of markets and fiduciary duty, not on conviction and principle. 

The courts, it turns out, have been writing it for you.

The narrow path

The courts based their decisions on a narrow and old-fashioned idea: the right of capital owners and their fiduciaries to incorporate whatever considerations they deem material to the allocation of their own capital. Not a fund label. Not a ratings methodology. A property right.

The system of capitalism that the anti-ESG movement treats as eternal and immutable is, on inspection, a sediment of contested innovations. Limited liability was once denounced as a moral hazard severing ownership from accountability. The Securities Acts of 1933 and 1934 were called the end of free enterprise. Index funds were dismissed as “un-American” and “Bogle’s folly.” Even shareholder primacy, the supposed bedrock of modern capitalism, dates to Milton Friedman’s seminal  1970 column in The New York Times, not to scripture or Adam Smith.

Each of these innovations was tested, contested and eventually metabolized by the markets. Others failed and vanished; markets dispose of their failures efficiently. That process is not a flaw.  It’s capitalism’s essence. A system that can no longer admit new entrants and new preferences is not being conserved. It is being embalmed.

Responsible investing is simply the current iteration: products, frameworks and analytical claims offered to a market that will sort them. And it has been sorting them vigorously. Greenwashed funds have been pruned. Label inflation has been punished by investors and regulators. Anyone claiming that ESG operates beyond market discipline has not watched fund flows since 2022.  

The apparatus of “free market” protection

Nevertheless, roughly two-thirds of U.S. states have enacted legislation that restricts government dealings with firms over their postures toward favored industries. In 2025, statehouses saw 192 anti-ESG bills proposed against 76 in support. 

These laws compile lists of disfavored private actors, prohibit commerce with them and require loyalty attestations from the rest. We have a name for this. It’s called industrial policy, and it carries central planning’s signature feature: the costs land on people who never voted for them.

After the Texas law took effect, five of the largest municipal bond underwriters left the state. The lost competition cost Texas issuers an additional $300–$500 million in interest on $31.8 billion of borrowing in the first eight months alone. 

That is a tax, levied by legislators on their own school districts and water authorities, that subsidizes a political posture. Friedrich Hayek warned about the delusion that legislatures could outperform the market’s discovery process; the anti-ESG movement has spent the past five years proving him right.

Fear is understandable, but the strategy is self-defeating

In short, opponents argue that ESG smuggles political preferences into capital allocation, distorts fiduciary judgment and corrodes the system that produced American prosperity. Defending capitalism requires stopping it.

Their solution is to freeze capitalism’s current configuration in legislative amber. But stasis has never been how durable systems persist. Resilience comes from absorbing new entrants and retaining what works through market competition — precisely the capacity the anti-ESG project attacks. It attempts to assure capitalism’s permanence by disabling the adaptive mechanisms that sustain it.

The court in Oklahoma turned the movement’s flagship legal theory —  that pecuniary factors alone may guide fiduciaries — against it. Fiduciary duty cuts both ways: If a manager’s climate-risk analysis is material to returns, prohibiting that analysis is the breach.

The demographic arithmetic

Here’s the forward-looking argument: The largest intergenerational wealth transfer in history is underway. An estimated $124 trillion in U.S. household assets will change hands through 2048. The succeeding generation may not always favor sustainable strategies, but it’s clear that a growing cohort of capital owners will demand that they are on the menu. 

American gatekeepers can greet these new owners as they have every prior generation: Develop your tactics, and the market will grade them; some will compound, some fail and the system will grow more robust. Or they can greet them with statutes that limit choices by prohibition, blacklist chosen managers and pre-emptively adjudicate their analytical frameworks in state legislatures.

The conservative case

Freedom of contract, capital allocation by owners rather than by legislatures, skepticism of government lists of disfavored businesses, resilience through adaptation rather than mandate — these are conservative commitments, and every one of them sits on the responsible-investing side of this fight. The recent court decisions established no new principles; they applied old ones to laws that violated all three.

The anti-ESG movement believes it is defending the American way of life. But that has never been a fixed inheritance to be guarded. Rather, it is a process of open entry, honest testing and ruthless pruning that each generation is invited to join. Let the market decide. It was always going to anyway.

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A new era of sustainability is emerging, focused on operational execution, infrastructure, and the organizational authority to build both. It’s a lot harder than the old days of voluntary commitments, aspirational targets and PR strategies.  

In dozens of conversations in recent months, corporate sustainability leaders — whether they work in finance, manufacturing, logistics, real estate, or consumer goods — tell me the hands-on work is intensifying, even if the communications around it are not.

