Municipalities carry climate responsibilities that extend far beyond those of individual businesses. They serve whole communities, including residents and local businesses, and can’t simply “pause operations” during disruptions or “shut down” if climate conditions get worse. Local governments also serve as a conduit for community-wide action, coordinating cross-sector efforts and investing in shared infrastructure when private-sector action is uneven or limited in scope. Residents depend on these efforts for everything from storm preparation and wildfire response to flood control, cooling centers, infrastructure upgrades, and programs that help stabilize insurance and utility costs. They also help local businesses prepare for new environmental regulations. For many communities, Climate Action Plans (CAPs) and Climate Action and Adaptation Plans (CAAPs) provide a structured framework for prioritizing investments, securing funding, coordinating across departments, and tracking progress over time.

By 2050, urbanization and population growth could add about 2.5 billion people to urban areas, with estimates suggesting roughly 68% of the world’s population will live in cities. Urban growth concentrates people, infrastructure, and economic activity in hazard-exposed areas, and a single climate event can strain multiple community services at once. This makes proactive planning increasingly important. What is a Climate Action Plan (CAP) or a Climate Action and Adaptation Plan (CAAP)?

A Climate Action Plan (CAP) is a strategic roadmap that municipalities use to identify actions local government and community partners can take to reduce greenhouse gas (GHG) emissions and strengthen infrastructure and services in response to climate change. Municipalities at the beginning of their sustainability journey commonly emphasize mitigation efforts, such as reducing emissions. As climate planning and sustainability programs mature and new challenges develop, CAPs are often expanded into Climate Action and Adaptation Plans (CAAPs). CAAPs combine efforts to reduce emissions with adaptation and resilience measures to address climate impacts and maintain the continuity of essential community services. CAAPs typically include clear climate-related goals and performance indicators to track progress and outcomes.

Why do Municipalities use CAPs/CAAPs?

Municipalities adopt CAPs and CAAPs for many reasons, including funding, but plans are also adopted to meet state requirements, local policy mandates, equity priorities, resilience planning, and long-term financial risk management.

The Inflation Reduction Act (IRA), passed in 2022, substantially increased municipal-level climate action by creating new funding streams for initiatives that promote sustainable infrastructure and economic development. Grants, tax credits, and other incentives for clean energy projects, electrification, and emissions reductions enabled many communities to begin developing and implementing CAPs. As local governments began implementing initial CAP measures, many recognized that reducing emissions alone doesn’t address local climate vulnerabilities. That realization led many communities to expand their CAPs into CAAPs, so that mitigation actions paired with vulnerability assessments and adaptation actions reduce climate risks and support the continuity of essential community services.

Federal funding can be a catalyst in developing a climate plan, but it’s not always dependable from one funding cycle to the next. As a result, many cities pursue federal opportunities when available while relying more heavily on state targets, requirements, and incentive programs to shape their plans and obtain funding. More broadly, municipalities implement climate plans to align targets with local and state initiatives, pursue grants, center equity and environmental justice in community development and rezoning, manage climate-related financial risks, and coordinate action across departments and agencies.

CAPs/CAAPs can also help cities translate state priorities into practical local actions. In California, legislation such as Assembly Bill 1279, which mandates statewide carbon neutrality by 2045, and CARB’s Scoping Plan and Priority Local Actions guide municipalities on actions and implementation plans for sustainability-aligned infrastructure, land use, transportation, and building decarbonization strategies to align with the state’s broader goals. This is reinforced further by Senate Bill 375, which links transportation and land-use planning through regional passenger-vehicle GHG targets and Sustainable Communities Strategies. Aligning plans with state-level goals can strengthen a city’s competitive position for receiving state-allocated funding tied to EV infrastructure, public transportation projects, wildfire resilience, and other sustainability or climate-related initiatives. California’s Senate Bill 1000 further shapes municipal climate planning by requiring local governments to identify disadvantaged communities and address environmental justice in planning, which CAPs/CAAPs can support by embedding equity into plan priorities and implementation actions.

Alongside state targets and planning requirements, California also backs implementation with incentive programs that help cities move from the planning stage to project delivery, with funding to support implementation. For instance, CARB administers the Low Carbon Transportation Incentives (LCTI) and the Air Quality Improvement Program (AQIP), which support clean transportation and advance sustainable technologies and infrastructure. LCTI is part of the California Climate Investments, which uses the proceeds from the Cap-and-Trade program to fund programs across agencies and sectors to reduce GHG emissions, improve public health, and provide economic benefits. The AQIP, created under Assembly Bill 118, emphasizes reductions in harmful air pollutants and diesel particulate matter. Other California Climate Investments programs, such as the Affordable Housing and Sustainable Communities (AHSC) Program, the Low-Carbon Transit Operations Program (LCTOP), and the Transformative Climate Communities (TCC) Program, also help cities finance the implementation of their plans.

In California, climate planning can also intersect with the California Environmental Quality Act (CEQA). A CAP/CAAP can sometimes serve as a plan-level foundation for evaluating GHG emissions and mitigation measures, which may reduce the need for analysis in later projects where appropriate. When a CAP/CAAP is CEQA-reviewed and designed to meet the criteria in CEQA Guidelines §15183.5, it can provide a consistent framework for future project-level GHG analysis. That being said, whether a project actually streamlines the CEQA review process later comes down to the available evidence, the enforceability of the plan, and how closely follow-up projects are aligned with the plan.

In other regions, local climate ordinances are also increasing the need for formal climate action plans. Policies like New York City’s Local Law 97 and Boston’s Building Emissions Reduction and Disclosure (BERDO) translate emissions goals into building-level requirements. A CAP/CAAP can provide the shared baseline, targets, and cross-departmental coordination needed to implement these programs consistently over time.

Pre-disaster resilience and hazard mitigation grant funding is another major driver of plan adoption. For example, FEMA Hazard Mitigation Assistance Grants prioritize communities that can show an adopted risk-reduction strategy, and CAAPs can complement that process by connecting vulnerability and risk assessment findings to fundable mitigation and adaptation projects. Municipal budgeting is another reason to formalize climate planning, as climate risk can affect a city’s bottom line. When municipal bonds are issued to fund infrastructure projects, credit rating agencies such as S&P Global Ratings, Moody’s, and Fitch Ratings assess the creditworthiness of the cities and the bonds they issue. Climate-related risks, such as wildfire, flooding, and extreme heat, are increasingly factored into these ratings. Because ratings can affect borrowing costs and financial flexibility, CAPs/CAAPs can help cities document risks and outline plans to reduce, mitigate, or adapt to them, supporting long-term budgeting and investment decisions.

Guiding Principles of a Climate Action (and Adaptation) Plan

Every city approaches climate planning slightly differently, but there are globally applicable guiding principles that make these plans more effective (Figure 1, UN-Habitat) and many municipalities use established frameworks and tools such as C40 Cities, the Global Covenant of Mayors, and the International Council for Local Environmental Initiatives (ICLEI) to guide inventory development, target-setting, implementation planning, and progress tracking within the plan. Cities typically implement these principles through sustained stakeholder engagement and clear documentation of how informed priorities and decisions are made.

