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Employee mobility policies are an often overlooked yet highly influential aspect of corporate environmental and social impact. Workplace transportation policies, whether explicit or implicit, shape how employees commute by influencing factors such as parking availability, company car benefits, commuting reimbursements, flexible working hours, and workplace location. These policies significantly affect travel behavior, including the number of trips employees make, the timing of travel, and the transportation modes they choose. Despite their importance, current ESG reporting frameworks provide only limited attention to employee transportation. Major reporting standards such as the GHG Protocol , GRI , and the EU Corporate Sustainability Reporting Directive (CSRD)  treat commuting and many business trips as indirect emissions under Scope 3 , which receives far less rigorous reporting requirements than direct organizational emissions (Scopes 1 and 2). This approach creates several distortions: companies may underreport commuting emissions, responsibility for business travel may depend arbitrarily on vehicle ownership, and the substantial influence employers have over commuting behavior, through policies such as free parking, is largely ignored. Moreover, environmental reporting frameworks focus primarily on greenhouse gas emissions while overlooking other negative externalities associated with car-dependent mobility, including congestion, noise pollution, land use impacts, and road accidents. From a social perspective, ESG frameworks similarly fail to address the broader role employers play in shaping equitable access to employment. Current reporting requirements focus mainly on workplace transportation injuries, without considering how employer mobility policies affect the accessibility of jobs for individuals without access to private vehicles or for disadvantaged populations. This omission is particularly striking given that ESG frameworks, including the European Sustainability Reporting Standards (ESRS) , emphasize equal opportunity, diversity, and inclusion. The article argues that ESG reporting frameworks should expand their treatment of employee transportation. Companies should be encouraged to take greater responsibility for the mobility patterns they help create by promoting walking, cycling, and public transportation while reducing reliance on private cars. More comprehensive reporting requirements could also encourage companies to cooperate with public policy efforts, such as congestion pricing—and to actively work with local authorities and stakeholders to reduce the environmental and social externalities associated with employee commuting. Strengthening corporate responsibility for employee transportation would allow ESG reporting frameworks to better capture a significant source of environmental and social impact and could serve as a meaningful tool for advancing more sustainable and equitable mobility systems. To read the full article, visit our website in Hebrew.

In recent decades, the business world has shifted from voluntary CSR to a complex system of ESG (Environmental, Social, and Governance) metrics. While agencies like MSCI and S&P provide scores reflecting corporate performance, skepticism remains: is a high ESG score evidence of reliable reporting , or merely a "smoke screen" to distract from poor business results? In two new articles published in Finance Research Letters , Prof. Dov Solomon and his colleagues ( Dr. Rimona Palas , Dr. Ido Baum , and Dr. Dalit Gafni ) examined this tension. Based on a wide sample of U.S. companies, the research refutes the fear that ESG masks financial failures, proving instead that high ESG performance is a clear indicator of superior financial reporting quality. The Link Between ESG Ratings and Financial Reporting Quality In the study ESG Regulation and Financial Reporting Quality: Friends or Foes? , we analyzed 3,907 U.S. companies (2012–2022). Using metrics such as Earnings Persistence, Cash Flow Predictability, and Restatements, the findings were unequivocal: Positive Correlation: High ESG ratings are directly linked to more reliable and predictable financial data, not at the expense of reporting quality. Lower Risk: Companies with strong ESG performance show a lower frequency of financial restatements. The BRT Effect: Following the 2019 Business Roundtable statement - shifting focus from "Shareholder Primacy" to "Stakeholders" - this positive link to transparency has only strengthened. The Impact of the Social (S) Component on Reporting Quality In the study ESG Ratings and Financial Reporting Quality: Why Social Performance Matters , we deconstructed ESG into its three components to test their individual impact: The "Social" Factor: While many assume Governance (G) is the primary driver, the research reveals that the Social (S) component actually has the strongest link to reporting quality. The Investor Gap: A major disconnect exists: while 57% of institutional investors prioritize reporting quality, only 2% consider the Social component significant in their decisions. The Takeaway: Investors seeking reporting reliability should attribute much greater weight to the Social component, as it most closely reflects internal integrity. Not Just an Expression of Values: ESG Rating as a Reflection of Organizational Culture The Social component - encompassing organizational culture and human capital - directly impacts the people and systems responsible for financial oversight. These findings show that ESG investment is not just about "conscience"; it is a core management strategy that builds market trust and serves as a vital tool for risk management in an uncertain world. Prof. Dov Solomon , Head of the LL.M. Program, Academic Center of Law and Business

