In a new article, Yair Avidan, Chair of the Advisory Committee of the Arison Center for ESG at Reichman University and former Supervisor of Banks, examines the evolving responsibilities of financial institutions in addressing climate change. Drawing on a recent report by Columbia University's Center on Sustainable Investment, he highlights the distinction between planetary, economic, and financial climate risks. While banks and financial regulators must manage climate-related financial risks, their role should not be confused with that of governments in setting and implementing climate policy. Avidan argues, however, that the financial sector's influence extends beyond risk management. Institutional investors, particularly pension funds with long investment horizons, can shape economic development through capital allocation, corporate engagement, and investment decisions. Addressing material climate risks is therefore not necessarily at odds with fiduciary duty but may be essential to protecting long-term returns. At the same time, he cautions against confusing ESG commitments, reporting, and portfolio alignment with measurable environmental impact. Ultimately, Avidan argues that managing climate risks is necessary but insufficient. The central challenge is leadership: governments must establish clear long-term policies and incentives while enabling regulators, banks, institutional investors, and businesses to work together. Effective climate action requires not only clearly defined institutional responsibilities but also coordination, long-term thinking, and the ability to translate financial decisions into meaningful economic and environmental outcomes. To read the full article, visit our website in Hebrew.

While public discussions about the climate crisis often focus on energy grids, water systems, and national infrastructure, the direct impact on workers is frequently overlooked. During extreme heatwaves, such as the record-breaking heatwave in Israel in recent summers, rising temperatures affect employees on a daily basis, raising critical questions about whether current protective measures are truly effective. A survey conducted by the Arlosoroff Forum and the Macro Center among hundreds of respondents across various economic sectors reveals critical insights. The impact is already felt on the ground, with one in six workers reporting that climate change significantly impacts their daily work environment. Interestingly, managers report feeling this impact at higher rates than non-management staff. Furthermore, heat exposure is not limited to traditional field jobs. While exposure is highest in transportation and industry, sectors like hospitality, food service, and entertainment also report severe climate impact as workers continuously move between air-conditioned indoors and hot outdoor spaces. Overall, nearly two out of every five workers in Israel are exposed to extreme heat for prolonged hours during their workday. Despite these challenges, a significant effectiveness gap remains. Although a majority of heat-exposed workers report that their employers took protective steps such as providing cold water, fans, or shaded areas, less than half believe these measures actually improved their health and safety. The core issue behind this gap is a lack of structured policy, as only a small fraction of employees report having formal workplace guidelines or protocols for extreme heatwaves. To protect workers effectively in upcoming summers, safety cannot depend on individual manager discretion alone. A collaborative round table bringing together employer organizations, regulators, and labor unions is necessary to establish binding, practical heat safety protocols across all industries. To read the full article, visit our website in Hebrew.

From Methodology to Tool The UN Environment Programme’s 2025 Adaptation Gap Report estimates that developing countries will require USD 310–365 billion annually for climate change adaptation by 2035, while international public adaptation finance amounted to only USD 26 billion in 2023. This gap is not only a challenge of mobilizing resources, but also, and perhaps more importantly, of allocating them effectively. When budgets are limited and needs are extensive, determining which adaptation measures justify investment becomes critical. Yet, based on our work in the field, many adaptation investment decisions by local authorities, government agencies, and businesses are still made without systematic economic analysis. Cost-benefit analysis (CBA) provides a framework for comparing alternatives by quantifying and discounting their costs and benefits over time. In Israel, a national methodology for cost-benefit analysis of adaptation measures has been developed under the leadership of the Ministry of Environmental Protection, with the involvement of the Ministry of Finance, the Prime Minister’s Office, and the Bank of Israel. The Economic Rationale for Adaptation The economic logic of adaptation is simple to describe but more complex to implement. Adaptation investments reduce expected climate-related damages, yet their marginal benefits decline as investment increases, and technological and other constraints place limits on adaptation. The objective is therefore to identify the optimal balance between the cost of adaptation measures and the climate damages they prevent. Applying the national methodology to 20 adaptation measures across areas such as urban heat, energy, agriculture, water, wildfires, and infrastructure showed that approximately 75% of the measures examined demonstrated clear economic viability, with benefit-cost ratios above one. Some of these findings were recently published in Ecology & Environment. Health benefits were the dominant component in many of the analyses, accounting for 60% to 85% of total benefits. “No-regret” measures, including nature-based solutions and early warning systems, also generated particularly high returns compared with capital-intensive engineering solutions. At the same time, producing each analysis can take weeks or months and requires specialized expertise, creating a potential gap between the growing demand for such analyses and the capacity to perform them. An AI Tool for Cost-Benefit Analysis Building on this methodology and the experience accumulated across the 20 analyses, we developed a tool based on a large language model (LLM) combined with a curated academic knowledge base. Importantly, the tool does not simply submit an open-ended question to a language model and return an answer. It uses a Retrieval-Augmented Generation (RAG) architecture and vector search to identify relevant information based on semantic similarity within a closed database of peer-reviewed articles and official reports. The tool identifies relevant adaptation measures, extracts quantitative parameters from the literature, highlights missing local data, and allows users to refine the assumptions underlying the analysis. It then produces a dynamic Excel model containing separate sheets for costs, benefits, assumptions, and sensitivity analyses, alongside calculations