Trends and Developments in Sustainability from 1H 2025

• Executive incentives: At Novartis, ESG targets now account for 20% of CEO pay; Microsoft ties executive comp to emissions cuts and sustainability metrics.
• Mandatory disclosures: The EU’s Corporate Sustainability Reporting Directive (CSRD) requires ~50,000 companies to report double materiality impacts. German auto giants like Volkswagen are building new ESG data hubs to comply.
• California’s lead: The California Climate Corporate Data Accountability Act (SB 253) now mandates large firms disclose Scope 1–3 emissions. Affects companies like Apple, Google, and Chevron.
• Forced labor crackdowns: The Uyghur Forced Labor Prevention Act led Shein and Temu to overhaul their sourcing; U.S. Customs has blocked over $2B in goods since 2023.
• Voluntary adopters win: L’Oréal adopted EU ESG guidelines globally ahead of schedule, boosting its sustainability fund to €1B and earning praise from institutional investors.

2. Energy & Climate: Acceleration Mode

• Record renewables: The IEA reports 2024 added 510 GW of renewable capacity globally—led by China (60%) and the U.S. (12%). First Solar and Vestas saw double-digit sales growth in Q1 2025.
• AI-powered carbon cuts: Siemens is using AI to optimize building energy use, cutting emissions by 25% across its global portfolio.
• Carbon capture scaling: Occidental Petroleum’s DAC (direct air capture) facility in Texas now pulls 500,000 tons CO₂/year—world’s largest in operation.
• Climate resilience spend: India pledged $8B for flood-resistant infrastructure; Kenya launched a $500M early-warning climate system with UNEP and Microsoft AI.
• Treaty watch: Expectations build ahead of COP30 in Brazil for new 5-year Nationally Determined Contributions (NDCs). Momentum is strong for global plastics and biodiversity pacts.

3. Circular Economy: No Longer Optional

• Take-back gains: IKEA’s “Buy Back & Resell” program expanded to 30 countries; 20M products re-entered circulation in 2024 alone.
• Plastic innovation: LanzaTech converts industrial carbon into sustainable materials now used by Zara and On Running.
• Tech-led waste cuts: Rubicon Technologies uses IoT to optimize waste for cities like Atlanta, diverting 60,000+ tons from landfills annually.
• Luxury reuse: LVMH’s Nona Source turns leftover fabrics into new fashion lines, cutting textile waste by 30%.

4. Nature & Biodiversity: On the Balance Sheet

• Finance flows: The TNFD (Taskforce on Nature-related Financial Disclosures) now includes pilot testing by HSBC, BNP Paribas, and AXA, with biodiversity KPIs built into lending criteria.
• Reforestation scale-up: India planted 75M trees on World Environment Day; Ethiopia aims to plant 6 billion this year.
• Corporate restoration: Nestlé invests $100M in regenerative agriculture across the U.S. and Brazil to restore soil biodiversity.
• Mangrove action: The Mangrove Breakthrough (a UN-backed coalition) received $250M in new funding to protect 15 million hectares by 2030.

5. Emerging Priorities

• Fair work focus: The Fashion Transparency Index 2025 ranks Patagonia, Puma, and H&M highest for fair wages and labor transparency.
• Water stress response: PepsiCo uses AI to optimize water use in Indian and Mexican plants—cutting usage by 20% per unit of product.

AI energy tension:Google DeepMind’s AI cuts energy use in data centers by 30%, but global data centers now consume 340 TWh/year—more than the UK.