Human rights management is no longer just a value-based commitment - it has become a strategic business necessity. In today’s regulatory and geopolitical environment, Israeli companies are increasingly required to demonstrate structured, professional, and transparent approaches to managing human rights risks. A new guide published by Maala outlines a practical and applicable framework for companies operating in Israel. The document translates international standards such as the UN Guiding Principles on Business and Human Rights into actionable steps tailored to the local business context. The guide covers policy development, human rights due diligence, risk mapping across operations and supply chains, governance structures, stakeholder engagement, and regulatory preparedness - particularly in light of evolving European requirements. It also provides sector-specific examples and measurable indicators to help organizations move from declarative commitments to operational implementation. By offering a structured seven-step due diligence process and internal and external management tools, the document enables companies to strengthen trust, mitigate risk, and enhance long-term business resilience. To read the full article, visit our website in Hebrew.

Corporate ESG (environmental, social, and governance) statements have shifted from voluntary branding tools to increasingly binding legal representations. Regulators, courts, and civil actors now treat climate and sustainability claims as legally relevant, especially when gaps appear between public commitments and actual practices. This shift is driving a reassessment of “soft law” standards as de facto legal benchmarks and expanding scrutiny of corporate governance, director duties, and legal risk management. The article focuses on greenwashing as an emerging basis for liability and explores its implications, including in the Israeli context. Greenwashing can be grouped into three main categories: climate greenwashing (e.g., unsupported net-zero or carbon neutrality claims), financial greenwashing (ESG-labeled investment products lacking real screening or oversight), and consumer greenwashing (vague environmental marketing without scientific grounding). All share a common feature: a mismatch between public claims and the methodological or factual infrastructure behind them. International case law shows a clear trend toward treating ESG commitments as legally meaningful. The Dutch Shell climate case established that corporate climate policy can be evaluated under a duty-of-care framework. Although the appellate outcome narrowed the remedy, the principle that climate risk management is part of reasonable corporate conduct remains influential. In the UK, the ClientEarth derivative action against Shell directors reinforced the idea that climate risk is embedded in directors’ fiduciary and care duties, even though the claim failed procedurally. Consumer cases such as the Dutch ruling against KLM confirmed that exaggerated environmental marketing can mislead the public, while the German DWS enforcement action demonstrated that ESG misrepresentations in financial products can trigger regulatory penalties. These cases collectively signal that ESG claims require measurable, documented backing. A key development is the use of voluntary sustainability standards as legal reference points. EU initiatives like the CSRD and the proposed Green Claims Directive aim to formalize this by requiring verifiable methodologies behind environmental claims. At the same time, critics warn of over-deterrence, or “greenhushing,” where firms avoid making legitimate climate disclosures out of fear of litigation. Additional challenges include the technical complexity of climate metrics and debate over whether litigation meaningfully reduces emissions. The policy task, therefore, is to set evidentiary and governance standards that encourage transparency without suppressing innovation. For Israeli companies, greenwashing is both a global and domestic legal risk. Firms active in international markets may already be exposed to foreign enforcement. Domestically, Israeli securities law, consumer protection law, and directors’ fiduciary duties provide a framework through which greenwashing claims could develop. Misleading ESG disclosures may trigger securities liability, vague environmental marketing may violate consumer law, and failure to align climate strategy with public commitments could be framed as a breach of director duties. Overall, greenwashing is emerging as a gateway to ESG litigation and reflects a deeper structural shift in corporate accountability. The central challenge is crafting a balanced duty-of-care standard that enforces transparency and methodological rigor while preserving legitimate environmental initiatives. In Israel, careful adoption of these principles could strengthen both public protection and legal certainty in the business sector. To read the full article, visit our website in Hebrew.