such as Net Present Value (NPV) and the Benefit-Cost Ratio (BCR). In a demonstration focused on urban heat in Tel Aviv, both street-tree planting and roof-related measures were found to be economically viable, while tree planting generated substantially higher benefits due to a broader range of co-benefits, including avoided heat-related mortality, energy savings, carbon sequestration, improved air quality, reduced stormwater runoff, and higher property values. The ESG Connection Although the tool was initially developed with governments and local authorities in mind, its relevance to the private sector and to ESG is direct. Emerging climate disclosure frameworks, including IFRS S2, require companies to identify physical climate risks, assess their financial implications, and describe how they are responding to them. Infrastructure, real estate, energy, insurance, and financial institutions therefore face many of the same questions as public authorities: which climate-resilience investments are economically justified, at what scale, and in what order of priority. A key distinction is that adaptation measures often generate both private benefits, such as energy savings or higher asset values, and public benefits, such as avoided mortality, improved air quality, and reduced urban runoff. A transparent analysis that separates these two types of benefits can help policymakers design incentives that mobilize private investment toward projects with proven social value. The tool is not intended to replace professional judgment or human review, but to significantly reduce the time and cost required to produce an initial, evidence-based analysis. In a world where the adaptation gap continues to widen, making the economics of adaptation more accessible can itself become an adaptation tool. Gur Angel and Dan Brodsky, economists and members of the team that developed Israel’s national methodology for cost-benefit analysis of climate change adaptation.

Over the past two decades, ESG reporting has become an integral part of how companies and banks communicate with investors and the public, and the volume of disclosure grows every year. But is all this information actually read? And can readers distinguish genuine commitment from wording that paints a rosier picture than reality? Embellishing reality rarely involves false information. Most companies are neither "entirely green" nor "entirely polluting", and a chairman's letter may declare a commitment to reducing emissions while also noting caveats that point to continued emission-intensive activity. All the information is there, but the way it is presented may shape how readers interpret it. We call this "potential embellishment": not necessarily deliberate deception, but complex wording that reasonable readers may understand differently. The issue is drawing growing regulatory attention: according to the European Banking Authority, alleged greenwashing cases in the EU financial sector rose from about 40 in 2018 to about 206 in 2022. We therefore asked whether financial experts, such as analysts, risk managers and credit officers, detect ambiguity and potential embellishment when reading a letter to shareholders, and whether detection is related to their investment recommendations. Unlike greenwashing in its common sense, the question here is not deception but whether readers connect the pieces. In our experiment, for example, the bank declared progress toward net zero by 2050, and in the same paragraph stated that the target would not be achieved by ending financing to energy companies. How Did We Examine the Question? Rather than looking at market reactions or computerized text analysis, we focused on the moment of reading itself, measuring readers' attention through eye-tracking. In a pre-registered field experiment, 128 financial experts read a simulated bank chairman's letter presented across three screens. Participants were randomly assigned to two groups that differed only in the opening screen, which emphasized either the bank's sustainability (ESG) goals or its digital innovation goals. The next screens, identical for all, presented neutral financial data and then ambiguous paragraphs that hedged the positive messages in both areas. Digital innovation served as a comparison: like sustainability, it relies on forward-looking goals that are hard to verify, but it carries less moral and regulatory weight. Participants then rated how much the bank embellished reality and gave an investment recommendation. What Did We Find? Attention is associated with detection in the ESG context: The more attention experts paid to ambiguity in the text, the more embellishment they detected, but only in the group that read the sustainability opening. The association held after accounting for participants' prior knowledge and attitudes, suggesting that critical-reading training may help. What happens when readers detect embellishment: Participants who detected more embellishment tended to give the bank a lower investment recommendation. There were also preliminary signs that a sustainability-focused opening softened this decline, a possible "halo effect" of the green label, although this finding ran contrary to our prediction, is not statistically robust and requires further testing. Those less exposed to ESG discourse detected more: Surprisingly, participants less familiar with regulatory and media discourse on ESG detected more embellishment. One possible explanation, formulated after the results, is that prolonged exposure normalizes certain phrasings and raises the threshold at which a gap in the text sets off a red flag. What Can We Learn? The main challenge may not be a lack of information, but the limits of readers' attention. Transparency is not only about what is disclosed, but about how it is organized and highlighted. Yet the responsibility does not lie with report writers alone: financial experts should read reports systematically, look for hedging paragraphs and forward-looking statements without quantitative targets or timelines, and compare the positive opening with the caveats that follow. Familiarity with ESG is no substitute for critical reading. The Broader Context The study is part of the author's doctoral research, which examines attention to financial reporting from several angles, from how experts read reports to how banks phrase them over time. The studies are currently under peer review. Lilah Shema Zlatokrilov is a doctoral candidate at the Hebrew University Business School, supervised by Prof. Dan Galai and Prof. Zvi Wiener, and a research economist at the Bank of Israel Research Department. The study was conducted with Dr. Abigail Hurwitz (Hebrew University) and Dr. Sven Nolte (Radboud University). Hurwitz, Abigail and Nolte, Sven and Shema Zlatokrilov, Lilah, Spotting "Washing": Can Financial Experts Detect the "Say-Do Gap" in Banking Reports? (December 31, 2025). Available at SSRN: https://ssrn.com/abstract=6725405 The views expressed are those of the authors and do not necessarily reflect those of the Bank of Israel. To read the full post, visit our blog in Hebrew.