They are zeroing in less on what they intend to do and more on how, specifically, to do it. The questions, and work to be done to answer them, have gotten harder and more concrete: Which battery storage configuration is needed for our footprint? How do we get procurement and engineering to agree on AI governance? Where does circularity sit in the org chart when it stops being a pilot and starts being a regulatory requirement?

Three forces are driving this shift: AI, energy demand and circularity compliance. They are also the through lines we’ll be going deeper on during Trellis Impact 26 starting tomorrow and running through Thursday at the Moscone West in San Francisco. Below I explore all, and point out relevant event sessions, too.

Will you be at Trellis Impact 26? Come find me and tell me if you agree or (even better) disagree with my take.

AI is starting to change sustainability in real ways

The AI boom is behind an explosion in data center energy consumption as well as big investment in new ways to fuel it: grid hardware, energy management software, batteries and next-generation geothermal. While this energy demand is a complicated variable for companies that spent years building science-based targets, it is spurring unprecedented financial support.

AI is also enabling sophisticated tools that sustainability teams are beginning to deploy in earnest. Think AI-assisted lifecycle assessment, automated Scope 3 data collection, satellite-based deforestation monitoring and investor-grade disclosure analysis. 

At Okta, a cybersecurity company, a team of sustainability, engineering, technology, and global operations staffers is rolling out AI tools that show which models for tasks like writing, coding, or analysis are most energy efficient. 

The cross-functional team “treats sustainability criteria as a design input for technology decisions rather than a reporting obligation attached afterward,” Alison Colwell, Okta’s Senior Director of Sustainability & Responsible Technology, told me.

On the investor side, financial giants like Goldman Sachs and sustainable investment specialists like Parnassus Investments are using AI to surface material risks buried across mandatory filings and voluntary ESG reports at a scale and level of rigor that was previously impossible.

You can see Laura Sennett, from Goldman Sachs’s Sustainable Investing Group, and Marcy McCullaugh, Sustainability Research Director at Parnassus, at the How AI is changing investor analysis session at Trellis Impact 26 tomorrow June 23. 

Energy has become a strategic bottleneck

In many markets, renewable energy has finally become attractive because it’s the fastest available path to new capacity. That may prove more durable than any policy mandate.

The C-suite is now making decisions about battery storage, distributed energy resources, power purchase agreements and on-site generation on speed-to-power logic as much as emissions logic because grid interconnection timelines stretch three years or more in many markets. 

Steelmaker Nucor and data center operator Aligned have invested in large-scale on-site battery storage — not primarily as a climate play but because getting reliable power quickly demanded it. 

Maersk and Bloom Energy, meanwhile, are turning to microgrids, distributed generation, and flexible on-site infrastructure as faster options. Check out Maersk Head of Energy Procurement Carlo Bertani and Bloom Energy’s Kaushal Biligiri, Senior Energy Transition Champion, during the Near-Term Solutions for a Constrained Grid session at Trellis Impact 26 on Wednesday June 24. 

Circularity is a regulatory reality (not just a voluntary philosophy)

Extended producer responsibility (EPR) legislation arrived faster than most corporate sustainability teams anticipated. 

Packaging regulations across states including Colorado, Maine, and Oregon, where enforcement carrying penalties of up to $25,000 per day, took effect last year. Registration for California’s textile EPR program begins next month. There’s even growing momentum toward a national circularity framework. 

The focus has shifted to harder operational questions, like how do you build a circular fiber supply chain at scale? How do you synchronize supply and demand for recovered electronics? How do you operationalize reverse logistics so that the cost of collecting, sorting and reprocessing materials doesn’t exceed the value recovered? 

Data center hardware offers a window into how this is taking shape. iFixit, a longtime advocate for right-to-repair policy, is extending the useful life of devices through open-source repair guides that keep hardware in service longer. Molg is building robotic microfactories to disassemble servers that have reached their “end of life” into components, and recover far more value than conventional recycling allows. “We’re energized by this generational moment,” Rob Lawson-Shanks, Molg’s CEO, told me, where advances in AI and robotics are “converging into a massive opportunity to reshape circular infrastructure” — and eventually scale it “beyond data centers to all electronics.”

Meet Lawson-Shanks and iFixit sustainability director Elizabeth Chamberlain at the Next Frontier of Circularity in Data Centers session at Trellis Impact 26 on Wednesday June 24.

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Sustainability leaders have spent the past week digesting the 100-plus pages of Version 2 of the Corporate Net-Zero Standard from the Science Based Targets initiative (SBTi), the most influential rulebook for setting and hitting emissions goals.