Source: UN-Habitat Guiding Principles for City Climate Action Planning

Core Components of a Strong CAP/CAAP

A strong CAP/CAAP is more than a list of aspirational projects. It’s a plan that connects baseline measurements, actionable strategies, and measurable progress over time. Essential components shared by the most successful plans include:

• GHG Inventory: A comprehensive community-wide Greenhouse Gas (GHG) inventory (Scopes 1 and 2) using the GHG Protocol or other commonly accepted GHG calculation methodologies to establish an emissions baseline and identify the community’s largest emission sources.
• Climate-related Targets: Clear, time-bound decarbonization and other climate-related targets that can be measured and tracked over time (including interim milestones), aligned with science-based pathways and relevant state or national climate commitments. Targets help prioritize actions, track progress, and attract funding and investment.
• Sector-specific mitigation strategies: Actionable steps for each sector to meet targets (such as energy, buildings, transportation, materials, waste, and land use), prioritized based on the community’s most significant emission sources. Each strategy usually includes estimated GHG reductions, cost implications, and co-benefits, such as air quality, job creation, etc.
• Equity and Environmental Justice Integration: A clear explanation of how the plan prioritizes communities that are disproportionately affected by climate change, including how equity is reflected in investments, program design, and access to benefits, such as cost savings and mobility.
• Governance and collaboration: Well-defined departmental ownership, coordinated decision-making frameworks, and identified key partners necessary for effective plan implementation. Defined ownership and coordination help ensure actions move forward, foster alignment across departments and partners, and facilitate funding, implementation, and sustained progress.
• Funding and implementation plan: A realistic assessment of costs, departmental roles and responsibilities, key partnerships, budgeting considerations and funding sources (including grants), and a phased timeline with near-term priorities.
• Monitoring, reporting, and scheduled review: A performance-tracking approach that specifies key indicators, assigns data owners, and establishes a public reporting schedule, along with a regular review and update cycle to ensure the plan continues to be relevant. Ongoing tracking and transparent reporting demonstrate what is effective, reinforce accountability, and allow the plan to adapt as new data emerges, circumstances shift, and community priorities change.

Originally, many cities focused primarily on emissions reduction. As physical climate risks intensify, adaptation is unavoidable. A CAAP includes everything in a CAP, plus structured climate risk and resilience planning. CAAPs reflect a shift from carbon management to comprehensive climate risk management:

• Climate Hazard Assessment: An analysis of the physical climate threats that could impact the community. Climate-related hazards, such as wildfire, drought, heat waves, and other physical impacts, are identified and evaluated for likelihood and impact across different timescales and emissions scenarios, establishing a foundation for resilience planning.
• Climate Vulnerability Assessment: An analysis of community vulnerability to climate hazards, including exposure, sensitivity, and adaptive capacity across people, assets, and essential services. Methods often include overlaying hazards with community assets in GIS, creating an inventory of critical infrastructure, conducting socioeconomic sensitivity analyses, reviewing emergency preparedness capacity, and assessing local resources and capacity to inform adaptation actions.
• Risk Prioritization: A translation of the findings from hazard and vulnerability assessments to identifying and assessing climate-related risks based on the likelihood of their occurrence and the magnitude of the impact. This step helps integrate climate risk into existing risk-management and capital-planning processes.
• Adaptation and Resilience Strategies: Measures intended to reduce material climate risks through adaptation and resilience efforts and uphold essential community services. Examples include stormwater and drainage upgrades, floodplain management, nature-based solutions, and heat mitigation. Strong CAAPs tie each strategy to clear responsibilities, timelines, funding, and outcome tracking, so resilience actions are feasible and practical.
• Governance and Integration: Clear ownership and cross-department coordination that embed climate risk into capital planning, emergency preparedness, operations, and reporting, ensuring resilience actions are ongoing.
• Community Engagement: An overview of stakeholder participation throughout the planning and implementation process, and how feedback shaped priorities, strategies, and tracking. This typically involves departments, elected leadership, community members (especially impacted groups), NGOs, and local businesses to improve practicality, equity results, and community support.
• Financing Strategy: A multi-year funding and capital-planning approach that identifies realistic financing pathways for priority actions. This often includes grouping projects to highlight co-benefits, using findings from climate hazard and vulnerability assessments to strengthen grant applications, and considering options such as bonds, utility partnerships, resilience funds, and phased budgeting.

Collectively, these elements establish a plan that can be implemented, financed, and monitored effectively over time. How these elements are developed and implemented differ across municipalities.

How to Build and Update a CAP/CAAP Over Time

Whether a community is drafting its first CAP or updating an existing one to include adaptation, the planning cycle is similar. Communities generally start by establishing or updating a baseline, such as a greenhouse gas inventory, reduction targets, and, for CAAPs, a vulnerability profile. Next, they translate key priorities into sector-specific actions and formalize the governance, funding, and monitoring systems needed to implement and track progress. The primary focus of these plans evolves. Initial versions often concentrate on reducing emissions, while subsequent updates place greater emphasis on addressing climate risk, vulnerability, and resilience to help ensure essential community services continue without interruption.

The examples below compare two similarly sized fictional municipalities at different stages of maturity. One is developing its first CAP, while the other is updating its CAP to a CAAP to plan and implement adaptation and resilience actions. By comparing their approaches, we can highlight how the process adapts to each community’s needs and circumstances.

Both cities use the same planning cycle; however, the City of Riverton’s maturity changes the depth and integration of risk and resilience. The most important common aspect of the CAP and CAAP examples above is the review-and-refresh cycle. Plans should be updated regularly as inventories improve, risks are reassessed and reprioritized, funding shifts, and community priorities evolve.

Alderbrook and Riverton are illustrative examples, but the transition from CAPs to more integrated climate-and-resilience planning is already happening in many cities. Below are a few examples showing how California cities have integrated adaptation and resilience into their climate planning.

City of Santa Monica:

The City of Santa Monica created a short-term CAP, the “15X15” plan, in 2013, designed around a near-term target of reducing GHG emissions by 15% by 2015. Sector-specific targets were established across energy use and generation, waste reduction and recycling, transportation and mobility, open space and land use, water conservation and efficiency, local food and agriculture, and municipal operations. The plan focused on practical mitigation actions to meet near-term GHG reduction goals.

In 2019, Santa Monica adopted a Climate Action and Adaptation Plan (CAAP) that expanded the city’s work from near-term mitigation to a longer-term strategy with deeper emissions cuts and a formal adaptation framework. The CAAP set more ambitious targets, including carbon neutrality by 2050, and organized mitigation actions around key sectors (buildings, waste, and mobility) while adding dedicated resilience strategies focused on community preparedness, water, coastal flooding, and ecosystems.

City of Sacramento:

Sacramento’s early climate planning centered on a community-wide Climate Action Plan that set near-term emissions-reduction goals and embedded climate policies into long-term strategic planning. The City adopted a CAP in 2012 with a 2020 emissions target and then incorporated an updated community CAP into the 2035 General Plan when it was adopted in 2015. Sacramento’s General Plan is the City’s long-term policy blueprint for growth and investment, guiding land use, infrastructure, and related programs.

In 2024, Sacramento adopted a CAAP alongside its 2040 General Plan. The CAAP expanded climate efforts from primarily mitigation planning to a more integrated framework of mitigation and adaptation. The CAAP sets updated climate targets (including a 2030 per-capita emissions target and a net-zero goal) and is explicitly framed to both reduce emissions and address climate impacts through adaptation planning.