Bringing climate technologies from the lab to commercial scale is not a sprint, nor even a marathon. It is a relay race that depends on coordination between many different players. The rapid growth of solar energy demonstrates what can happen once technology successfully crosses the gap between early development and large-scale deployment. Yet for many emerging climate technologies, reaching the first commercial-scale facility, or FOAK (First of a Kind), remains one of the most difficult stages of development. Companies must overcome not only significant financing gaps, but also challenges involving supply chains, organizational capabilities, regulation, insurance, market fit, and industrial partnerships. Many of these barriers can be reduced through earlier engagement with the partners that will eventually be needed for commercialization. The experiences of companies such as UBQ and LanzaTech show the value of involving industrial partners and regulators well before their participation becomes an immediate necessity. Early collaboration can help companies design better pilots, collect the right data, anticipate regulatory requirements, strengthen supply chains, and reduce costly changes later in the process. Successfully scaling climate innovation therefore requires more than a technology that works. Technology companies, investors, industrial partners, insurers, regulators, suppliers, and customers must prepare for the next stage together. The earlier these actors begin coordinating, the greater the chances that promising climate technologies will make the journey from the laboratory to their first commercial facility, and ultimately to widespread deployment. To read the full article, visit our website in Hebrew.

In August 2026, severe data emerged from Europe revealing tens of thousands of heat-related deaths due to extreme summer heatwaves. This reality is not unique to Europe; in Israel, forecasts predict an average temperature rise of 3.5 degrees Celsius by the end of the century, turning climate change from a distant scenario into a present danger. This article highlights how the climate crisis (the 'E' in ESG) directly harms workers (the 'S'), and why proactive management and governance (the 'G') are no longer optional. Scientific evidence shows a clear, linear connection between heat stress and work accidents. On days with extreme heat, the risk of a workplace accident jumps by 23%, and this heightened danger lingers for days even after the heatwave ends. This risk heavily impacts outdoor workers in construction and agriculture, as well as industrial workers in factories without climate control. Furthermore, the burden disproportionately falls on vulnerable populations, including low-wage earners and foreign workers, while corporate boards often maintain a "blind spot" regarding these direct health risks to their employees. However, the regulatory landscape is shifting. A new draft regulation in Israel outlines concrete requirements for managing work during heatwaves, including mandatory safety plans, designated rest areas, and strict reporting protocols. For organizations, adapting to these guidelines early is not just a regulatory burden, but a strategic opportunity for corporate leadership that ultimately saves money, reduces legal risk, and protects human lives. To read the full article, visit our website in Hebrew.

In a labor market grappling with a talent shortage and a growing need for diverse modes of thinking, creativity, and problem-solving, businesses can no longer afford to overlook a population of significant professional potential: neurodiverse individuals. Yet this population struggles to enter the workforce. Integrating neurodiverse employees is not merely a social or ethical question, but a genuine test of corporate responsibility and of sound human-capital management — at both the organizational and national levels. What Is Neurodiversity — and Why Does It Matter to Organizations? Neurodiversity describes the natural variation in how people think, learn, process information, express themselves, and interact with their surroundings. It is not a marginal phenomenon: it includes people on the autism spectrum, people with ADHD, and others with distinctive neurological profiles. Because neurological difference is often invisible — unlike a physical disability, which is recognized immediately and almost intuitively prompts accommodation — the difficulties and needs it entails may go unrecognized, or even be misread. Yet alongside traits that certain medical models define as disorders, it also brings distinctive strengths: attention to detail and to change, pattern recognition, systematic thinking, and the capacity to process information at scale. The term "difference" is not entirely neutral; it reflects the perspective of the majority, whose characteristics shape social norms, education systems, and the workplace. It is precisely at the meeting point between neurotypical and neurodiverse minds that significant advantages can emerge, as different ways of thinking complement one another. Difference as Both Challenge and Strength A striking illustration is the story of Temple Grandin — an autistic scientist and academic who was among the first to describe the experience of living with autism from the inside. Her insights made an important contribution to understanding neurological difference, and to seeing how thinking differently can become a source of breakthrough professional insight. Her achievements show that traits sometimes perceived as a source of difficulty may, in the right environment, become a source of knowledge, innovation, and unique professional contribution. And yet many neurodiverse individuals struggle to find work — not for lack of professional ability, but because of a gap between the characteristics of the work environment and their ways of thinking, communicating, and functioning. The figures are stark: in Western countries, employment among people without disabilities runs at roughly 70–80%, while among people on the autism spectrum it stands at only about 30% — a figure that captures the depth of the gap between potential and its realization. When the Barrier Is the Organization: Recruitment, Environment, and Accommodations For people with high-functioning autism (hfASD), one of the central barriers is conventional recruitment and screening. Screening processes and job interviews rely heavily on communication and social skills — eye contact, fluent conversation, and self-presentation