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Sustainability value-creation in 2026

  • sherry8120
  • a few seconds ago
  • 5 min read

2026 is around the corner, which means that the planning and budgeting cycle is well underway for sustainability leaders. What are the themes that will drive success in the year ahead?


As we work with companies to set carbon management priorities and programs for 2026, here are the four things that we see gaining importance:  


1.      Focusing on near-term actions (over long-term goals)

2.      Granular analysis of decarbonization opportunities

3.      Proactive electricity procurement

4.      Managing a fragmented policy and regulatory landscape

 


1. Focusing on near-term actions (over long-term goals):


The number of companies committing to Science-Based Targets continues to grow (11,911 companies as of November 2025). But the on-the-ground reality for many sustainability leaders is that it’s difficult to attract operational and financial investment for long-term objectives when their companies are managing the uncertainties of tariffs, AI integration, and political changes. 


Instead, decarbonization must make sense in the here-and-now, regardless of potential future scenarios for the economy and for the business. Win-win efforts like energy efficiency upgrades, select fleet upgrades, and green procurement become key actions to build buy-in, financial value, and progress.



2. Granular analysis of decarbonization opportunities:


Many companies come to Rappel when they realize that high-level marginal abatement cost curves (MACCs) and broad-brush decarbonization analyses are insufficient for identifying and implementing specific carbon reduction actions.  This reality is becoming increasingly true in 2026, as major provisions from the Inflation Reduction Act (IRA) expire and states (and countries) increasingly go their own way on policy incentives and even energy prices.


To understand where the economics of decarbonization do and don’t make sense, sustainability leaders will need to test the financials on an asset-by-asset basis.  Differences in operational practices and geographic location go a long way towards determining the ROI of core actions like on-site solar, heat pumps, and electric vehicles. 


Looking at fleet electrification as an example. Take two light-duty trucks — one operating in Nevada, the other in Virginia.  The economics of transitioning to an electric truck can vary by $20K or more (see below), depending on the truck’s location and use profile. With those potential swings in ROI, it becomes even more important to consider each asset directly, rather than painting with a broad brush.


Asset-level analysis powered by Rappel’s CO2-AIM model
Asset-level analysis powered by Rappel’s CO2-AIM model

3. Proactive electricity procurement:


Electricity procurement hasn’t required much thought for most finance and operations leaders, until recently.  Electricity prices were essentially flat for a decade before 2020, but they have since increased faster than inflation (see below). 2025 has represented an inflection point, where the AI infrastructure boom, US policy changes, and large-scale climatic events like the Los Angeles wildfires, have put significant pressure on future electricity availability and cost.  

 


Demand growth is being fueled by structural shifts in the economy. The American Public Power Association notes that data centers, increased electrification, and increases in manufacturing activity continue to spur growth in electricity demand, especially in the supply regions managed by the Electric Reliability Council of Texas (ERCOT) and the PJM regional transmission organizations. 


AI is no longer just increasing energy demand; it’s also shaping it. Deloitte projects that peak power demand could increase 26% by 2035, propelled by the rapid growth of data centers and electrification,[1] making this the most rapid increase we’ve seen in the power sector in three decades. [2]


Additionally, the IRA’s 30% solar investment tax credit (ITC) begins to phase out in 2026, adding potential pressure to the future costs of utility scale renewables and on-site solar. Amidst the rising electricity demand and volatility, companies will have a greater need to proactively manage their supply for affordability, reliability (including energy security at the national or regional level), and emission reductions.


 

4. Managing a fragmented policy and regulatory landscape


The global consensus for the speed and focus of climate action has frayed significantly since 195 countries agreed to the Paris Agreement a decade ago. Each country is responsible for submitting their action plan, and nearly 95% of countries have missed a UN deadline to submit new climate pledges for 2035. [3]Within the U.S., states are increasingly setting divergent paths after the federal government repealed most climate policies this year.


As a result, companies face a patchwork of policies, incentives, and regulations.  These are only set to increase in the year ahead. A global company with more than $1 billion in revenue will be subject to four or five different reporting systems between 2026 and 2028. In California, the company will need to begin reporting mandatory Scope 1–3 emissions in 2026 under SB 253. In Europe, the company will fall under the Corporate Sustainability Reporting Directive (CSRD) if it generates at least €150 million in EU revenue, triggering far more detailed obligations, including double-materiality assessments, category-level Scope 3 reporting, and assured disclosures. At the same time, Australia, the United Kingdom, and Singapore are adopting International Sustainability Standards Board (ISSB)-aligned standards, but each with its own thresholds, phase-in timelines, and interpretations of materiality. The result is a world where the same company may be fully in scope in California, partially in scope in Europe, and on an entirely different schedule in Asia. Beginning in 2026, companies will need to actively manage this fragmentation to maintain global growth and avoid escalating compliance risk.


Regulatory uncertainty further complicates companies’ ability to prepare. In California, SB 261 has been delayed in posting official requirements and has now been appealed to the federal Ninth Circuit Court, throwing reporting timelines into doubt. Meanwhile, in Europe, legislators have postponed reporting timelines for the next wave of companies under the Corporate Sustainability Reporting Directive (CSRD), as well as for the first cohort of companies subject to the Corporate Sustainability Due Diligence Directive (CSDDD), as they work to reduce administrative burdens.  All of these shifting requirements will add to the need for sustainability leaders to be flexible and operate living processes, not just static plans, in the year ahead.

 


Need help navigating how to use decarbonization as a value creation lever in 2026?  


At Rappel, we’re continuing to evolve our solutions to best support our customers as they navigate these trends in the year ahead:


  • Asset-level analysis of operations using our industry-leading CO2-AIM model to identify high-ROI actions that deliver value today and in the future.


  • Modular solutions to best serve companies with diverse starting points and objectives, whether that’s a near-term plan for a few facilities or a corporate-wide SBT net zero target and roadmap.


  • New deep dive pages in our decarbonization dashboards that let companies visualize and manage their energy sources across their full portfolio of locations and assets.


  • Expert guidance on strategic tradeoffs and risk management to navigate the changing, and conflicting, requirements of governments and customers.

 





References:


[1] Austin, Z., Keefe, T. L., Adams, K., & McLemore, N. (2025, October 29). Energy crossroads: Market uncertainty and AI are transforming the industry — Artificial intelligence, resilience, and capital discipline are reshaping the energy landscape in 2026. Deloitte Insights. https://www.deloitte.com/us/en/insights/industry/energy-resources-industrials/us-energy-industry-trends.html

 

[2] U.S. Energy Information Administration. (2025, May 13). After more than a decade of little change, U.S. electricity consumption is rising again. https://www.eia.gov/todayinenergy/detail.php?id=65264

 

[3] Dunne, D. (2025, February 10). Analysis: 95% of countries miss UN deadline to submit 2035 climate pledges. Carbon Brief. https://www.carbonbrief.org/analysis-95-of-countries-miss-un-deadline-to-submit-2035-climate-pledges/

 


 
 
 
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