The feedback has been largely positive, with the SBTi earning praise for recognizing a broader suite of mechanisms that companies can use to act on climate. But the applause was not uniform. Some said the the expanded focus was based on shaky evidence, while others lamented that, for all the changes, SBTi remained an unreasonably powerful actor. 

“Version 2 quietly clarifies SBTi’s role,” said Alicia Seiger, director of climate at the Chan Zuckerberg Initiative and a visiting scholar at Stanford University, in her summary of the changes. “It’s becoming an evaluator and recognizer of corporate climate effort rather than a manager of the global carbon budget, and that’s a fit-for-purpose move.”

Here’s our round-up of the key points from a week of debate.

Avoiding the breaking point on Scope 3

For many companies, value-chain emissions are the single most troubling part of the current SBTi process, which offers a relatively restricted range of options for setting Scope 3 targets. So restricted, in fact, that many businesses in some sectors, including auto manufacturing, will likely not be able to continue to commit to them.

“The previous version set the bar, but with the best will in the world, companies could not deliver on commitments made,” said Bridget Wise, a sustainability analyst at Secaro, a supply-chain intelligence platform. “This meant that while it may have been ambitious, SBTi was on a path to becoming ineffective and less influential.”

SBTi listened to feedback from companies and greenlit several new approaches, including the use of environmental attribute certificates, such as credits for purchasing low-carbon steel, sustainable aviation fuel (SAF) and other cleaner commodities. This comes with risks, noted some nonprofits. There’s a “lack of an evidence base on whether these more flexible mechanisms will work,” warned the NewClimate Institute in its review of the standard. 

Some advocates saw it the other way, arguing that even more flexibility is needed to create a stronger market for the certificates. This includes looser rules on matching the timing of credit purchases to mitigation measures and allowing certificates to be traded, said Adam Klauber, chief sustainability officer at SAF producer World Energy. 

Going slow on carbon credits

SBTi’s attitude has always been that companies must focus first on their own emissions. That remains, but the nonprofit also clarified its stance on how carbon credits can complement this work. Companies can now earn voluntary recognition for credit purchases and, from 2035 onwards, will be required to use carbon removals to neutralize a steadily increasing fraction of their ongoing emissions.

That pace of change is too slow for some. “The few companies that want to and can afford to counterbalance their emissions with permanent carbon removal and credible environmental attribute certificates should be allowed to claim net zero fulfillment today, either for their full emissions, or a more narrow operational net zero claim,” said Robert Höglund, head of climate at Milkywire, a Swedish company that helps businesses meet climate and nature commitments.

Others chafed at both the SBTi’s decision and it’s ability to influence so many companies. “The latest guidance essentially says: Do your best for the next nine years, gold star for trying, and don’t worry yourself with ongoing emissions until 2035,” wrote Tommy Ricketts, CEO of carbon credits rating agency BeZero, on LinkedIn.

In a subsequent post, Ricketts mentioned SBTi’s “obsession” with value-chain abatement and referred to a group of Soviet-era approved decision-makers. “It is like the nomenklatura in the USSR deciding how many toothbrushes to manufacture each year. SBTi has now decided it’s also going to set industrial strategy for most global sectors.”

Splitting Scopes 1 and 2

The current standard permits combined goals for Scope 1 and Scope 2 emissions, allowing companies to use gains in one area to make up for slower progress in the other. In one of the less-heralded changes, SBTi said that companies will now have to set separate targets for each scope. 

“The separation of Scope 1 and 2 targets will challenge many companies — but it’s the right call,” said Charlotte Bande, managing director at Quantis, a sustainability consultancy. ”Near-term targets have too often been met through Scope 2 reductions alone. Companies now have to look seriously at their own industrial processes, which is where a large part of the work they directly control actually lies.”

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A pioneering carbon removal initiative has announced a second funding infusion and added Anthropic, creator of the Claude AI service, to its list of members. 

Frontier was launched in 2022 with a commitment from Google, Stripe and others to spend $1 billion on carbon removal by 2030. Since then, members have signed contracts worth almost $700 million for 1.8 million tons of removals from 53 projects. The initiative is based on an Advanced Market Commitment (AMC) model, which is designed to incentivize technological developments that would otherwise struggle to attract funding.

In this second phase, Frontier will focus on a smaller group of projects, those that have a clear path to government support once its own funding runs out. The group is calling the moment a “baton pass.” Members have committed $915 million to the “Growth AMC,” which will target offtake agreements spanning 8 to 10 years with 10 to 15 companies. Frontier will also continue to support “high-potential breakthrough ideas” through prepurchases of removal credits, small offtakes and research grants.