that matches unwritten expectations. Sensory overload in an unfamiliar setting may impair concentration during the interview; difficulty with eye contact may be mistaken for a lack of confidence or interest; directness, precision, or a focus on detail may be read as rigidity or a failure to grasp the social context. The workplace itself offers no guarantee of an untroubled routine: open, noisy environments, alongside intensive verbal communication and informal social expectations, can pose significant challenges, particularly for people with hfASD. None of these characteristics necessarily bears on the ability to perform the role, yet they can overshadow an employee's professional competence, affect how they are evaluated, and thereby become a barrier to entry. The challenge, then, is not the candidate's or the employee's alone, but the organization's — and the way it defines, examines, and evaluates fit and performance over time. For organizations, this is not only a social or ethical question but a business one: how can they identify, integrate, and realize unique human potential that currently goes untapped? Successful integration does not happen on its own; it requires awareness and understanding of neurodiversity, together with a willingness on the part of organizations and employers to make the necessary accommodations. This is not about lowering the requirements of the role or favoring particular candidates, but about adapting recruitment processes, the work environment, and management practices so that employees can express their professional abilities and realize the potential within them. A notable example is Israel's "Roim Rachok" program, which works to place young people on the autism spectrum in technological and intelligence roles during their military service. By matching role requirements to participants' strengths, the program shows that adapting recruitment and the work environment can not only overcome barriers but also unlock professional potential of a high order. Between Legal Rights and Actual Implementation Israel has recognized the right of people with disabilities to equal participation in the labor market. The law prohibits discrimination in hiring, in working conditions, in promotion, and in dismissal, and requires employers to make the accommodations needed for the integration of employees with disabilities. It also seeks to promote adequate representation of people with disabilities, through representation requirements and the appointment of an officer responsible for advancing their employment. But although the legal framework in Israel is relatively broad, implementation is not always simple. The law provides that a failure to accommodate may amount to discrimination, yet it also recognizes that an employer cannot be required to make every possible accommodation. The duty to accommodate does not apply where it would impose an "unreasonable burden in the circumstances" — a concept that is not clear-cut, varying with the size of the organization, the cost of the accommodation, and the resources required. In many cases, whether a given accommodation is reasonable depends on how well the organization knows its employees' needs and on its willingness to adapt the work environment. Where neurological difference is insufficiently familiar to employers, significant gaps can open between the legislature's intent and practice — and so the integration of neurodiverse people in the Israeli labor market remains relatively limited. Israel's "Equal Employment" program is an important step in the right direction, but it cannot on its own close the gaps described here, and it deserves to be expanded. Examples from Around the World Accumulated experience shows that legislation alone is not enough, and that successful integration also depends on active organizational policy. In the United States, alongside the legal prohibition on discrimination, a practical approach has emerged that treats the integration of neurodiverse employees as a competitive advantage; organizations, chiefly in technology, finance, and data analysis, are developing dedicated programs of adapted recruitment, training, and support, out of a recognition of these employees' distinctive contribution. In the European Union, the Employment Equality Directive (2000) prohibits discrimination on the basis of disability and requires employers to make reasonable accommodations, while leaving their scope to employers' discretion; recognizing the gap between legislation and implementation, the EU has developed complementary policy. Ireland illustrates that even a comprehensive legal framework and government support are insufficient to close the employment gaps of people on the autism spectrum without broader organizational and cultural change. In Germany, employers who fail to meet the statutory employment quota pay a compensatory levy that — together with public funds — finances workplace accommodations, support services, and integration programs, creating a combined mechanism of obligation, incentive, and support. A complementary model is offered by Specialisterne, an international organization that mediates between employers and neurodiverse workers, on the premise that responsibility for integration rests with the employer as well. From Legal Recognition to Policy That Encourages Inclusion In Israel today, people with disabilities must often turn to the labor courts to contest employment discrimination — a complex, lengthy, and costly path that also requires proving discrimination, no simple task. Placing the responsibility on the injured individual alone is not enough; a broader public policy is needed, one that seeks to create structural change in the labor market. International experience suggests that meaningful integration of all segments of the population also rests on economic incentives, professional support, and conditions that encourage it. Among the measures worth considering are tax benefits for inclusive employers, grants and public recognition for companies that promote diverse hiring, and sustained professional support for employee and employer alike, alongside broadening awareness of neurodiversity and training managers in inclusion. A shift from a policy centered mainly on legal enforcement toward one that encourages employers' active participation — through economic incentives and a cost attached to persistent non-inclusion — could enable broader, more stable, and more effective integration of neurodiverse people, and others, in the