City of Irvine:

The City of Irvine took a different approach to bolstering its climate action planning. Rather than updating an existing CAP, the City began by setting its direction through a citywide climate resolution called Irvine ACHIEVES, a policy statement that outlined key strategies, established a 2030 carbon-neutrality target, and launched a planning process to develop a comprehensive CAAP.

Through the CAAP process, the City engaged the community to set priorities, developed a GHG inventory and targets, and conducted a vulnerability assessment to guide adaptation planning. This resulted in an integrated plan covering both emissions reduction and climate risk.

These real-world examples mirror those of Alderbrook and Riverton. Early plans often begin with mitigation fundamentals, and later updates strengthen the work by adding vulnerability assessments, adaptation measures, and more robust implementation systems. Cities may call these documents different things (CAP, CAAP, Climate Action & Resilience Plan), but the evolution of these plans is similar: over time, municipalities develop clearer accountability, a stronger link between risk and investment, and greater integration across departments and planning procedures.

Conclusion

Effective climate planning is a continuous process, not a one-time achievement. Success depends less on the specific label, CAP or CAAP, and more on whether the plan remains practical and adaptable over time. The Alderbrook and Riverton examples show how plans can evolve to reflect changing conditions, expanding capacity and scope as needed. Early plans typically focus on organizing emissions data, setting clear targets, and implementing sector actions within available resources. As plans mature, they integrate detailed risk assessments and scenario planning to inform resilience and adaptation investments and safeguard essential community services. Treating the plan as an ongoing management tool, supported by routine updates, transparent reporting, and active stakeholder engagement, ensures it remains relevant and effective as local needs and priorities shift.

For communities just beginning this process, the priority should be to establish a solid baseline and identify a manageable set of initial actions. For those with more experience, efforts should focus on bolstering accountability, updating targets, and integrating resilience to align the plan with evolving risks and realities.

If your city is building a Climate Action Plan or updating a Climate Action and Adaptation Plan, we can help with the technical analysis, stakeholder process, and implementation roadmap needed to turn climate goals into feasible and managed action plans. At GSI, our experts help support municipalities with CAPs and CAAPs through the following services:

• Calculating community-wide GHG inventories and helping develop realistic, but ambitious goals
• Conducting comprehensive climate hazard, vulnerability, risk, and scenario analysis assessments
• Assisting in strategy development for mitigation, adaptation, and resilience actions established in the plan
• Facilitating stakeholder engagement and establishing clear governance structures, supported by effective monitoring and reporting systems
• Evaluating the financial implications of climate risks and community needs to inform funding strategies

EcoVadis was founded in 2007 and launched in Paris[8]; it has since grown into a global provider of business sustainability ratings used in supply chains. [9] EcoVadis describes its sustainability assessment as a paid service delivered through registration, questionnaire, expert analysis, and results. [10]

Methodologically, EcoVadis evaluates the quality of a company’s sustainability management system through Policies, Actions, and Results, and it operationalizes these through seven management indicators (Policies, Endorsements, Measures, Certifications, Coverage, Reporting, and 360° Watch Findings). [11] The framework covers up to 21 criteria grouped into four themes:

• • Environment
  • Labor & Human Rights
  • Ethics
  • Sustainable Procurement

The assessed criteria is tailored to the individual company profile and risk context [12] and translated into a verified score from 0 to 100. Disclosing companies receive medals or badges based on percentile ranking relative to peers. Medal thresholds are percentile-based across all assessed companies in the prior 12 months: Platinum (top 1%), Gold (top 5%), Silver (top 15%), Bronze (top 35%). [15]

EcoVadis is not a public sustainability reporting platform; rather it is a procurement-facing management system assessment. Its purpose is to help buyers understand whether a supplier has credible, functioning sustainability programs in place.

Evidence rules are unusually practical (and that’s the point!). EcoVadis says supporting documents should be recent, relevant, complete, and aligned to the scope of evaluation, and it provides examples such as sustainability procedures, audit reports, HSE policies, codes of conduct, employee handbooks, and ISO certificates. [13]

Why EcoVadis matters in procurement, risk, reputation, and regulation

EcoVadis is designed around supplier assessment and scorecard sharing with trading partners, and it positions its ratings as analyst-validated supplier assessments with continuous improvement tooling. [16] For suppliers, EcoVadis often becomes a market access gate: not a complete measure of sustainability, but a standardized proxy for whether management systems exist, operate, and can be evidenced. [17]

It is also a reputational and compliance signal. EcoVadis describes 360° Watch as a complementary screening using external stakeholder inputs and notes that significant cases (for example, fines or sanctions) can affect theme scores based on severity. [2] This tends to reward companies that can demonstrate preventive controls, corrective action discipline, and clean documentation, not just aspirational policies.

Regulation is pushing the same direction. The European Commission[18] describes EU corporate sustainability reporting rules as requiring large and listed companies to report on sustainability risks and on impacts to people and the environment, supported by standards covering the full ESG range. [19] Even where a supplier is not directly in scope, customer requests commonly cascade through value chains.

EcoVadis in the sustainability reporting ecosystem

EcoVadis sits alongside sustainability disclosure frameworks and standards by focusing on the verifiable management system underneath the narrative. Global Reporting Initiative (GRI) [20] provides a broad impact reporting framework across economic, environmental, and social topics. [21] The International Sustainability Standards Board[22] IFRS S1 and IFRS S2 standards focus on sustainability-related and climate-related financial disclosures for capital markets, and the Sustainability Accounting Standards Board[23] standards are maintained as industry-based guidance under the ISSB ecosystem. [24]

Practically, the payoff is consolidation

EcoVadis’ methodology materials emphasize alignment with these global frameworks and standards and an evidence-based approach that combines company documentation, third-party endorsements, and external monitoring inputs. [25] Practically, the payoff is consolidation: one well-governed data and evidence system can serve EcoVadis, CDP, GRI-based reporting, and CSRD-aligned customer data demands, reducing the annual scramble. [26]

Another way to look at the strategic advantage of EcoVadis is illustrated by the graphic below. Sustainability expectations cascade through markets: regulations and competitive pressures apply first to companies directly in scope, and those companies then pass requirements down to their suppliers through questionnaires, data requests, and ESG ratings such as EcoVadis. Procurement departments use EcoVadis as a standardized comparison tool to evaluate the maturity of suppliers’ sustainability management systems across environmental, labor, ethics, and procurement criteria. When two suppliers offer comparable products or services at similar cost and quality, but one holds an EcoVadis medal and the other has not submitted at all, the rated supplier provides greater transparency, verified documentation, and lower reputational and regulatory risk. If stakeholders or investors prioritize sustainability performance, procurement is far more likely to select the supplier with the demonstrated, externally assessed management system, as it signals governance strength, operational controls, and alignment with evolving market expectations.

Mapping EcoVadis expectations to environmental engineering deliverables

EcoVadis’ “Coverage” concept rewards programs that are deployed consistently across the assessed scope, not just piloted at one facility. [27] That makes operational measurement and compliance programs disproportionately valuable because they create repeatable, auditable evidence: plans and procedures, monitoring logs, results tables, and corrective action records. [28] A practical maturity-building pattern is to treat each relevant EcoVadis criterion as a small “evidence pack” spanning policy, process, KPI results, training/communication, and proof of deployment.