ESG ratings have become essential tools for capital allocation and risk management. However, a 2025 OECD report reveals a fundamental gap between their intended purpose and actual implementation. Examining over 2,000 metrics, the report finds that most ratings measure policies and declarations (inputs) rather than tangible results and impact (outputs). This knowledge record analyzes the economic and systemic implications of this "sustainability illusion," with particular relevance for the Israeli context. It explores how misaligned incentives reward branding over operational change, masking systemic risks in ways reminiscent of pre-2008 financial dynamics. Using case studies like Boeing and Volkswagen, the article demonstrates that real risk lies in corporate culture and incentive structures rather than formal procedures. Ultimately, the author argues for a transition from measuring intentions to measuring performance. ESG must be reframed as a core governance and resilience tool - essential for efficient capital allocation and long-term economic stability - rather than a mere reputational asset. לקריאת הרשומה המלאה, בקרו באתר שלנו בעברית.

The Climate Crisis in Our Wardrobe While oil and chemicals are often blamed for pollution, the fashion industry is a major global polluter, responsible for 8% to 10% of global greenhouse gas emissions. Each year, it releases 500,000 tons of microplastics and generates 61 million tons of textile waste . A garment's impact is measured through Life-cycle Analysis (LCA) , covering everything from raw material growth to disposal. The Fast Fashion model , built on cheap production and rapid turnover, fails to reflect its true "externalities." The environmental damage and labor rights violations are not included in the consumer price, but are instead shifted to producing nations and the Global South. Global Trends vs. Israeli Policy Many nations, particularly in the EU, are shifting toward sustainability through three main channels: Extended Producer Responsibility (EPR): Making producers responsible for a product's entire life cycle, including waste. Import Tariffs: Using taxes to protect local industry and reduce carbon footprints. Local Production: Reducing reliance on global supply chains to cut transport emissions. In contrast, Israeli policy encourages fast fashion. This reflects a failure to integrate ESG principles into public strategy, prioritizing short-term costs over long-term responsibility. Since the 1990s, Israel has systematically lowered garment tariffs from 33% to nearly 0%. Most recently, the 2026 budget increased the VAT exemption threshold for personal imports to $150 , further incentivizing mass consumption of cheap imports. The Collapse of Local Industry Between 1990 and 2017, employment in Israel's fashion industry plummeted by 82% . This crisis was driven by: E-commerce giants: Platforms like Shein and AliExpress promoting near-compulsive consumption. COVID-19: The shift from local physical stores to global online shopping. The "Iron Swords" War: Disruptions to supply chains and the workforce , leading to further business closures. While the Ministry of Economy proposed a recovery plan in 2018, it lacked significant environmental components or EPR mechanisms, proving to be "too little, too late." Civil Society and the Path to Reform With the government lagging behind, civil society groups like "Mitlabshot" (Fair Fashion Israel) and Greenpeace are leading the way. They advocate for sustainable legislation and recently succeeded in canceling double taxation on second-hand clothing. However, systemic change requires a regulatory overhaul. Policy Recommendations for Reform Tax and Tariff Reform: Gradually raise import tariffs to 20-25% and provide tax incentives for sustainable brands and repair services. EPR Legislation: Enact Extended Producer Responsibility laws that hold importers accountable for waste and prohibit the destruction of unsold stock. Support for Local Industry: Establish a government fund to support local designers, sustainable R&D, and create a "Sustainable Israeli Fashion" certification. The Circular Economy: Mandate space for second-hand stores in malls at reduced rents and support community-based recycling platforms. Environmental Regulation: Strictly limit imports containing hazardous chemicals (following the EU REACH standards) and restrict aggressive fast-fashion advertising. Conclusion: Rhetoric vs. Reality The Israeli case highlights the gap between sustainability declarations and actual policy. While the developed world tightens regulations to fight fast fashion, Israel is moving in the opposite direction. Without integrating ESG considerations into the heart of government strategy, the environmental and social costs will continue to rise. Dr. Zohar Barnett-Itzha ki, Head of the Environmental and Social Sustainability Research Group, Ruppin Academic Center.