labor market. Inclusion as a Measure of Corporate Responsibility In recent years, investors and stakeholders have paid growing attention to ESG and to the welfare of employees and consumers. They assess not only companies' financial performance but the way they act within the society in which they operate: whether they help narrow gaps, act fairly, and create accessible, inclusive environments. Accordingly, inclusive employment policy is becoming a central element in evaluating an organization's corporate responsibility. Openness to employing people from diverse groups, among them neurodiverse individuals, is seen as part of responsible human-capital management. Contending with discrimination claims, in Israel or abroad, can entail legal costs, management time, and financial and reputational exposure. Early investment in accommodations, in manager training, and in building an inclusive work environment can reduce these risks and contribute to a positive organizational culture. Inclusive policy is part of responsible human-capital management and of putting ESG into practice. I write in this article as a call to action. The integration of neurodiverse individuals is, to my mind, an important dimension of ESG strategy; to that end, we must broaden knowledge and awareness of neurodiversity, invest in the necessary accommodations, train managers and teams, and build adapted recruitment and employment processes. Organizations that learn to identify the strengths of neurodiversity and harness them will enrich their ways of thinking and creating, widen the circle of opportunity, and gain a real business advantage. A world that is aware of neurodiversity and inclusive of it is a richer, more just, and more successful world. Dr. Jochewed H. Schwarz is a musician, attorney, and mediator. In recent years she has worked to advance the integration of neurodiverse individuals into the labor market, with a focus on high-functioning autism, and on the relationship between employment and the labor market, organizational inclusion, and corporate responsibility. לקריאת המאמר בגרסה המלאה, בקרו באתר הבלוג בשפה העברית.

Women in the Patent System: The Gap Behind Israeli Innovation Israel is rightly known as the “Startup Nation,” yet its technological success is not shared equally. Women remain underrepresented among inventors and patent holders, despite their growing presence in science, technology, and entrepreneurship. Previous research has shown that intellectual property registration systems are not merely technical mechanisms: they may function as gatekeepers, shaping who is able to transform knowledge and inventions into legal and economic assets. Against this background, the current survey examines not only who holds patents, but also how Israeli startups make decisions about patenting, the barriers they encounter, and whether women and men experience the patent system and the funding environment differently. The Study in Brief: Who Participated and What the Full Sample Revealed The survey was conducted in Hebrew between January and March 2025 among founders, CEOs, and CTOs of Israeli startups. The findings indicate that the composition of a company’s technical workforce was the strongest predictor of patent ownership: the higher the proportion of engineers and scientists, the more likely the company was to hold patents. Industry also mattered, with patent ownership substantially more common in health sciences, hardware, and robotics than in software. Annual revenue, by contrast, did not predict patent ownership. These findings suggest that the use of patents depends not only on a company’s financial resources, but also on the nature of its technology, the organization of knowledge, and its intellectual property strategy. Cost barriers were also widespread, including not only filing fees, but also drafting, legal advice, international filings, renewal fees, and especially enforcement costs. Reducing filing fees alone, therefore, is unlikely to address the broader challenges posed by a patent system that can be costly, complex, and unpredictable. The Gender Finding: Similarities in Innovation, a Gap in Translating Engagement into Funding The most important gender-related finding concerns what the survey did not find: women and men did not differ significantly in patent ownership, innovation strategy, exit strategy preferences, or reported barriers to patenting. The findings therefore do not support the view that women entrepreneurs are less innovative, less interested in intellectual property, or inherently less likely to use patents. A notable difference did emerge, however, at the funding stage. Women reported greater engagement with institutional funding sources, including venture capital funds, corporate investors, and banks, during negotiations, yet this engagement did not translate into higher rates of securing funding. The data therefore point not to less initiative on the part of women, but to a possible gap between entering the funding process and succeeding in it. This shifts the focus from the question, “Do women ask?” to the more significant question, “What happens after they do?” Policy Recommendations If women in the sample are neither less innovative nor less inclined to pursue patents, yet their engagement with funding does not translate into comparable outcomes, policies aimed at promoting women’s entrepreneurship should not focus solely on “fixing” the entrepreneur. Instead, attention should be directed toward the institutional transition points that determine who reaches investors, how ventures are evaluated, who receives professional guidance on intellectual property, and who can bear the costs of patent registration and enforcement. More broadly, the survey delivers a dual message. First, patents are strategic tools whose use depends on technology, industry, and organizational structure far more than on revenue alone. Second, the gender findings challenge the simple narrative that women patent less because they are less innovative or less interested in protecting their inventions. The data instead direct attention to the institutions that translate innovation into rights, capital, and growth. If Israel seeks to realize its full innovative potential, the question is not only how many patents are registered, but also who is able to access them, finance them, and derive value from them. Professor Miriam Marcowitz-Bitton, Full Professor and holder of the Raoul Wallenberg Chair in Human Rights, Faculty of Law, Bar-Ilan University.