Environmental Metrics Quantification establishes clear definitions, calculation methods, and data controls for key sustainability indicators so that performance results are accurate, consistent across facilities, and comparable over time. This structure strengthens the quality and defensibility of EcoVadis “Results” and “Reporting” responses by ensuring that data is traceable and decision-relevant.

On the operational side, technical compliance work provides the documented evidence that EcoVadis expects. Air services generate permitting records, emissions inventories, monitoring logs, and regulatory reports. Stormwater programs produce compliance strategies, employee training records, sampling data, SWPPPs, corrective action plans, and centralized data systems that house analytical results and supporting documentation. Together, these materials demonstrate that environmental policies are not only written, but actively implemented and monitored.

Practical submission plan, timeline, and evidence library

EcoVadis provides a 30-business-day submission window once the questionnaire opens, but strong submissions are rarely built within those 30 days alone. [33] In practice, companies benefit from beginning preparation at least four months before submission. That longer timeline creates space to identify structural gaps, formalize documentation, and ensure that supporting materials reflect established practices rather than documents created solely for the rating. EcoVadis documentation guidance generally expects that materials demonstrate implementation and maturity, and documents created or dated too close to submission may not be credited in the same way as established records. Beginning preparation early allows organizations to update policies with proper approvals, document training completion, refine KPIs, and implement corrective actions well before the assessment window opens.

EcoVadis is not a one-person exercise

The process of supporting GSI clients with their EcoVadis submissions typically begins with a structured kickoff meeting that brings internal stakeholders together to understand what EcoVadis is, how procurement departments use it, and what evidence expectations look like. EcoVadis is not a one-person exercise. It requires coordinated input across departments with operational knowledge of internal processes and documentation. Facilities may oversee environmental permits and monitoring logs. HR may manage diversity policies and employee training records. EHS may maintain greenhouse gas inventories and compliance documentation. Legal may control codes of conduct and governance procedures. Finance may track risk-related metrics. Frequently, each function operates effectively within its own domain, yet no single individual has visibility into how these materials connect within a sustainability rating framework.

Once relevant stakeholders are identified, focused working sessions help translate questionnaire language into practical documentation. This is where clarity and organization become essential. A facilities manager may not immediately recognize that a stormwater monitoring log satisfies an environmental evidence requirement. HR may not realize that a signed DEI policy requires a visible approval date and defined review cycle to qualify. Greenhouse gas inventories may exist, but ownership and version control may not be clearly defined. These cross-functional reviews take time, but with knowledge of the process and disciplined coordination, documentation can be gathered efficiently and mapped to specific questionnaire requirements.

After documentation is assembled, a consolidated review allows companies to identify short-term improvements before submission. Many gaps are procedural rather than substantive. A training program may exist but lack formal attendance records. A policy may be implemented but missing a signature, date, or company logo. Targets may be tracked internally but not formally documented. It is not uncommon to lose points because a supporting document lacks proper formatting or fails to demonstrate scope coverage. Addressing these issues two months before submission ensures that documentation reflects established implementation rather than last-minute preparation.

When the questionnaire officially opens, the organization shifts into execution mode. During the 30-business-day window, responses should be tightly aligned with available evidence, clearly referenced, and annotated so analysts can easily locate supporting pages and understand coverage statements. [33] Because preparation occurred months in advance, the submission period becomes a structured sprint rather than a scramble.

There is, however, an important caveat. Especially for first-time submitters, companies do not know the exact questions they will receive until the questionnaire is released. EcoVadis tailors questionnaires based on industry, size, geography, and risk profile, and the methodology evolves year over year to reflect its commitment to continuous improvement. This means preparation cannot rely on predicting specific questions. Instead, it must focus on strengthening the underlying management system, refreshing core metrics, updating policies, and ensuring documentation is complete, approved, and traceable.

At GSI, we have been able to help companies prepare effectively even before they gain access to their specific questionnaire. Having supported multiple submissions across industries, we understand the recurring themes, common documentation gaps, and typical areas of weakness. While no one can know the exact questionnaire in advance, experience allows preparation to be targeted and strategic. By focusing on foundational policies, measurable results, governance structures, and evidence quality, companies are positioned to respond confidently when the tailored questionnaire becomes available, regardless of minor variations in wording or emphasis. After submission, EcoVadis analysts review the materials and issue a scorecard that includes a 0–100 score, percentile ranking, theme-level breakdown, and medal or badge status where applicable. The scorecard also outlines improvement areas. Rather than treating the result as a final judgment, high-performing organizations use it as a roadmap for the next cycle. Since scorecards are valid for 12 months, companies that maintain documentation continuously, refresh policies on schedule, track environmental metrics consistently, and document training throughout the year find that each subsequent submission becomes more streamlined and more reflective of true organizational maturity. [34]

Starting four months in advance transforms EcoVadis from a compliance exercise into a management systems discipline. The rating rewards established programs, traceable data, and cross-functional coordination. With sufficient lead time, companies can ensure that what is submitted is not only complete, but representative of how sustainability is genuinely embedded within the organization.

Building a Durable Sustainability Management System

EcoVadis reflects a broader shift in how sustainability is evaluated in the marketplace. Sustainability performance is no longer confined to annual reports or marketing materials. It is embedded in procurement decisions, enterprise risk management, lender due diligence, and operational governance. Companies that approach EcoVadis as a one-time compliance task may secure a score, but companies that treat it as an internal systems audit build something more durable. The distinction lies in integration.

Consider two suppliers operating in the same sector with similar products, pricing, and quality. One completes the EcoVadis questionnaire each year by gathering documents in a rush, updating policies only when requested, and treating the exercise as an administrative requirement. The other uses EcoVadis as a structured review of how sustainability is governed across the organization. In the second company, environmental monitoring is tracked routinely, greenhouse gas inventories are updated on a defined schedule, training records are maintained centrally, supplier screening is embedded in procurement workflows, and policies are reviewed annually with documented approvals. The EcoVadis submission in this case does not require new work. It simply reflects work already being done.

The practical implications are significant. Companies with higher EcoVadis scores often demonstrate stronger internal controls and clearer lines of accountability. When a regulatory update occurs, they already have documented procedures and assigned owners. When a customer requests emissions data or water consumption metrics, the information is retrievable and defensible. When a controversy arises in the supply chain, they can point to due diligence processes, supplier codes of conduct, and screening mechanisms. These capabilities reduce operational disruption and reputational exposure.

Resilience emerges from this alignment. Environmental compliance programs reduce the likelihood of violations. Documented greenhouse gas inventories enable scenario planning and transition risk analysis. Structured supplier oversight mitigates downstream exposure to human rights or environmental incidents. Governance frameworks ensure that sustainability considerations are integrated into executive decision-making rather than handled reactively. In this context, a strong EcoVadis score is not the goal itself. It is a byproduct of coherent management systems.

When environmental monitoring, compliance programs, greenhouse gas inventories, supplier oversight, and governance structures are documented and aligned, EcoVadis becomes less of a sprint and more of a reflection of organizational maturity. The rating validates what is already embedded in operations. That shift from reactive disclosure to integrated management is where long-term value is created, because the company is not merely responding to external pressure. It is building systems that anticipate it.