Enforcing environmental law in cases of harm to the public at large is inherently difficult. In Israel, the state itself acknowledges that it lacks sufficient tools to effectively confront large polluting corporations. This structural weakness, combined with dispersed public interests and strong, well-resourced corporate actors, results in inadequate deterrence and the externalization of environmental costs onto the public. Although private enforcement through representative actions could have strengthened deterrence, it has largely fallen short. Environmental litigation increasingly ends in settlement agreements that prioritize expediency over accountability. These settlements often fail to reflect the full scope of environmental harm or the profits generated by violations, and they typically exclude personal liability for corporate officers. As a result, they undermine deterrence and allow polluters to present themselves as environmentally responsible without assuming real responsibility. The handling of the Ashalim Stream disaster exemplifies these shortcomings. Despite extensive environmental damage, enforcement mechanisms failed to impose meaningful consequences on either the corporation or its decision-makers, leaving the public and the environment to bear the cost. To read the full article, visit our website in Hebrew.

The year 2025 marked a significant stage in the development of the Arison Center for ESG Blog. Over the course of the year, discourse on environmental, social, and corporate governance issues matured and deepened, moving beyond foundational definitions toward critical engagement with practical, regulatory, and conceptual challenges facing businesses today. The blog served as a dynamic platform for professional, interdisciplinary, and reflective discussion on how ESG considerations increasingly shape corporate behavior and decision-making. A central theme throughout the year was the intersection between climate discourse and business reality. Blog posts addressed climate change not merely as an environmental concern, but as a factor with tangible legal, economic, and operational implications for corporations. Topics ranged from corporate liability for climate-related harm and climate litigation, through critical examinations of the Net Zero narrative, to everyday operational changes that collectively generate meaningful environmental impact. Another prominent focus was ESG reporting and regulation. Contributions examined ESG reporting not only as a compliance exercise, but as a mechanism linking transparency, values, and real-world corporate conduct. Several posts challenged purely quantitative approaches to ESG reporting, explored its interaction with securities law, and highlighted international regulatory developments that increasingly transform sustainability reporting into a binding and behavior-shaping obligation. The blog also engaged extensively with questions of corporate responsibility and the relationship between ethics and profitability. Discussions explored the maturity of responsible investment in Israel and emphasized the integration of purpose and responsibility into core business strategy, rather than viewing ESG as a cost or constraint. These debates were enriched by contributions from leading academic voices closely connected to the Center. Social dimensions of corporate governance received meaningful attention as well. Posts examined issues such as gender diversity in leadership, executive compensation, shareholder voting behavior, and the role of institutional investors, demonstrating how ESG principles materialize within concrete governance and market mechanisms. Finally, 2025 was characterized by a wide diversity of voices and perspectives. Contributions came from academics, practitioners, regulators, and students across disciplines including law, economics, business, psychology, capital markets, and sustainability. This diversity reinforced the blog’s role as an open, multidisciplinary forum that bridges theory and practice. Looking ahead, the blog aspires to continue expanding and deepening this dialogue, fostering critical thinking, practical insight, and collaborative engagement. The year concluded with appreciation for the contributors and editorial teams who shaped the blog’s work, and with a forward-looking commitment to remain actively involved in shaping the future of ESG discourse. To read the full article, visit our website in Hebrew.