Sometimes academic research touches a nerve no one knew was exposed. That is what happened to a study I recently published with Dr. Ori Sharon of Bar-Ilan University in Scientific Reports. Within a month of publication it had been covered in more than fifteen languages and in outlets including Vogue UK, Vogue Germany, the Associated Press, the Los Angeles Times, Yale News, Slate and Grist, and had set off heated debate on social media. The attention was gratifying, but the more interesting question, to my mind, was why the findings provoked such a strong reaction. Probably because they unsettle an assumption most of us have come to take for granted: that if we buy second-hand, we are consuming more sustainably. From a Polluting Industry to a Circular Economy Fashion carries a heavy environmental price. The industry accounts for an estimated 8–12% of global greenhouse gas emissions, consumes vast quantities of water, and its dyeing and finishing processes are a significant source of water pollution. Added to this is a sharp rise in production and consumption that multiplies those effects: global garment production has nearly doubled over the past two decades, and clothing consumption has risen by an estimated 400%. The problem, of course, is not only how much we produce, but how quickly we stop using what we buy. Against this backdrop, the second-hand market came to look like the perfect sustainability story. The logic is simple and persuasive: pass a garment on instead of discarding it and you extend its life; buy something that already exists and you reduce the need to produce something new. Gradually, buying second-hand stopped being merely a cheaper alternative and became a choice with moral weight — a way for consumers to be part of the environmental solution through their wallets. And then something strange happened. As the second-hand market grew, the market for new clothing did not shrink. In fact, both continued to grow in parallel. Even fast and ultra-fast fashion companies such as H&M and SHEIN began folding resale platforms and take-back programs into their sustainability strategies. At the same time, criticism of a different kind began to be heard: in African countries receiving enormous volumes of used clothing from the Global North, leaders, researchers and activists pointed out that the flow is not necessarily an environmental solution, and may shift a significant share of the burden of wealthy countries' excess consumption onto poorer ones. Within the second-hand market itself, something else was shifting. What had once been associated with reuse had become, in many cases, simply another place to shop: digital, cheap, trend-driven and above all fast. That contradiction led us to a fairly simple question: does buying second-hand actually reduce the purchase of new clothing, or have we merely created a new form of overconsumption? What Is in the American Consumer's Closet? To answer it, we ran a national survey of 1,009 consumers across all fifty US states, asking not only what they think about sustainability but how many clothes they buy, how often, how much they spend, where they shop, how long they keep their garments, and when and why they part with them. The central finding was sharp. More second-hand was not associated with reduced consumption, but with precisely the opposite. We found a strong positive relationship between second-hand clothing consumption and the purchase of new clothing: people who bought more used garments also tended to buy more new ones. For many consumers, the second-hand market does not replace the market for new clothing but joins it, as an additional purchasing category. The rate of turnover in the closet was troubling as well. The analysis identified two distinct consumer groups. The larger — 59% of respondents — consumed heavily in both markets, bought more frequently, and kept garments for shorter periods. Within this group, 37.9% disposed of clothing less than a year after buying it, and 14.2% did so within a single month. Members of the second group, characterized by lower consumption levels and higher spending per item, tended to keep their clothes longer. Across the sample as a whole, roughly a quarter of respondents reported discarding clothing that was still in good condition, and 19% said explicitly that they had done so to make room for something new. The desire for novelty, in other words, outweighed the desire to keep using what was already there. And there was one further finding, perhaps the most troubling of all: environmental knowledge did not necessarily lead to more environmentally sound behavior. Participants who knew more about the environmental consequences of the fashion industry did not necessarily consume less. In fact, we found a small but statistically significant negative relationship between sustainability knowledge and some sustainable behaviors. The Rebound Effect: When the Solution Lets Us Consume More How can this paradox be explained? One concept that helps is the rebound effect: a situation in which an improvement meant to reduce the environmental impact of an activity produces a behavioral change that offsets part of the saving, and sometimes cancels it entirely. If I perceive second-hand shopping as cheaper and greener, I may buy more items than I would have if every purchase were new, or more expensive. The impact per item may be smaller, but the total quantity grows. To this we can add a psychological mechanism known as moral licensing. When we do something we perceive as "good," it can grant us a kind of moral credit that makes it easier to justify less sustainable behavior later. Having shopped "green" at a second-hand store, it becomes easier to tell ourselves that one more shirt does no real harm. Our study does not prove that moral licensing caused the behavior we observed, but the consumption patterns we found are consistent with it, and with the rebound effect. The combination matters especially in fashion. Unlike goods we replace only when they break, clothing is bound up with identity, novelty, trends and pleasure. When the second-hand market offers near-infinite stock, low prices, the thrill of a find and an environmental promise all at once, it may remove some of the constraints that ordinarily moderate consumption. So Should We Stop Buying Second-Hand? Not at all. Second-hand can extend the life of garments, reduce waste and offer a genuine alternative to buying new. The problem begins when we assume that moving to a secondary market makes consumption sustainable in itself, without asking whether it actually reduces the number of new clothes we buy, and the overall rate of turnover. From the consumer's point of view, this means that more "sustainable" shopping cannot be measured only by which product we buy, or in which market it is sold. It matters just as much how much we consume, how long we use what we buy, and above all whether a second-hand purchase genuinely replaces a new one, or simply adds to it. For companies and policymakers, the conclusion is somewhat different. From an ESG perspective, the mere existence of a resale market, or the adoption of a circular model, does not make a business sustainable. Companies need to examine the consumption patterns their business models actually produce and encourage. Resale platforms are not necessarily sustainable by virtue of being circular: if they adopt the same mechanisms as fast fashion — relentless promotions, a sense of urgency, impulse buying and rapid turnover — they may reproduce precisely the patterns the circular economy was meant to change. For regulators, the findings point to the need for policy that does not focus solely on managing waste once it has been created, but also on durability, reuse, extending garment life, and reducing the incentives for overconsumption. Ultimately, our study is not an argument against second-hand. It is an argument against magic solutions. The circular economy can be an important part of the transition to a more sustainable fashion industry. But if circularity only allows us to buy more, replace faster and feel better while doing it, it misses the point. Even in an era of resale, digital platforms and the circular economy, one fairly simple truth remains: the most sustainable garment is still the one already hanging in our closet. Dr. Meital Peleg Mizrachi is a research fellow and lecturer at Stanford Law School, and a former postdoctoral fellow in the Department of Economics at Yale University. לקריאת המאמר המלא, מוזמנים לבקר באתר שלנו בעברית.