[1] [17] https://resources.ecovadis.com/ecovadis-solution-materials/csr-rating-methodology-scoring-principles

[2] https://support.ecovadis.com/hc/en-us/articles/115005125328-How-the-360-Watch-Findings-works

[3] [6] [11] [23] [32] https://support.ecovadis.com/hc/en-us/articles/115002531507-What-is-the-EcoVadis-methodology

[4] [7] [8] [12] [18] [25] https://resources.ecovadis.com/whitepapers/ecovadis-ratings-methodology-overview-and-principles-2022-neutral

[5] [22] https://www.gsienv.com/services/sustainability-climate/ghg-and-climate-services/

[9] https://ecovadis.com/about-us/

[10] https://support.ecovadis.com/hc/en-us/articles/115002653188-What-is-the-EcoVadis-assessment-process

[13] [28] [35] https://support.ecovadis.com/hc/en-us/articles/210460307-Understanding-supporting-documents

[14] [33] https://support.ecovadis.com/hc/en-us/articles/210459457-How-long-does-it-take-to-complete-the-questionnaire

[15] https://support.ecovadis.com/hc/en-us/articles/210460227-Understanding-EcoVadis-Medals-and-Badges

[16] https://ecovadis.com/solutions/ratings/

[19] https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en

[20] [21] https://www.globalreporting.org/

[24] https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s1-general-requirements/

[26] https://www.cdp.net/en/disclose/question-bank

[27] https://d2uars7xkdmztq.cloudfront.net/app_resources/54766/documentation/194666_en.pdf

[29] https://www.gsienv.com/services/sustainability-climate/

[30] https://www.gsienv.com/services/sustainability-climate/environmental-metrics-quantification/

[31] https://www.gsienv.com/services/air/

[34] https://support.ecovadis.com/hc/en-us/articles/11564680007442-What-happens-after-you-get-a-scorecard

For many organizations, managing environmental issues can be reactive. Environmental management often consists of responding to inspections, incidents, or customer requests as they arise. ISO 14001 provides a structured, proactive system for managing environmental risks and compliance obligations, and for improving performance and efficiency through integrating environmental management processes across business operations.

What is ISO?

The International Organization for Standardization (ISO) is an independent NGO that develops voluntary, widely adopted, interoperable international standards to promote quality, safety, and efficiency across products, services, systems, and processes. ISO has published over 26,000 standards spanning nearly all aspects of technology, management, and manufacturing.

ISO standards are designed to work together. Many management system standards, including ISO 14001, share a common high-level structure, which allows organizations to integrate them into a single, cohesive management system. For example, ISO 14001 aligns structurally with ISO 9001 (Quality Management Systems), ISO 45001 (Occupational Health and Safety), and ISO 50001 (Energy Management). In addition, other standards in the ISO 14000 family support ISO 14001 by providing more detailed guidance on specific topics, such as ISO 14064 for greenhouse gas accounting and ISO 14040 for life cycle assessment.

ISO 14001 also plays an important supporting role in today’s sustainability and climate-related reporting landscape. While ISO 14001 is not a disclosure framework, it helps establish the internal systems, controls, and governance processes that many reporting requirements rely on. ISO 14001 provides a practical management foundation that can support regulatory disclosures, investor reporting, and voluntary sustainability frameworks. In this way, ISO 14001 helps ensure that sustainability and climate disclosures are grounded in repeatable, defensible processes that reflect how the business actually operates.

What is ISO 14001?

ISO 14001 was developed to help companies of all sizes implement and manage environmental management systems. The standard provides a structured framework for identifying environmental risks and impacts associated with an organization’s activities, products, and services; understanding and meeting compliance obligations; setting meaningful environmental objectives; and driving continual improvement in environmental performance.

ISO 14001 is not a sustainability certification; it is an environmental management system framework that enables organizations to manage environmental risks and opportunities systematically and to improve operational efficiency over time.

ISO 14001 is applicable across industries and can be scaled to fit organizations at different stages of environmental program maturity.

Why do companies use ISO 14001?

Organizations adopt ISO 14001 for many different reasons. Implementing an ISO 14001 environmental management system (EMS) can help companies reduce the occurrence of environmental incidents and compliance risks, improve operational consistency across sites, teams, and products, and clarify internal roles and key decision-making processes. The standard also helps companies move from reactive, ad hoc problem-solving to a more proactive approach to environmental risk management. Implementing an environmental management system also signals environmental responsibility to customers, investors, and regulators and, in some cases, helps organizations meet environmental expectations set by customers, partners, or suppliers.

ISO 14001 is well-suited for organizations seeking a structured approach to managing environmental risk, particularly those operating in regulated or operationally intensive or complex environments. For many companies, ISO 14001 serves as a practical starting point for broader sustainability or climate efforts without requiring those programs to be fully built out on day one.

Understanding the PDCA Cycle

The ISO 14001 framework is built on the Plan-Do-Check-Act (PDCA) cycle, which provides a structured approach to planning, implementation, monitoring, and continuous improvement of an EMS. This structure ensures environmental management is not a one-time exercise, but an active system that evolves as the organization’s environmental management practices mature.

Plan Phase

The “Plan” phase aligns with the requirements set out in Clauses 4 through 6 of ISO 14001 and is designed to establish a comprehensive understanding of the organization and its environmental risk profile. During this phase, the organization must determine the operations, locations, products, and services that will be included in the scope of the EMS. The organization must also identify the environmental aspects and impacts associated with its activities, determine relevant compliance obligations, and establish environmental objectives that reflect its most significant environmental risks, opportunities, and priorities.  At this stage, the conversation is not about reporting, but about operations.

Case Study: A manufacturing facility identifies stormwater runoff and hazardous waste handling as key environmental risks based on permitting requirements and past inspection findings. Compliance obligations are documented, and objectives are set to reduce incidents and improve consistency.

Do Phase

The “Do” phase corresponds to the requirements in Clauses 7 and 8 of ISO 14001, which focus on implementing and operating the environmental management system. Once environmental risks and objectives are identified and defined during the planning phase, the organization implements the controls and procedures required to manage these risks and achieve these objectives. This phase typically includes establishing operational controls and work procedures, providing training and awareness for employees and contractors, communicating environmental expectations across the organization, and maintaining processes for emergency preparedness and response. This stage includes documenting what changed and why – something that becomes invaluable later.  

Case Study: The manufacturing facility updates operational procedures, standardizes waste-handling practices, and provides targeted training for employees and contractors to address the identified risks.

Check Phase

The “Check” phase is aligned with Clause 9 of ISO 14001. The primary objective of this phase is to monitor and measure the environmental management system and to establish and maintain effective internal audit and management review procedures. During this phase, organizations track environmental performance, evaluate compliance with applicable legal and other requirements, conduct internal audits, and review results with management to confirm that the system is functioning as intended. At this stage, ISO 14001 starts separating signal from noise because you are not just collecting data – you are interrogating it.

Case Study: Environmental performance is monitored at the manufacturing facility through routine inspections, permit reviews, and internal audits. Results are reviewed with management to confirm procedures are being followed and objectives are being met.

