Impact Cords: This Week's Moves (No. 12) March 29, 2025

The sustainable finance landscape continues evolving rapidly as political headwinds reshape ESG approaches and impact investing strategies. This week brought significant developments that highlight both the challenges and innovations emerging in response to the current environment. From climate disclosure retreats to community-focused financing models gaining traction, here's what's hitting a cord this week:

SEC Abandons Climate Disclosure Defense

In a significant development that follows our coverage of regulatory shifts, the Securities and Exchange Commission has officially announced it will no longer defend its climate-related disclosure rule in the Eighth Circuit court case Iowa v. SEC. Acting Chair Mark Uyeda stated the Commission's actions aim to "cease the Commission's involvement in the defense of the costly and unnecessarily intrusive climate change disclosure rules." This decision marks a definitive retreat from the agency's previous position on corporate climate accountability. Commissioner Caroline Crenshaw criticized the move, arguing it represents "policy-making through avoidance and acquiescence, rather than policy-making through open, transparent, and public processes."

"Greenhushing" Becomes Corporate Strategy

Corporate climate talk has plummeted as companies adapt to the new political reality. According to a Bloomberg analysis of S&P 500 earnings calls, mentions of sustainability and related terms have dropped by a staggering 76% compared to three years ago. This "greenhushing" represents a strategic response to changing political winds, with companies increasingly reframing their sustainability initiatives in economic rather than environmental terms. As Hortense Bioy of Morningstar noted, "You have this new administration that is anti-climate and wants all of this to disappear," leading many executives to conclude that "the climate story needs to disappear" from their public messaging. However, a PwC report suggests actual corporate climate action continues behind the scenes, with the firm calling this "an era of quiet progress."

Arctic Sea Ice Sets Alarming Record

Environmental data continues to underscore the climate challenges ahead despite political shifts. The National Snow and Ice Data Center reported that Arctic sea ice reached its lowest winter peak in the satellite era's 47-year record. The annual maximum on March 22 measured just 5.53 million square miles – approximately 31,000 square miles below the previous record set in 2017 (an area roughly the size of Maine). This concerning milestone comes as rapid Arctic warming, estimated at three times the global average, accelerates ice loss. The reduced ice coverage not only threatens ecosystems but also opens the Arctic to increased shipping and military competition between Russia, the U.S., and China.

Insurance Industry Turns to AI for Climate Resilience

As climate-related losses mount, insurers are increasingly turning to artificial intelligence to better predict and manage risks. With annual insured catastrophe losses of $150 billion becoming "the new normal" according to broker Gallagher Re, the industry is investing in AI-driven modeling techniques that can provide more granular property-level assessments. Companies like Zurich Insurance, Verisk, and Moody's - Insurance Solutions are deploying machine learning to analyze satellite imagery and other data sources to evaluate wildfire, flood, and severe convective storm risks more accurately. These innovations could help address challenges like Texas hailstorms, which generated $61 billion in insured losses in 2024 alone, according to Aon. As Firas Saleh of Moody's observed, traditional models are "an imperfect representation of a very complex phenomena," making AI assistance invaluable for risk assessment.

Re:Construction Movement Builds Economic Opportunity

In a political environment increasingly hostile to traditional impact approaches, community-focused development finance institutions (CDFIs) are demonstrating their value through bipartisan economic impacts. The U.S. Treasury Department's CDFI Fund – initially targeted for elimination in a Trump administration executive order – appears positioned to survive due to its demonstrated track record of delivering economic opportunity in both rural and urban areas. As ImpactAlpha reports, CDFIs have garnered support across the political spectrum by focusing on practical economic development, with Republican-led congressional districts making up eight of the top ten recipients of CDFI investment over the past decade. This pragmatic approach to shared prosperity, which ImpactAlpha calls Re:Construction, offers a potential playbook for impact investors seeking to navigate divisive political environments.

'Clean' Fashion Emerges as Next Frontier

While corporate "greenhushing" grows in the political climate, innovative approaches to sustainable fashion continue to evolve. The latest trend gaining momentum is "clean fashion" – an emerging wave of brands creating skin-friendly clothing made from natural fibers without harsh chemicals that seek to tap into consumer interest in products promising health and wellness benefits. (Business of Fashion)

This movement mirrors the successful trajectory of clean beauty, which has become mainstream by focusing on both personal and planetary health. Brands are finding that framing sustainability through the wellness lens may resonate with consumers who are increasingly concerned about what touches their skin, even as explicit climate messaging faces political headwinds.

The clean fashion trend represents a strategic pivot that aligns with our observation from previous weeks: successful sustainability initiatives increasingly emphasize practical consumer benefits alongside environmental impact. This wellness-focused approach may provide a resilient pathway for sustainable fashion brands navigating today's complex landscape.

Climate Protesters Change Tactics

Just Stop Oil, the climate protest group known for disruptive demonstrations including throwing soup on famous artworks, announced it will end its confrontational tactics. The organization said it will "hang up the high vis" following the UK Labour government's policy shift to end new licenses for unexplored oil and gas fields. This pivot demonstrates how activist strategies evolve in response to political developments, with the group now focused on supporting members facing prosecution rather than staging new protests. The shift comes as some climate groups recalibrate their approaches amid changing political and regulatory landscapes.

Looking Ahead

This week's developments highlight a central theme: resilience through adaptation. While some traditional approaches to sustainable finance face political headwinds, new pathways continue to emerge. From insurance companies leveraging AI to navigate climate risks to community development institutions finding bipartisan support through economic impacts, the landscape is evolving rather than disappearing. As environmental indicators like Arctic sea ice continue to raise alarms, the imperative for innovative solutions only grows stronger.

The key question moving forward is not whether sustainable finance will survive, but how it will adapt to navigate the current environment effectively. As Jim Coulter of TPG said last month, successful strategies will "ignore the noise from Washington, DC, and pay attention to what's happening on the ground."

About the Cordes Foundation

Born from a fortuitous collision of Wall Street savvy and humanitarian passion, the Cordes Foundation emerged in 2006 when Ron Cordes and Marty Cordes decided that selling an investment management business shouldn't just create wealth—it should create change.

Ron, with his financial acumen and unexpected talent for getting lost in developing countries, paired perfectly with Marty's unwavering commitment to women's empowerment and superior navigation skills. Their global development experiences profoundly shaped the foundation's approach—prioritizing deep listening, local wisdom, and authentic partnerships over prescriptive interventions. This collaborative philosophy now guides all their work, ensuring investments address genuine needs rather than assumed solutions.

In 2014, Marty and Ron were joined by their daughter Steph Stephenson who traded the glossy corridors of Condé Nast for the gritty realities of sustainable supply chains, bringing her fashion industry connections and millennial perspective to the table. She was soon joined by Eric Stephenson, who navigated the delicate transition from "portfolio director" to "husband" while ensuring the foundation deployed 100% of its assets for impact with market-rate returns—proving that both relationship types benefit from careful due diligence and long-term commitment.

Today, this quartet operates with a refreshingly un-foundation-like fluidity, eschewing traditional office structures for a nimble, purpose-driven approach. They divide their time between connecting social entrepreneurs to resources, convening gatherings that strengthen impact ecosystems, and proving that ethical fashion isn't just a trend but a transformative economic force.