Generation: How Green Trends are Impacting Supply Chains

It has been a turbulent year for sustainability with progress set against major setbacks.

Sustainable investment firm Generation has released its 2025 Sustainability Trends Report, reflecting on the past 12 months.

The report details a complex picture where rapid climate tech development is contrasted with political manoeuvring and corporate backtracking on green initiatives.

According to the report, global climate politics have entered a “period of retrenchment” – partly due to the re‑elected Trump administration rolling back US climate policy and abandoning the Paris Agreement.

However, clean technologies are scaling quickly across the power transport and finance sectors. Capital is following and the cost of delaying climate action is rising.

US policy shifts and China's supply chain dominance

The Generation report frames 2025 as a stress test for global climate action to withstand US disengagement as the world’s largest historical emitter.

Donald Trump’s administration has withdrawn from the Paris Agreement and moved to strip the federal government of its authority to regulate greenhouse gases. This could impair future climate action by American presidents.

The report estimates these policy reversals have already cancelled nearly US$30bn of prospective clean‑industry investment in the US, with modelling suggesting lost investment could reach US$500bn over 10 years.

This has created a power vacuum in global climate leadership. The report argues that China is moving to become the world’s leading force in sustainability, propelled by its industrial policy and growing exports of renewable energy technology and electric vehicles (EVs).

The authors describe the People's Republic of China as a future “electrostate,” with its emissions potentially peaking well before the official 2030 target. For procurement leaders this change could mean greater reliance on Chinese suppliers.

Energy sourcing in a system under strain

The report is emphatic that solar power and batteries are reshaping the energy system, but not yet fast enough to reduce emissions decisively. Global electricity generation from solar increased by 28.3% last year.

In a single month, China added more solar capacity to its grid than any other country has in a whole year.

Battery deployment is also changing grid profiles. In California, batteries meet about 20% of peak evening demand on some days displacing gas‑fired generation. This figure rises to roughly 30% in parts of Australia.

However, rising demand from EVs, data centres and air conditioning is pushing power demand growth towards 4% annually almost double the long‑term average.

This increased demand has allowed fossil‑fuel generation to rise pushing electricity‑related emissions to new records. While coal’s share of the global energy mix is falling, the absolute amount being burned remains near record highs sustained by its use in China and India.

Electrification of transport and fleet procurement

In road transport, Generation’s report sides with the view that electrification is the primary global goal. It cites data suggesting electric cars are expected to account for 25% of global auto sales this year.

In China, cars with plugs already make up more than half of new sales and around a quarter across Europe. The US is lagging with EVs making up only about 10% of car sales in 2024.

A modest bump is expected in 2025, as US buyers rush to capture expiring subsidies before “the hammer could fall” as federal support is dismantled. Tesla’s market position has also started to erode this year particularly in Europe.

Decarbonisation in heavy‑duty transport is beginning to stir with electric lorry sales rising from a small base. The report stresses, however, that infrastructure for high‑power charging needed for eHGVs is at a “barely‑started” stage in most countries.

For corporate and financial audiences the report’s message is that the economics of the transition are pulling in one direction while politics pushes in another. This creates both execution risk and competitive opportunity.

Companies that treat this turbulence as a reason to pause decarbonisation risk being on the wrong side of what the report calls “the race for the future”.