Act Phase

The “Act” phase corresponds to Clause 10 of ISO 14001, which focuses on identifying nonconformities, implementing corrective actions, and monitoring results for continual improvement. The final phase in the PDCA cycle focuses on executing improvement measures based on what the organization has learned during the implementation or review cycle. This includes correcting identified issues, addressing their root causes, and updating procedures or environmental objectives as needed. Over time, this process helps organizations strengthen their EMS and better integrate it into everyday business operations. Then the cycle starts again – stronger than before!

Case Study: Based on audit results and performance data, the manufacturing facility corrects issues, addresses root causes, updates procedures or objectives, and integrates the lessons learned into everyday operations.

What makes an ISO 14001 EMS Successful?

Organizations that see value in using ISO 14001 for their EMS often share a few traits. Leadership is actively involved beyond simply approving policies, with clear accountability and ownership established across the organization. Documentation is practical and risk-based, and the environmental management system is integrated into day-to-day operations and decision-making rather than treated as a standalone compliance exercise. These organizations also commit to ongoing review and improvement to ensure the system continues to reflect real risks and operational realities.

Organizations that struggle to realize value from ISO 14001, by contrast, often approach the standard as a documentation or certification exercise, focusing on checklists or generic templates rather than aligning the system with how the organization actually operates.

Why ISO 14001 Is Especially Relevant Now?

As a sustainability consultant, I have worked with organizations that initially viewed ISO 14001 as “something we do for certification” or “a box check” exercise. Almost without exception, their perspective changed once implementation began. The most significant shift usually happens when leadership realizes ISO 14001:

• Clarifies ownership of environmental data
• Encourages alignment between sustainability goals and operational reality
• Creates documentation that holds up under regulatory, investor, and assurance scrutiny.

In today’s complex environment, sustainability expectations are increasingly shaped by fragmented regulations, politicized narratives, and rapid technological change, while governance measures often struggle to keep up with the pace. ISO 14001 provides a practical way to create structure amid that uncertainty by embedding environmental management into existing operations rather than layering on new, standalone processes. ISO 14001 helps organizations prepare for climate and sustainability disclosures without chasing every new rule, supports credible claims with documentation processes, integrates sustainability into risk management and internal controls, and improves operational continuity.

In practice, I’ve seen ISO 14001 help organizations move beyond reactive compliance toward more consistent, resilient environmental management. By requiring clear ownership, documented procedures, and ongoing review, the standard helps ensure that sustainability efforts continue to function even as priorities, leadership, or external expectations evolve. If sustainability is going to last (inside organizations rather than just in reports), it needs systems that can weather uncertainty. ISO 14001 is one of the few tools I’ve seen consistently do that.

Whether your organization is preparing for its first ISO 14001 audit or looking to strengthen an existing environmental management system, GSI can help. We work with organizations to design and implement practical, risk-based EMS frameworks, prepare teams for internal and external audits, and ensure ISO 14001 requirements are meaningfully integrated into existing operations. Our approach focuses on building systems that support compliance, improve consistency, and drive continual improvement over time.

We have a new entrant into the state-level GHG Reporting world, 6 NYCRR Part 253 (Mandatory GHG Reporting) is here!

If you have large sources of scope 1 emissions in NY, sell fuel/electricity into NY, supply large amounts of agricultural lime and fertilizer in NY, or run waste large operations/export in NY, annual GHG reporting is no longer “nice to have” — it’s a regulated filing.

The data gathered from this regulation will greatly inform how NY’s carbon market could play out with a potential Cap-and-Invest type policy.

Why New York’s Mandatory GHG Reporting Feels Familiar:

• It is like the federal EPA GHGRP (40 CFR Part 98) and California’s Mandatory Reporting Regulation (MRR). The regulations include requirements for defined methods, documentation, QA/QC, and deadlines.
• Similar to the California requirements, NY requires third-party verification for “Large Emission Sources”.
• The NY regulations calculates CO₂e using a 20-year global warming potential (vs the typical 100-year GWP) — which puts a brighter spotlight on near-term climate pollutants (especially methane).

If You’re a Large Emission Source, Expect a Real, Reasonable Level Audit Cycle, Not a Light Review.

• Verification is required annually once you cross the “Large” thresholds (e.g., facilities ≥25,000 MT CO₂e/year; plus supplier-specific thresholds).
• Timeline: emissions year 2026 is the first reporting year; first Emissions Data Report is due June 1, 2027.
  • First Verification Statements are due Dec 1, 2027 (for 2026) and Dec 1, 2028 (for 2027), then Aug 10 in later years.
• How to get it done: you’ll need to contract with a DEC-accredited verification body (DEC is currently developing the website with the full list of verification bodies). The first year is a “full verification” (expect a site visit + deeper systems/data checks), with the next two years potentially less intensive if you earn a clean statement.

The practical takeaway is that 2026 is not a “dry run” year.  It will be important to follow your established monitoring plan, initiate QA/QC procedures, iterate and improve processes, and start assembling an evidence package in preparation for verification. Note that certain reporters such as High-Emitting Solid Waste Landfills, Anaerobic Digester and Liquid Storage Operators will need to submit an Emissions Monitoring and Measurement Plan by September 1, 2026.

Across jurisdictions, markets, and institutions, sustainability expectations shifted while the work was already underway. Regulatory timelines stretched, collapsed, or overlapped. Political rhetoric sharpened even as investor and insurer expectations largely held. Technology advanced faster than most organizations could comfortably absorb. Very little stopped. But it became much harder to pace, prioritize, and describe with certainty.

This article sits inside that tension. It brings together what we saw across client work and the judgment calls behind it, and includes personal reflections from members of our sustainability team on what 2025 felt like from within the work. We also look ahead, because many of the patterns that defined 2025 are likely to shape how sustainability work evolves in 2026.

Rather than treating 2025 as a tidy timeline or a set of definitive answers, we trace the forces that shaped day-to-day decision-making within the organizations we worked with. Here are eight forces our team saw unfold over the past year.

1. Regulatory Uncertainty Increased, but the Work Did Not Disappear

ESG regulatory uncertainty increased in 2025. EU CSRD and CSDDD “simplification,” repeated delays to the EU Deforestation Regulation, the continued stay around the U.S. SEC climate disclosure rule, and uneven movement in California’s climate disclosure laws all reinforced the same lesson: plan anyway, but build flexibility as the compliance map keeps shifting.

Europe: “simplify + delay” without stepping away

In Europe, 2025 felt less like retreat and more like recalibration. The European Parliament approved an Omnibus amending directive in December 2025 that reshapes the scope and timing of sustainability reporting and due diligence requirements. The headline was “burden reduction,” but the lived reality for many companies remained the same: build systems that can hold up.

Meanwhile, the EU Deforestation Regulation was delayed again. The revised compliance dates (late 2026 for larger operators and mid-2027 for smaller ones) were primarily driven by implementation readiness rather than by a change in ambition. Additionally, CBAM quietly kept moving forward: the European Commission continues to frame 2023–2025 as the transitional phase, with the definitive regime starting in 2026. Even when public debate focused elsewhere, product-level emissions data work still crept into procurement, trade, and finance teams.

Taken together, these shifts led to a kind of planning whiplash. Many companies continued to build CSRD-level systems but focused more on getting the basics right and keeping things flexible rather than trying to optimize for any specific regulatory outcome.

