Search

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.

In contrast to the growing politicization of ESG in the United States, the United Kingdom is taking a bold regulatory step. In July 2025, the Financial Conduct Authority (FCA) introduced a reform that transforms climate reporting from a voluntary practice into a mandatory requirement for any company seeking to list on the London Stock Exchange. Starting January 2026, companies will need to disclose concrete climate risks, realistic transition plans, and board-level oversight mechanisms—shifting the market toward greater transparency and accountability. The reform comes at a strategic moment. London has faced declining IPO activity in recent years, with companies migrating to New York and Amsterdam due to valuation gaps and liquidity concerns. Rather than lowering standards, the UK is positioning itself as a leader in responsible finance: fewer bureaucratic burdens, but more meaningful information that investors can trust. Under the new rules, companies must identify material climate-related risks such as exposure to extreme weather, dependence on fossil-based technologies, and vulnerabilities within supply chains. They must also present detailed transition plans with measurable targets, timelines, cost estimates, and contingency strategies. The FCA places significant emphasis on governance, requiring boards to demonstrate expertise, accountability, and integration of climate considerations into strategic decision-making. A core aim of the reform is curbing greenwashing. By standardizing disclosures and demanding concrete data rather than vague commitments, the FCA seeks to provide investors with clearer insight into long-term risks and opportunities. This also empowers smaller investors, who will now be able to compare companies more easily without relying on costly analysis. The UK’s approach reflects a broader shift: treating environmental and social considerations as interconnected. Companies must account not only for emissions and energy use, but also for how their transition strategies affect workers, local communities, and economic resilience. This aligns with emerging global thinking around climate justice. There are several reasons to believe the reform will succeed. Public demand for sustainable products and responsible corporate behavior is rising sharply in the UK. Technological tools—from satellite data to independent databases like CDP—make it harder for companies to obscure environmental impacts. And as more companies adopt transparent practices, market expectations will evolve, rewarding those that lead in credible sustainability performance. Seen globally, the UK is charting a middle path: less complex than the European Union’s extensive regulatory framework, yet more ambitious and mandatory than the US’s increasingly polarized approach. By betting on clarity and comparability, London aims to strengthen its competitiveness and redefine ESG reporting standards worldwide. To read the full article, visit our website in Hebrew.

Human-driven activity since the mid-18th century has accelerated environmental change, increasing greenhouse gas concentrations and intensifying global warming. Israel is identified as a climate “hotspot,” expected to face more extreme heat, reduced winter precipitation of up to 22%, and greater variability in heavy-rain events. With rapid population growth and high urban concentration along the vulnerable coastline, the country faces heightened exposure to sea-level rise and coastal erosion, while sparsely populated northern and southern regions present opportunities for peripheral development in sectors such as agri-tech, desert-tech, energy, and water. Climate impacts carry significant economic consequences, including losses in productivity, infrastructure damage, supply chain disruptions, and global value-chain pressures. International estimates place annual global natural-disaster damages at roughly 170 billion USD, and Israeli studies suggest potential GDP declines of up to 27.5%, with major projected costs in water, flooding, and agriculture. The United States and Europe have introduced a range of carbon-reduction tools, including carbon taxes, fuel taxes, and cap-and-trade systems, all contributing to a growing carbon-pricing market. The EU’s Carbon Border Adjustment Mechanism (CBAM), launched in 2023, aims to prevent carbon leakage by aligning the carbon cost of imported goods with EU standards. Additional policy measures - such as the U.S. Inflation Reduction Act and EU research and mitigation programs, provide fiscal and monetary incentives to support adaptation and decarbonization. Global climate governance frameworks, including the IPCC, the Rio Convention, the Kyoto Protocol, and the Paris Agreement, guide national policy. Israel participates actively in these frameworks and has adopted government decisions to advance renewable energy, reduce emissions, implement carbon pricing, promote green construction, support energy efficiency, expand solar and agri-voltaic infrastructure, and strengthen national climate adaptation and coordination mechanisms. The Ministry of Economy and Industry’s Climate Plan, budgeted at 1.4 billion NIS, with additional initiatives under development, aims to bolster economic resilience, reduce industrial carbon footprints, and support growth in emerging climate-related sectors. The plan is structured around four pillars: climate adaptation (including resilient industrial zones and worker safety), mitigation (such as carbon pricing implementation and circular-economy measures), climate-driven growth engines (energy, desert agriculture, hydrogen, carbon capture, and food-tech), and long-term strategic planning based on dynamic techno-economic modeling and supply-chain analysis. Overall, Israel’s climate strategy rests on integrating environmental and economic considerations, leveraging global experience, and strengthening national capabilities. Embedding the plan within ministerial operations is intended to keep it adaptive and model-driven, while innovation and market analysis are positioned as key drivers of national resilience and competitiveness under changing climate conditions. To read the full article, visit our website in Hebrew.