The funding will be welcome news for the carbon removal sector, which was roiled in April by reports that Microsoft, by far the largest purchaser of removals to date, was slowing its buying. The market got another boost last week when the Science Based Targets initiative said it will require companies to use removals to cover a small but steadily increasing proportion of their ongoing emissions from 2035 onwards.

Removal pathways

Frontier did not disclose details of the projects it is targeting for future funding, but it did share estimates of cost and removal potential of various mechanisms, based on recent learnings.

• Top of the list is surficial mineralization, which involves grinding and exposing to air rocks that absorb carbon dioxide. The mining industry has already developed the necessary technology, and large amounts of mining waste are currently available. Frontier estimates that the approach could capture in excess of 10 gigatons (Gt) annually at a cost of $80-$120/ton. The approach is currently being tested in small-scale trials.
• Crushed rocks can also be added to ocean waters to trigger reactions that draw down CO2. Frontier said the potential here also exceeds 10 Gt annually, with costs in the $100-$200/ton range. British Airways, Stripe and Shopify are among the companies that have backed early projects in this area.
• Projects that store CO2 captured by plants could remove 1-5 Gt annually at a cost of $60-$200/ton, Frontier estimates. Microsoft is a backer of one of the largest projects in this area: Stockholm Exergi, a utility that burns forest residues and other organic waste to generate electricity while capturing the carbon produced in the process. 

Anthropic’s involvement is notable given that large AI model-builders have announced few sustainability initiatives to date. Neither Anthropic nor OpenAI, its most prominent rival, disclosed emissions to the Foundation Model Transparency Index, a research initiative that makes public information on AI safety, data use, environmental impacts and other issues.

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The International Organization for Standardization (ISO) has published the consultation draft of a new, independently verifiable standard for corporations that make net-zero emissions commitments.

The ISO Net Zero Aligned Organizations Standard (ISO 14060) started life as loose guidelines shaped by more than 1,200 stakeholders from civil society and the corporate world, including Amazon, FedEx,Google, Intel, Mars, McDonald’s and Meta. 

The 91-page draft outlines processes that companies should use to develop, implement and communicate their strategies for reducing their greenhouse gas emissions to net zero, as outlined in the Paris Agreement.  

The standard builds on ISO’s existing suite of rules for quantifying and reporting on emissions, many of which are referenced along with widely used standards and guidance from other organizations, including the Science Based Targets initiative’s new corporate net-zero recommendations. 

“The big proposition of ISO is scalability,” said Noelia Garcia Nebra, head of sustainability and partnerships at ISO. “The standard is for any organization, any size, any sector. In that sense, it is agnostic. Anyone can apply it.” 

The backstory

ISO is a respected organization that has produced more than 25,000 international standards that are used by companies for everything from food safety to information security. 

It’s also a close — and getting closer — partner of the carbon accounting rules maker Greenhouse Gas Protocol: The two standards organizations aim to combine their existing guidance into a new set of co-branded standards, a relationship disclosed in late 2025.    

ISO’s net-zero draft will be circulated for 12 weeks, during which its members — more than 170 national standards bodies — will collect feedback. The British Standards Institution, the UK National Standards and Colombia’s national standards body, ICONTEC, are responsible for the process.

ISO hopes to reach consensus by September, but the timeline is difficult to predict because member organizations will be obligated to address every comment, Garcia Nebra said.

What it is

The standard’s focus is the commitment and governance necessary to achieve net zero, and toward that end, it will require companies to publish a detailed transition plan within two years of setting a target. That roadmap must include, among other things:

• “Reliable, quantified data” justifying the suggestions
• Processes for integrating the strategy into the company’s core business model
• Timelines for the actions the company plans to take
• Information about how progress will be measured, reported and verified
• Details about any planned use of carbon credits

The draft also includes a section specific to net-zero strategies for small and midsize enterprises, which is intended to simplify the process for them and reflect the unique challenges they face.

For example, smaller companies are more likely to grow significantly, making absolute carbon emissions cuts more difficult. They’re also less likely to have access to detailed data or the same reduction options as large companies, ISO’s standard suggests.

To reflect those obstacles, small and midsize enterprises can opt to concentrate on interim targets or on prioritizing their most significant emissions categories. They also can decide to report on progress every three years, rather than annually. 

“We do hope that through this ISO standard, we can reach out to other companies that have not been thinking about it yet,” Garcia Nebra said.

On the flip side, ISO encourages companies with “higher technical and economic capacity” to act more ambitiously. That might include phasing out products and services that could “lock-in the use of fossil fuels” or to aim for an operational state “in which the organization’s annual CO2 removals exceed its GHG emissions.” 

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