United States: disclosure stalled, pressure persisted

In the U.S., the SEC climate rule stayed on hold. In March 2025, the SEC voted to stop defending the rule, and later the Eighth Circuit paused the related litigation, leaving the outcome largely dependent on what the SEC ultimately decides to do next.

In California, momentum was uneven but not gone. During a late-2025 CARB SB 253/SB 261 rulemaking workshop, a lawyer interjected to announce that the Ninth Circuit had issued an injunction, a moment that our team on the call quietly described as feeling somewhat Netflix-like in its timing. CARB remained focused and continued answering questions, signaling that implementation work was still moving forward despite the legal uncertainty.

CARB subsequently posted draft proposed rulemaking documents on December 9, 2025, for the implementation of SB 253 and SB 261, while noting the Ninth Circuit’s temporary injunction on SB 261 enforcement pending appeal. The practical impact was similar to what we had experienced with the CSRD delay.  Some organizations paused work, but the majority continued to develop inventory methods, governance structures, and data pipelines because customers, investors, lenders, and internal risk owners continued to request the underlying information.

United Kingdom: credibility and enforcement took center stage

In the UK, attention shifted from expanding disclosure to strengthening its foundations. The FCA set out proposals to bring ESG ratings providers under oversight, focusing on transparency, governance, and conflicts of interest. In parallel, the CMA’s consumer enforcement powers expanded in April 2025 under the Digital Markets, Competition and Consumers Act framework, raising the stakes for misleading environmental claims. That enforcement shift changed behavior. More teams became cautious about public claims, and more effort moved upstream into internal evidence, controls, and review processes.

Across regions, the message of 2025 was consistent, even if the signals were not: regulation did not get lighter. It got harder to read. The organizations that kept moving built flexible systems, documented assumptions, and focused on credibility over certainty.

2. Global Standards Consolidated Quietly, Even as Regulations Stayed Uneven

While timing and enforcement of regulations remained uncertain, the underlying content of sustainability requirements moved in a more consistent direction. More jurisdictions continued to adopt or align with the ISSB standards, and the IFRS Foundation continued to support the framework through ongoing stewardship and refinements.

In practice, that quiet consolidation mattered. Even where formal rules were delayed, stayed, or contested, many companies used ISSB and TCFD-style architecture as a lowest-regret foundation: a structure that could satisfy investors while remaining adaptable across jurisdictions. One caveat persisted. ISSB incorporated TCFD’s disclosure recommendations into IFRS S2, but TCFD continues to be referenced in regulation and practice because laws often cite frameworks long after standards evolve. California’s SB 261 is a clear example: its reporting expectation is built around TCFD (or a successor/equivalent standard), meaning many companies must operate across both legacy and emerging frameworks simultaneously.

3. COP30 Pushed Finance and Adaptation Closer to the Center

COP30 reinforced a shift that has been building for years: the focus moved away from announcing new pledges and toward implementation, finance, and delivery. One clear signal was the renewed emphasis on adaptation finance, with COP30 outcomes calling for efforts to at least triple adaptation finance by 2035 as part of the broader climate finance trajectory. The point was not that COP30 “solved” adaptation finance; it did not, but it did sharpen expectations around delivery and real-world outcomes.

That same shift has been evident in our work supporting California’s SB 261 climate-risk disclosure requirements. Much of our focus has been on building capacity and shared understanding with clients, helping them see how their existing processes, GHG inventories, and climate risk assessments can serve as tools for resilience and adaptation rather than just disclosure requirements. Internally, this has meant identifying risks and modeling climate scenarios at a level that aligns with clients’ climate maturity, from initial risk identification through more detailed scenario analysis to support operational planning, continuity, and long-term adaptation decisions.

4. Technology Narrowed to What Actually Works: Measurement, Energy, and Removals

In 2025, technology conversations became more focused and more consequential. A few years ago, much of this space felt exploratory. This year, it looked more like infrastructure decisions.

Digital MRV and traceability moved from optional to foundational

Digital measurement, reporting, and verification (MRV) systems, alongside traceability tools, became harder to treat as “nice-to-have.” Expectations for compliance-grade data are rising, and organizations increasingly need systems that can withstand audit-style scrutiny and multi-framework reporting. For us as consultants, this also changed the work: clients increasingly requested assistance with evaluating tools, integrating platforms, and determining what should be in-house versus outsourced. To advise well, we had to educate ourselves quickly across a crowded and uneven software landscape.

Carbon dioxide removal matured fast, but unevenly

Carbon dioxide removal followed a similarly uneven path. Corporate interest has been expanding, and the menu of pathways has become more real: biochar, BECCS (bioenergy paired with carbon capture and storage), other CCS-linked approaches, and enhanced weathering that accelerates natural mineralization. At the same time, debates around MRV, accounting treatment, and claims governance intensified, underscoring that the market is scaling faster than consensus about how to measure and communicate impact.

Internally, this led to deeper learning and research, particularly on biochar as a pathway (including how feedstock, pyrolysis conditions, and end-use affect permanence and co-benefits). We are careful here: this is not a claim about published “GSI biochar research,” but rather about the reality of what we needed to understand to advise credibly.

Energy constraints stopped being a background issue

Overlaying both trends was a broader energy reality check. Electrification ambitions collided with grid constraints and reliability concerns, while data center demand became a material planning variable in many regions. That combination pushed more pragmatic conversations about efficiency, flexibility, and clean firm power, and it pulled sustainability discussions closer to operations, facilities, and energy procurement teams.

5. Voluntary Carbon Markets: Integrity Became the Product

Voluntary carbon markets continued to shift away from volume toward credibility. The core question increasingly became: what does this credit represent, and what claim does it support?

Integrity initiatives continued to raise the bar. The Integrity Council’s Core Carbon Principles are explicitly designed to increase transparency and quality differentiation in the voluntary carbon market. In parallel, VCMI’s Claims Code of Practice continued to shape expectations for credible claims linked to real emissions reductions and transparent reporting.

This credibility shift is also evident in how standard-setting bodies are evolving. For example, the GHG Protocol launched public consultations in 2025 on revisions to its Scope 2 Guidance and consequential accounting methods for electricity-sector actions, reflecting the broader push toward tighter accounting rules and clearer claims discipline. In practice, the direction is consistent: participation now requires stronger governance, clearer claims frameworks, and greater tolerance for scrutiny than in prior years.

6. Business Opportunities that Accelerated in 2025

Looking at 2025 through a services and operating-model lens, one thing became clear. Uncertainty didn’t slow sustainability work down; it changed where time and investment were spent. As regulatory timelines blurred and companies became more careful about public positioning, demand shifted toward strengthening internal systems, governance, and decision-making. The areas that moved fastest were not tied to any single framework, but to building capabilities that enable organizations to operate credibly across a range of scenarios. Below are a few examples of how this played out in the organizations we worked with:

1. Regulatory readiness and adaptable reporting systems
   EU “simplification” did not reduce workload so much as change priorities and order in which companies mature their sustainability programs to comply. The companies that moved forward built modular systems, so data and controls could adapt as requirements evolve.
2. Assurance readiness and ESG data controls
   Companies are increasingly focused on maturing their internal systems so that boards and audit committees have clear policies to rely on, and ESG data have defined owners, controls, and documentation that can withstand scrutiny, especially when regulation is imminent or investor expectations remain high.
3. Supply chain data and product-level traceability
   Even with delays, CSRD, CBAM, deforestation, and due diligence requirements pushed sustainability work deeper into procurement, making supplier data, traceability, and engagement core operational needs rather than side tasks. Those pressures quickly flowed down the value chain, driving greater demands on suppliers and keeping tools such as EcoVadis and Assent relevant, alongside newer platforms focused on lower-tier supplier data and traceability.
4. Climate risk and resilience planning tied to capital decisions
   Climate risk continued to shift away from disclosure and toward capital planning, insurance, and business continuity, and client conversations increasingly centered on a practical what’s in it for me lens, translating climate risk into financial materiality at different levels of the organization. This shift helped ground sustainability in real business value and decision-making.
5. CDR procurement strategy and claims governance
   As removal options expanded, companies increasingly needed formal procurement rules: what qualifies, what evidence is required, what claims are permissible, and what contract guardrails protect credibility.