On July 1, 2026, the Arison Center for ESG at Reichman University hosted a panel at the Herzliya Conference examining the role of Israel’s business sector in safeguarding democratic resilience. The panel was moderated by Prof. Nir Hashai, Chair of the Arison Center for ESG and Dean of the Arison School of Business, with the participation of Chemi Peres, Co-Founder of Pitango Venture Capital and Chairman of the Peres Center for Peace and Innovation, and Sami Peretz, a journalist at TheMarker and Haaretz. The discussion focused on whether corporate involvement in public and democratic issues, such as the judicial reform, falls outside the traditional role of business or should instead be understood as part of corporate responsibility. While companies are primarily expected to create economic value, employ workers, provide goods and services, and generate returns for shareholders, their ability to do so depends on functioning institutions, the rule of law, regulatory certainty, public trust, and an independent judicial system. Democracy as Economic Infrastructure A central theme of the panel was that democracy is not only a social or moral value but also an important economic foundation. Comparative data from the World Justice Project and other studies indicate an association between effective checks on government power, lower levels of perceived corruption, and higher standards of living. Strong institutions allow companies to assess risks, attract capital and investors, and plan for the long term. The panel nevertheless highlighted the limits of corporate political power. During the judicial reform period, parts of the business sector considered stronger forms of protest, but many companies remained dependent on government regulation, licensing, tenders, and ongoing relationships with public authorities. Companies must also take into account that their employees may hold very different political views, making the use of corporate power for political purposes particularly complicated. The Israeli High-Tech Paradox The discussion emphasized the growing influence of major corporations and the broader responsibilities that may accompany that influence. This is particularly relevant to Israel’s high-tech sector, which contributes substantially to exports, GDP, and tax revenues. Paradoxically, high-tech companies, which are among the most internationally mobile businesses and can more easily relocate capital or operations abroad, were also among the most publicly involved in opposition to the judicial reform. More locally dependent industries often acted more cautiously because of their reliance on Israeli regulators and government institutions. This difference does not necessarily reflect different levels of commitment to democracy. Rather, it illustrates different economic incentives and dependencies. International companies face expectations from global investors, employees, and customers, while domestic companies may be more concerned about the consequences of confronting political decision-makers or regulators. What Can the Business Sector Actually Do? The panel also considered the practical tools available to the business sector in times of democratic crisis. Although Israeli businesses control significant financial resources and support major social initiatives, their ability to directly block government policy remains limited. More extreme measures, such as economic shutdowns, withholding taxes, or moving capital abroad, raise significant legal and ethical concerns. The discussion therefore highlighted a fundamental tension: efforts to defend democracy risk losing legitimacy if they themselves violate the rule of law, while relying exclusively on existing institutional mechanisms may become increasingly difficult when those institutions are themselves under pressure. From Corporate Governance to Democratic Resilience The panel’s conclusions also broadened the meaning of the “G” in ESG. Corporate governance is usually understood as relating to internal corporate structures,boards of directors, shareholder meetings, compliance, oversight, and executive responsibility. Yet companies cannot maintain sound governance over time within an unstable institutional environment. Judicial independence, an effective public service, anti-corruption mechanisms, freedom of the press, and the ability of citizens and civil society organizations to scrutinize government all influence corporate risk management. Democratic resilience should therefore be viewed not as separate from ESG, but as part of the institutional environment on which sustainable business activity depends. The conclusion was not that corporations should become political organizations or replace elected officials. Rather, businesses should recognize their dependence on strong democratic institutions and consider how their decisions and public engagement may affect the conditions that allow them, and the broader economy, to operate, invest, and grow over the long term. To read the full article, visit our website in Hebrew.