The climate crisis poses an unprecedented global threat, with Israel at particular risk due to its location in a climate "hotspot." While polluting industries continue to reap immense profits from greenhouse gas emissions, regulators struggle to restrain them. The crisis is largely driven by the production of fossil fuels, with a small number of "Carbon Majors" responsible for the vast majority of emissions; in Israel, for example, just 15 factories contribute 74% of all industrial emissions. Despite existing legislation, regulatory enforcement is failing because fines are negligible compared to the profits derived from pollution, and current carbon taxes do not fully reflect external costs. Consequently, civil litigation has become a crucial tool in the fight against climate change, yet private lawsuits based on traditional tort law face significant hurdles, particularly the difficulty of proving a causal link between a specific polluter’s emissions and specific climate damages. Facing these failures, we propose an innovative addition to the legal toolkit: suing for polluters' profits under the Law of Unjust Enrichment rather than focusing on damages under tort law. This paradigm shift moves the inquiry from proving complex climate damages to the simpler question of whether a polluter unjustly enriched itself at the public's expense. The advantage of this cause of action is that it does not require proving or quantifying specific damages. A key precedent is the "Dieselgate" case, where the Tel Aviv District Court ruled that Volkswagen unjustly enriched itself by deceiving regulators. The court determined that the company had to return profits made at the expense of the public’s right to clean air, without needing to prove specific health damages caused by the excess pollution. This legal framework is particularly relevant to the fossil fuel industry, which is among the most profitable in the world. Liability can be established either through "wrongful enrichment"—where pollution involves legal violations or fraud—or through "unjust enrichment" derived from depleting the "Carbon Budget." The Carbon Budget represents the finite amount of emissions the atmosphere can absorb before catastrophic warming occurs; it is a public resource essential for human survival. When companies exhaust this budget for private profit, they are unjustly enriching themselves at the expense of the general public. While regulatory measures remain vital, they are currently insufficient to deter pollution as long as profits exceed penalties. The proposed approach offers significant advantages over tort litigation: it focuses on quantifiable, current profits rather than diffuse, future damages, and it bypasses the high barrier of proving causation. By targeting the massive profits of the few corporations responsible for the crisis, unjust enrichment laws can make excess pollution economically unviable. This approach effectively implements the "Polluter Pays" principle, ensuring that companies bear the true cost of the environmental degradation from which they profit. לקריאת הרשומה המלאה, בקרו באתר שלנו בעברית.

Background At the kind invitation of the Arison ESG Center at Reichman University, I visited the University in the last week of November 2025.   I met many academics, business leaders, journalists and students and heard their views on the current state of the Israeli economy and business.  I discussed the profound changes that businesses around the world are currently experiencing and the relevance of these for Israeli business.   The Rise and Fall of ESG The world is experiencing a period of immense turbulence and global disorder.  In addition to political, economic, military and security risks, there are threats from the climate and environment, social fragmentation and polarization, and scientific and technological revolutions. These are creating substantial challenges for business, not least in terms of the growing expectations and regulatory requirements that are being imposed upon it.   The end of the last decade saw companies rushing to adopt corporate social responsibility (CSR), environmental, social and governance (ESG) reporting, and corporate purpose statements. There was a substantial rise in ESG regulation around disclosure and due diligence. But it was then slowly realized that CSR was just about philanthropy and charity, ESG reporting was frequently subjective, inconsistent and incoherent, and corporate statements were no more than straplines, promotion and marketing campaigns.      There followed the inevitable backlash in accusations of ESG greenwashing, purpose washing and woke capitalism.  This has resulted in a bonfire of regulations, especially in the US but also in Europe where the Omnibus package has watered down previous regulations around the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD) and Sustainable Finance Disclosure Regulation (SFDR).    The backlash has occurred for good reason.  ESG reports are often lengthy, costly and indigestible, and, most seriously, not business relevant.  They are an add-on to financial reports – not integrated into them.  Put simply ESG and sustainability reporting are cost centres, unrelated to the main task of business - to make money.    