7. ESG Politicization Continued to Chill External Positioning

Companies became more conservative in branding and public claims, not necessarily because the work stopped, but because the risk of overstatement rose and because ESG politicization continued to chill external positioning. As greenwashing enforcement tightened, especially in the UK, more companies shifted from communications-first to evidence-first approaches. With ESG politicization, investor pressure became more fragmented across regions, such that global companies had to manage differing expectations across European and U.S. stakeholders.

In practice, this showed up in very real ways. For example, we supported clients’ policies and governance structures to focus on transparency and process rather than specific goals or commitments. Likewise, our work drilled down on tangible impacts and business continuity.

8. What “Won” in 2025: Operationalizing Sustainability

Across sectors, one pattern stood out. ESG shifted from storytelling to operating system design. The companies that made real progress were not those with the most polished narratives, but those investing in the mechanics of how sustainability is actually implemented within the business.

In practice, that meant building controls and data pipelines that could serve multiple frameworks without constant rework, treating transition planning as part of capital planning and enterprise risk management, and investing in supply-chain transparency where regulation and exposure made it unavoidable. Increasingly, these systems followed a familiar plan–do–check–act cycle, with clearer planning, implementation, review, and continuous improvement built in rather than treated as afterthoughts.

This shift also signals something broader. Sustainability as a business concept is maturing and moving steadily toward compliance and standardization. Far from slowing progress, such standardization often creates the stability and clarity needed for meaningful competition, innovation, and long-term value creation. In that sense, 2025 marked the year ESG began to behave less like a narrative and more like a system that must function under real-world pressures.

Closing: the Shift that Defined the Year

Looking back on 2025, the most meaningful shift was not driven by a single regulation, standard, or technology. It was a reframing that happened inside organizations themselves. As uncertainty increased and external signals became harder to interpret, attention shifted away from debating headlines and toward understanding how sustainability functions day-to-day.

In 2025, the companies making real progress stopped centering their efforts on what to say publicly and started asking harder, more consequential questions internally. How does this actually operate within the business? Who owns it? How does it hold up under scrutiny? How does it connect to capital, risk, and operations? Those questions reshaped priorities, slowed down some conversations, and deepened others.

That shift mattered. It pushed sustainability work out of slide decks and into systems. It grounded climate risk in financial materiality and business continuity. It reframed reporting as the output of governance and processes, rather than the starting point. And it made space for sustainability to be treated less as a special initiative and more as part of how organizations plan, invest, and adapt.

If 2025 taught us anything, it is that sustainability work is not linear. It advances through pauses, reversals, recalibration, and steady, often quiet progress. The move from voluntary action toward clearer expectations, standardization, and compliance is not a sign of failure or fatigue. It is a sign of maturity.

As we look toward 2026, the question is no longer whether sustainability will continue to matter. The question is how well organizations are prepared to run it as part of the business, even when the rules keep shifting. In that sense, the defining question of 2025 may also be the one that carries forward: not what do we say, but how does this actually work. That shift defined the year.

Check out photos from 2025 Conferences and Personal Reflections from the team below:

Becky Twohey’s Personal Reflection on 2025

Jannika Kremer’s Personal Reflection on 2025

Albert Lu’s Personal Reflection on 2025

Carmen Twitchell’s Personal Reflection on 2025

Lauren Besser’s Personal Reflection on 2025

Albert Chung’s Personal Reflection on 2025

Brady Koetting’s Personal Reflection on 2025

References:

[1] European Parliament, “Simplified sustainability reporting and due diligence rules for businesses” (Dec 16, 2025). European Parliament
[2] European Parliament, “Deforestation law: Parliament adopts changes to postpone and simplify measures” (Dec 17, 2025). European Parliament
[3] European Commission, “Carbon Border Adjustment Mechanism (CBAM): transitional phase 2023–2025; definitive regime from 2026.” Taxation and Customs Union
[4] U.S. SEC Press Release, “SEC Votes to End Defense of Climate Disclosure Rules” (Mar 27, 2025). SEC
[5] Reuters, “US appeals court hits pause on challenges to SEC climate rule” (Sep 12, 2025). Reuters
[6] California Air Resources Board, SB 253/SB 261 program page noting draft proposed rulemaking documents posted Dec 9, 2025. California Air Resources Board
[7] CARB Staff Report (ISOR) referencing Ninth Circuit temporary injunction on SB 261 enforcement (Nov 18, 2025). California Air Resources Board
[8] Financial Conduct Authority, “FCA sets out proposals to make ESG ratings transparent” (Dec 1, 2025). FCA
[9] DLA Piper, “CMA’s new consumer enforcement regime comes into force in April 2025” (Apr 7, 2025). DLA Piper
[10] IFRS Foundation, ISSB overview and ongoing standard support/maintenance. Taxation and Customs Union (Note: if you want, I can swap this for a more specific IFRS “jurisdictional adoption” page in a second pass.)
[11] PwC, SB 261 explanation referencing TCFD alignment and practical disclosure expectations. PwC
[12] PwC, SB 261 and TCFD relationship and “successor framework” concept. PwC
[13] Baker Tilly, SB 261 requiring disclosure in accordance with TCFD or equivalent and noting enforcement paused. Baker Tilly
[14] UNFCCC document calling for efforts to at least triple adaptation finance by 2035 (COP30 decision text). UNFCCC
[15] IISD, “COP 30 outcome: what it means and what’s next” summarizing adaptation finance emphasis and delivery issues. IISD
[16] McKinsey Sustainability, coverage on digital MRV/measurement systems and compliance-grade data trends (sector perspective). IEA (If you prefer only Big Four, I can replace this with a Deloitte/PwC equivalent.)
[17] IPCC AR6 (peer-reviewed assessment basis) for definitions and pathway categories: biochar, BECCS, enhanced weathering (CDR taxonomy). (Web citation not pulled in this pass; if you want it strictly linked, I’ll add the exact IPCC chapter reference with a stable URL.)
[18] VCMI Claims Code of Practice (April 2025, v3.0) for claims discipline and credible use expectations. VCMI
[19] IEA, “AI is set to drive surging electricity demand from data centres” (Apr 10, 2025). IEA
[20] ICVCM, “Core Carbon Principles” (quality threshold and integrity framing). ICVCM
[21] GHG Protocol, announcement of public consultations on Scope 2 Guidance updates (Oct 20, 2025). ghgprotocol.org