2025: The Year Sustainability Becomes Transactional

2025: The Year Sustainability Becomes Transactional
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Sustainability is shifting from being a value-added feature to a core strategy for cost savings and risk management. How does this transformation affect the housing sector?

For years, corporate sustainability has been primarily mission driven. While its quantitative benefits, such as improved profitability, have been clear, the qualitative benefits—especially environmental and social impacts—have been the key drivers of adoption.

Now, with evolving market conditions, a rapidly changing climate, and a swiftly adapting regulatory environment, 2025 is poised to mark the transition of sustainability from an optional enhancement to a critical operational necessity.

2025 The Year Sustainability Becomes Transactional

Proactive Response

No doubt, the next four years will be a litmus test for sustainability in the U.S. We can expect that President Trump will back out of the Paris Accord again (despite a growing chorus of requests from executives, including the CEO of Exxon Mobil, to stay in) and roll back environmental protections, emissions regulations, and vehicle standards.

We’re also starting to see some companies, like Tractor Supply Company, John Deere, and Jack Daniels, step back from sustainability commitments in response to the nti-ESG movement that has taken hold within certain demographic segments.

Even so, twenty-four states remain committed to the Paris Accord, representing 54% of the U.S. population and 57% of its economy. And, many business leaders are doubling down on sustainability to counteract the anticipated pushback at a federal level.

Many business leaders are now thinking differently about sustainable strategies. Instead of looking at sustainability as a competitive advantage, these leaders view it as a shrewd tactic to improve operational performance, boost profitability, enhance product quality, and augment customer value.

As companies execute comprehensive organizational sustainability, they’re enjoying the benefits of amplified competitiveness, reduced risks, and decreased costs, drawing in Chief Financial Officers and risk assessment teams to evaluate climate risks and future-proof businesses against the financial implications of natural disasters, raw material and resource shortages, and geopolitical instability.

These teams are increasingly prioritizing adaptation strategies to safeguard assets and maintain business continuity in a precipitously transmuting environment.

Business investments in climate adaptation and resiliency are at an all-time high as the rate of physical damage to facilities, shipping routes, and supply chains intensifies. With the scale and scope of climate disruption escalating out of control (according to the U.S. National Oceanic and Atmospheric Administration, the number of major weather events that caused $1 billion dollars or more of damage skyrocketed from 8.5 in 1980 to 20.4 in 2023), climate risk is an undeniable factor that businesses can no longer ignore.

Investor Momentum

From an investor standpoint, Morgan Stanley reports that 77% of investors in the U.S. are focusing on environmental issues, with 57% confirming that their interest has grown over the past two years—irrespective of election outcomes.

In Europe, lenders are offering a 20-basis point discount for companies with climate emission reduction targets. While banks in the U.S. aren’t quite as aggressive as those in Europe, pension funds in states like New York and California have joined a global alliance that has allocated $9.5 trillion to zero-carbon investments.

Not surprisingly, the rise of younger, sustainability-minded investors is further accelerating the interest in impact investments that focus on measurable societal and environmental contributions, with climate change emerging as a central priority for the years ahead.

Reporting Requirements

Emerging climate risk disclosure and sustainability reporting requirements are also changing the landscape for businesses throughout the entire economy.

Starting this year, companies that do business in Europe will face new requirements from the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD), which oblige companies to report on the Environmental Social, and Governance (ESG) impacts of their operations and supply chains.

In the U.S., reporting requirements in California will also be implemented this year, ushering in a new era of mandatory reporting, corporate transparency, and accountability for material climate risks.

It’s possible that publicly traded companies may face climate-risk disclosure requirements from the Securities and Exchange Commission, however, the organization’s ruling is currently stayed as it faces legal challenges.

These new compliance requirements demand comprehensive, science-based plans for linking a company’s emissions reduction strategies with long-term climate goals. In simple terms, if a company can’t convincingly validate how it will contribute to limiting global warming to 1.5°C through Scope 1, 2, and 3 emission reductions, it will inevitably face heightened financial, market, and legal risks.