Corporate Purpose That is precisely why business is now going through a profound change – the sort of change that is observed every sixty or so years.   There is a growing recognition that the purpose of business is to make money from finding innovative ways of solving major problems – local, national and global problems.  This flips ESG from being a business cost to being a business opportunity of finding innovative way of solving problems that create financial value for firms and their investors.    Business creates value by building trust in its stakeholders, thereby attracting more loyal customers, more engaged employees, supportive suppliers and collaborative communities and societies.  Above all, it establishes a natural partnership between governments that are seeking to solve environmental and social problems and businesses that are looking to profit and create financial value from solving not causing problems for others.  Governments therefore support businesses in internalizing the benefits they confer through licensing, chartering, purchasing from, subsidizing and co-investing with businesses that seek to profit from solving not creating problems for others.    What is required to achieve this is a commitment by businesses, their owners and investors to a purpose of profiting from solving not creating problems.  The focus of business remains on profit and financial value creation but recognizes that profit and financial value derive from solving not creating problems for others.  In other words, the purpose of a business is to produce profitable solutions not problems for people and planet.   Delivering a Corporate Purpose There are three key components to delivering this.  The first is the ownership of the problem- solving purpose of a business.  All the most successful businesses, such as the trillion-dollar companies in the US, the “magnificent seven” – Alphabet, Amazon, Apple etc – were founded, owned and/or led by remarkably ambitious and visionary people who sought to solve major world problems – for example, connecting people around the world with knowledge, consumer goods, computing power and each other.    Second, they recognize that problem solving is a process – a long-term commitment to finding ways of deriving commercial value from solving problems, creating other problems, and solving those problems in turn.   The word profit derives from the Latin proficere/ profectus to advance and progress.   That is precisely where a profit and financial value come from – advancement and progress, not disadvantage and regress.   Third, alongside ownership and long-term commitment to the problem-solving purpose comes its governance. Everyone in an organization from the board to the shop floor needs to be committed to and have a sense of ownership of the corporate purpose.  They should recognize their part in the problem-solving purpose and feel motivated and inspired by it. They should believe it is authentic, reflected in the values, principles and culture of the organization, and in their incentives, remuneration, promotion and recognition.  That requires delegating authority and placing trust in people lower down in the organization who understand and can resolve the real problems the business needs to address.   The Israeli Context This business revolution is particularly relevant to Israel now and in the future.     At the best of times, Israel is a remarkably successful economy in terms of growth, entrepreneurship and innovation.   It has one of the highest number of start-ups per capita of any country in the world.   What is even more remarkable is that even in the worst of times, Israel has remained a successful economy in terms of growth, entrepreneurship and innovation.   Despite the terrible circumstances and conflicts that have prevailed over the last few years, the economy has been strikingly resilient.    At the heart of this has been a common purpose of the pursuit of safety, security, and survival across the public and private sectors.  If, as of course it is be hoped, conflict will now be replaced by a lasting peace then the new common purpose should be around a shared prosperity of individual, social and natural world flourishing.   While there is a fragile peace, Israel is not at peace with itself.  It remains a troubled and divided society between the politically right and left, between orthodox and liberal Jew, Jew and Arab, Israeli and Palestinian, and Israel, Palestine and the rest of the world.   The Purpose of Israeli Business Business has a vital role to play in unifying the country and its neighbours.  It is not just that problem-solving business can benefit from the support that it receives from government and the public, but also that business in turn can promote a government and nation that seeks to create a common purpose of shared prosperity.  It is therefore critical, not only to the success, sustainability and survival of business but also of Israeli society and its democratic system.    As Milton Friedman, the Nobel Prize winning economist said: “only a crisis actual or perceived produces real change.  When that change occurs, the actions that are taken depend on the ideas that are lying around.  It is therefore our basic function to develop alternatives to existing policy, keep them alive and available until the politically impossible becomes the politically inevitable”.  A purpose of profiting from solving not creating problems for others is an idea whose time has come.  If Israeli business can grasp it, then not only will it thrive and prosper but also demonstrate to the world how to do this in the most turbulent of places at the worst of times.   Colin Mayer, Emeritus Professor of Management Studies Said Business School, University of Oxford