Until a few years ago, an ESG questionnaire from an international client was perceived by quite a few Israeli companies as just another bureaucratic hurdle on the way to a deal. Today, it has become a strict gateway - and in too many cases, the very reason Israeli businesses are being left out of global markets. Why Supply Chains Became the Ultimate ESG Battleground Global corporations are rapidly integrating environmental, social, and corporate governance (ESG) criteria into their procurement and supplier selection processes. Driven by evolving global regulations and corporate risk management, international clients can no longer meet their sustainability targets without tracking their suppliers' data. This shift is moving away from basic "tick-the-box" reporting toward rigid, data-driven performance assessments (such as EcoVadis ratings). Recent data from the 2026 EcoVadis Sustainable Procurement Barometer reveals that 98% of surveyed global companies have already integrated ESG metrics into their procurement processes. The Domino Effect of Global Regulation Even if an Israeli company isn't directly bound by international sustainability regulations, its global clients certainly are. Since a massive portion of a company's environmental and social footprint lies within its supply chain (Scope 3 emissions, human rights policies, and labor standards), global giants are rolling these strict demands down to their suppliers. From tech startups to traditional manufacturers, no sector is immune to this pressure. Reactive vs. Proactive Management Waiting for the next urgent tender or client questionnaire puts companies at a severe competitive disadvantage, forcing expensive, last-minute compliance rushes. Conversely, forward-thinking businesses that proactively manage their ESG data, track carbon footprints, and establish clear corporate governance can turn compliance into a powerful competitive edge, securing their position in the global market. The question is no longer if these demands will reach your doorstep, but whether you will meet them with a clear strategy or only after the opportunity has already slipped away to your competitors. To read the full article, visit our website in Hebrew.

White-collar crime is often associated with senior employees who hold access to information, resources, and decision-making power. While these tools are essential for legitimate business activity, they can also create opportunities for misuse. The harm caused by economic crime extends far beyond direct financial loss: it can undermine fair competition, weaken public trust, and damage the social and economic systems on which markets rely. Criminal law plays an important role in responding to such misconduct, but punishment alone has clear limits. White-collar offenses are often concealed, complex, and difficult to detect. Their perpetrators may underestimate the likelihood of being caught or believe they can avoid scrutiny altogether. Moreover, misconduct does not always result from a single immoral choice. It can emerge from an organizational environment that rewards financial success at any cost, normalizes small deviations from rules, or fails to challenge unethical conduct. The “fraud triangle” offers a useful way to understand these dynamics. According to this model, misconduct is more likely when three elements come together: opportunity, pressure, and rationalization. Opportunity may arise from weak oversight or concentrated power; pressure may result from financial targets or competitive workplace culture; and rationalization allows individuals to justify improper conduct as necessary, harmless, or simply part of doing business. This is where ESG can become more than a reporting framework. When implemented authentically, ESG can serve as an internal preventive mechanism that addresses these conditions before misconduct occurs. The governance component of ESG is particularly significant. Independent boards, active audit committees, clear separation of responsibilities, and effective internal controls can reduce the opportunity for managers to act without scrutiny. Protected whistleblowing channels are also essential: they enable employees to report irregularities and increase the perceived likelihood that wrongdoing will be exposed. In organizations where authority is concentrated, such mechanisms help counter the classic agency problem—the gap between the interests of managers and those of the company and its stakeholders. Yet formal oversight alone is not enough. Organizations also need an ethical culture that makes misconduct harder to justify. A code of ethics should not be a document stored in a drawer or used only after a crisis. It should be reflected in everyday decision-making, leadership behavior, employee training, and the way violations are handled. When senior management consistently demonstrates integrity, employees are less likely to see unethical conduct as normal, unavoidable, or acceptable. This distinction is crucial because ethics and criminal law operate differently. Criminal law establishes a minimum threshold: conduct below it may lead to enforcement. Ethics sets a higher standard. By encouraging employees and managers to act according to broader ethical principles, organizations create meaningful distance between ordinary business decisions and criminal wrongdoing. The third dimension concerns incentives. Many companies reward senior managers primarily for financial performance, such as growth, profitability, or market share. These incentives can unintentionally create pressure to take excessive risks or manipulate information. Linking part of executive compensation to compliance, integrity, and ethical performance can help reshape this structure. It makes misconduct costly not only because of the possible future risk of prosecution, but also because it may lead to the immediate loss of tangible rewards. The effectiveness of ESG ultimately depends on its authenticity. A company cannot credibly present itself as responsible or sustainable while its governance systems are weak, its ethical standards are ignored, or its internal culture tolerates misconduct. ESG should not serve as a public-relations exercise or a formal checklist. It should be integrated into risk management, internal oversight, employee evaluation, and organizational decision-making. Criminal enforcement remains necessary when wrongdoing occurs. However, ESG can complement enforcement by acting earlier and from within. By reducing opportunities for misconduct, challenging rationalizations, and aligning incentives with ethical behavior, ESG can help organizations build the internal resilience needed to protect not only their own interests, but also public trust and the broader economy. לקריאת המאמר המלא בקרו באתר שלנו בעברית.