And, to be sure, while carbon is the frontier that we’re pioneering today, it’s all but guaranteed that water, waste, and plastic usage is next on the horizon.

Fortunately, most business leaders are onboard. A recent survey by Workiva of 1,600 corporate executives revealed that 85% of respondents confirmed that they will forge ahead with climate disclosures regardless of what occurs on a Federal level, primarily because they believe that increased transparency and disclosure enables them to “identify performance gaps that enhance financial growth opportunities.”

Recruiting Talent

Beyond reducing business risk, increasing profits, enhancing competitive advantage, and complying with reporting requirements, sustainability is now an undeniable driver of talent demand.

Purpose-driven work is now attracting and retaining top-performing professionals at all levels, especially within Millennial and Gen Z individuals who are looking for roles that allow them to take action and implement solutions that safeguard their future.

As these younger individuals seize leadership roles within companies, they are not only demanding stronger sustainability commitments, they are also driving a discussion about employee wellbeing, enhanced collaboration, and emotional security in the workplace.

Sustainability Becomes Transactional

As demand for sustainable products explodes, climate risks mount, and the potential for regulatory penalties, litigation, and reputational damage increases, the decision to implement enterprise-wide sustainability strategies has become increasingly transactional.

Apply standard business principles: the opportunity to capture growth opportunities, implement price premiums (namely, from new green products and services) and enhance employee productivity and morale has become too compelling to ignore.

The numbers don’t lie: according to McKinsey & Company, sustainable products had an 8% larger cumulative growth over the past five years versus non-sustainable products. McKinsey also reports that the net costs for sustainability initiatives are often lower than what companies initially expect them to be and yield a much higher return both in terms of value creation and revenue generation.

The result: companies that are implementing market-based strategies to address social and environmental issues are generating positive brand equity and boosting sales—a trend that will continue to grow in response to consumer demand, regardless of who is in the White House.

Impact on the Housing Sector

Businesses in the housing sector—manufacturers and building professionals alike— are increasingly compelled to adopt sustainable practices due to evolving consumer expectations, stakeholder pressures, investor requirements, and tightening regulations.

From a consumer perspective, homebuyers across all demographics—especially younger generations—now expect homes to meet established sustainability standards. Features like energy efficiency and healthy living environments are no longer differentiators but baseline expectations.

On the product side, demand for sustainable materials has reached unprecedented levels. Meanwhile, interest in carbon-intensive products, such as non-recycled steel and high-emission insulation, is declining sharply.

Supply chain partners are also raising the bar by requiring vendors to provide green products and transparent reporting. Companies that fail to meet these heightened expectations risk losing valuable partnerships and significant revenue streams.

Fortunately, builders and manufacturers now have opportunities to transform sustainability from an emotional selling point into a practical, transactional benefit. Key areas of advantage include:

  • Energy efficiency: Investments in energy-efficient upgrades yield long-term savings on utility bills, often with rapid payback periods..
  • Electrification: All-electric solutions, such as heat pump HVAC systems, water heaters, and induction cooktops, offer higher efficiency and lower operating costs compared to traditional alternatives.
  • Resiliency: Preparing homes to withstand climate events helps prevent costly repairs, saving homeowners time and money.
  • Solar + storage: Integrated solar systems reduce energy costs during peak grid demand and ensure functionality during outages.
  • Smart home technology: Connected devices enhance energy management, leak detection, and security, reducing costs while improving safety.
  • Health and wellness: Sustainable, healthy homes protect families from illnesses, creating measurable value and improving quality of life.

Sustainability is no longer a niche market trend—it is a defining feature of the future housing industry. Businesses that embrace this shift can unlock new opportunities to drive value for consumers, partners, and stakeholders alike.

By integrating sustainable practices and innovations into their operations, housing sector leaders can meet rising expectations, solidify market positions, and thrive in a rapidly evolving landscape. Those who delay risk falling victim to rising costs, regulatory penalties, and waning consumer demand for unsustainable practices, but those who act now will have the opportunity to shape the future of housing.


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