In the past decade, global regulation has increasingly positioned sustainability, environmental responsibility, and ESG practices as essential conditions for economic activity. China's recent announcement—tightening environmental reporting requirements, introducing absolute emissions caps starting in 2027, and linking regulation to international trade-marks a transformative shift affecting not only Chinese industry but global markets, including Israel. China’s carbon market, launched in 2021 and initially focused on the power sector, is now expanding to steel, cement, and aluminum-industries responsible for roughly 60% of China’s emissions. By 2030, China aims to implement a nationwide emissions trading system (ETS) aligned with European and Asian markets. The shift from intensity-based targets to absolute emissions caps, combined with stricter transparency standards and enforcement mechanisms, reflects China’s ambition to integrate with global regulatory trends and prepare for policies such as the EU’s CBAM. Simultaneously, China is moving from voluntary ESG guidelines to mandatory non-financial reporting for public companies, later extending to large domestic firms. Requirements include reporting Scope 1 and 2 emissions, partial Scope 3 measurement, alignment with global frameworks (IFRS S2, CDP), and the adoption of unified data and IT systems for real-time monitoring. These developments are driven by both external and internal pressures: compliance with European import requirements and the need to preserve China’s competitive advantage in global markets. They also aim to accelerate “green innovation,” including circular economy models, resource management, and carbon-capture technologies. For Israeli industries, the implications are direct. Exporters to China—or companies supplying components to Chinese exporters—will need accurate emissions data, environmental reporting, and compliance with evolving standards. Importers from China may face changes in pricing, supply chain structures, and transparency requirements. At the same time, new opportunities emerge for Israeli companies offering green technologies, resource-management solutions, or advanced ESG capabilities. Israel’s current ESG landscape remains fragmented and largely non-mandatory. China’s regulatory shift highlights the need for Israeli companies to adopt comprehensive ESG systems, strengthen supply-chain monitoring, and prepare for global alignment. Firms that act early will enhance competitiveness, improve access to capital, and position themselves within emerging green markets. China’s policy direction reflects strategic economic motivations rather than purely environmental concerns. As a centralized state, its regulatory moves also serve geopolitical and industrial objectives, including protection of domestic manufacturing and the shaping of global technological standards. Ultimately, China’s actions signal that ESG is no longer a voluntary branding tool but a binding framework defining participation in global trade. For Israeli companies, now is the time to adapt. Sustainability has become a core business language underpinning global supply chains. Early adopters will lead; late adopters risk exclusion from key markets. To read the full article, visit our website in Hebrew.

In the global focus on ESG, the crucial role of Small and Medium-sized Enterprises (SMEs) is often overshadowed by large corporations . Despite this, SMEs represent over  90% of businesses globally , making their collective potential for societal and environmental impact immense -"the whole is greater than the sum of its parts." Key Role and Characteristics of SMEs In Israel, SMEs are particularly vital , accounting for 99.5% of businesses and contributing 54% of private sector GDP. These companies are characterized by flat organizational structures, high flexibility, and a founding motivation often driven by inherent values to address market and social gaps. They possess a natural inclination towards "doing good," which forms part of their organizational DNA. Bridging the Knowledge Gap The main obstacle for SMEs in maximizing their impact is the lack of awareness, knowledge, and accessibility to structured processes for responsible management and measuring impact. This leads to valuable, values-driven actions being treated as hidden philanthropy rather than being strategically connected to the core business and communicated externally. To realize their full potential, SMEs need to embrace a clear, business-focused impact language, start with small, measurable actions, and be supported by collaboration and knowledge sharing from larger corporations. Adopting an impact strategy is not optional; it is essential for their growth and for promoting a sustainable society. Michal Tamam , Consultant, Lecturer, and Project & Community Manager specializing in Growth, Innovation with Social Impact, and Cross-Sectoral Collaboration.