Over the past two decades, Environmental, Social, and Governance (ESG) principles have become central to corporate strategy and investment priorities worldwide. Yet, recent years have seen growing criticism—especially from within the business and financial sectors—regarding inconsistent standards, measurement difficulties, and the tension between ESG commitments and financial performance. Global shifts in late 2024 and early 2025, including the return of the Trump administration and its deregulatory, anti-ESG stance, have deepened uncertainty. Meanwhile, in Europe, the EU Omnibus Package  has raised questions about the scope and timing of sustainability reporting obligations. Despite political polarization, evidence shows that ESG is not declining but evolving. Many companies continue to integrate ESG principles into management systems, sometimes under different names, using them as tools for risk management, governance improvement, and long-term value creation. Even institutions withdrawing from climate alliances such as GFANZ continue implementing climate-related risk models and resilience strategies. Financial actors like Norges Bank Investment Management  have adopted AI-based sustainability assessments across vast portfolios, highlighting a shift toward operational integration. Academic and professional surveys—such as those by Harvard Law School’s Forum on Corporate Governance  and EY’s Europe Long-Term Value  study—show that executives still view ESG as a strategic driver of competitiveness and long-term stability rather than a mere compliance requirement. The EU Omnibus Package , far from signaling regulatory retreat, aims to streamline ESG frameworks and clarify legal obligations under directives like the CSRD and CSDDD. Companies such as Schneider Electric view these adjustments as opportunities to enhance consistency and investor trust. Ultimately, ESG is undergoing a process of maturation and institutionalization. While its terminology may evolve, its substance is becoming an inseparable component of modern corporate governance—essential for managing environmental, social, and financial risks in an increasingly volatile world. To read the full article, visit our Hebrew main blog.

Since 2023, the rise of artificial intelligence has been reshaping economies, labor markets, and social systems worldwide. While AI enables new professions, knowledge accessibility, and technological solutions to social issues, it also disrupts employment stability, pension savings, and long-term financial security. In Israel, these transformations intersect with demographic changes that challenge the traditional pension structure, once based on a stable generational pyramid. The shift toward flexible and temporary employment undermines predictable income patterns and long-term planning. To ensure social resilience, Israel must redesign its employment, education, and pension systems to adapt to a rapidly evolving technological landscape. Responding to future challenges requires a transformation in how societies manage human capital and intergenerational wealth. Education and professional training must evolve toward lifelong learning accessible to all citizens, with emphasis on digital literacy, creativity, empathy, and leadership. Economically, a modular pension savings model starting from birth—supported by the state, families, and society—could provide every citizen with continuous, independent pension growth. At the same time, aligning pension investments with the UN Sustainable Development Goals (SDGs) would turn these funds into strategic instruments for sustainable growth. Global examples such as Norway’s sovereign wealth fund and Canada’s CPP Investments demonstrate that ESG-aligned portfolios can generate both long-term returns and social impact. In its early decades, Israel effectively used pension and national insurance funds to finance national development through long-term, guaranteed bonds. Reapplying this model—this time toward sustainable infrastructure and SDG-driven investment—could make Israel a world leader in adaptive, forward-looking policy. Despite gaps in national coordination and declining climate-tech investment, Israel’s small scale, technological ecosystem, and innovative culture position it to lead by example. The central question is not technological but ethical and managerial: whether the state will cling to outdated mechanisms or embrace transformative ones suited for the AI era. By linking pension systems with sustainable development, Israel can pioneer a model of long-term economic resilience and intergenerational stability. To read the full article, visit our Hebrew main blog.

The past decade has marked a turning point in recognizing the financial implications of the climate crisis. As climate-related risks increasingly affect global markets, regulators worldwide are integrating environmental and climate considerations into the financial system. The Basel Committee on Banking Supervision (BCBS) set this trend in motion with its 2022 principles on climate-related financial risks. In Israel, this movement is culminating in the forthcoming Proper Conduct of Banking Business Directive No. 345 , which will take effect in June 2026 , requiring banks to systematically identify, assess, and manage climate-related risks within their credit portfolios. Directive 345 introduces a paradigm shift: banks must now consider environmental exposure as a core financial risk factor, on par with credit or liquidity risks. Institutions will evaluate their corporate clients through new climate questionnaires, scenario analyses, and advanced statistical models that quantify vulnerabilities to physical, regulatory, and transitional climate risks. Companies that fail to provide adequate climate data or demonstrate sound sustainability practices may face stricter lending terms, higher collateral requirements, or even credit denial, while firms with proactive sustainability strategies will benefit from better financing conditions and stronger investor trust. For the business sector, the directive signifies a fundamental transformation in credit access. Climate readiness will become a decisive factor for financing and competitiveness. Firms across high-risk industries—such as agriculture, real estate, energy-intensive manufacturing, and logistics—must now adopt structured climate-risk management processes, reduce emissions, and enhance transparency through standardized ESG reporting. Early adaptation will not only ensure regulatory compliance but also create a strategic advantage in a rapidly evolving global economy where climate resilience and environmental governance define long-term financial stability. To read the full article, visit our Hebrew main blog.