Instead, boards need to understand their own true personality around ESG and then evolve the board composition in that direction whether it is climate change, next generation, social justice, or diversity concerns. Less noticed is the messier and increasingly relevant fact that environmental, social, and governance (ESG) topics exist both inside and outside of investors' portfolio decisions. Companies have been struggling to communicate sustainability to consumers. We will scale new technologies to gradually disrupt our carbon economy. Yet collaborations are difficult to orchestrate as they demand systemic changes in clear contrast with the linear and profit-driven mindset prevailing in business. For any business owner, whether you own a SaaS product or any other kind of company, the climate is likely high on your agenda too. In that publication, we suggested 2021 . The topics in this report on today's emerging sustainability trends are selected for their high growth across sites including Google, TikTok, Instagram, Reddit, Twitter, YouTube, and Amazon. At Economist Impact we will continue to create momentum for building a sustainable ocean economy, at our World Ocean Summit in February/March and through the World Ocean Initiative. Sustainability is good for business, and not just because it mitigates regulatory compliance risk. Susan Goldsworthy, Affiliate Professor of Leadership, Communications and Organizational Change. Around 70% of global professionals mentioned their companies face at least some pressure from competitors, governments, and consumers, according to Euromonitors Voice of the Industry: Sustainability Survey 2022. Another trend in sustainability that's gaining traction in restaurants is eco-friendly packaging. More countries may make reporting under recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) mandatory, such as New Zealand, Singapore and Switzerland, where the requirement comes into force in 2023. We expect that 2023 will see significant attention paid to adaptation and resilience financing. Only limited material is available in the selected language. Under increasing SEC scrutiny, Forrester analysts expected public companies to anchor their sustainability goals with corporate policies aimed at driving environmentally sustainable behavior. IDC analysts predicted that by 2026, regulations and sustainability-linked lending will drive over 60% of global manufacturers to adopt product carbon footprint as a key metric to operationalize sustainability beyond reporting. I have ordered these by the five pillars of Economist Impacts Sustainability Project: Net zero is the ambition to reduce greenhouse-gas emissions as much as possible towards zero, and to counter any remaining emissions with carbon-negative solutions, whether nature-based (for example, planting trees or restoring mangroves) or technological (such as direct air capture). In that journey, many are also realizing that it is impossible to achieve net zero without looking outside of their traditional business. The impacts from climate change will not be evenly distributed, with lower- and lower-middle income countries more at risk than higher-income peers and less ready to cope. This research is based on feedback from analysts and researchers across S&P Global. The global green, social, sustainability and sustainability-linked bond (GSSSB) market in 2022 did not reach the highs set in 2021, as rising interest rates and the risk of recession in many parts of the world sidelined debt issuers. This push-and-pull dynamic could be a hallmark of sustainability discussions and decisions throughout 2023. Fundamentally, if we take a long-term perspective, we will deal with climate change. We anticipate that some investors will increasingly check to see if companies are backing their words with actions, particularly on climate. Many companies will see an opportunity to accelerate the green energy transition, and the plans that were put in place before the war in Ukraine, as renewables become more cost competitive. This includes swapping packaging materials . They then write down all the things they can influence and achieve in the upcoming meeting, placing those post-it notes on the opposite wall. There is an urgent need for private capital to enter frontier markets to help solve systemic grand challenges. Go on - they only take five minutes. The State of Sustainability for Emerging Beauty. 2023 Post-filing season update; Electric vehicle federal tax credit rules tightened as of April 18, 2023; Download this insight brief to learn about the top eight ESG and sustainability trends you should expect to see in 2022 and beyond. Key insights such as 'The Future of Jobs' report will map . Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. Intergovernmental Panel on Climate Change (IPCC) experts argue in their latest climate change mitigation report that, to mitigate climate change and avoid a rise in global temperatures over 1.5C-2.0C, offsetting carbon solutions are not enough, and urge the need for carbon-negative (or climate-positive) strategies to accelerate global economies transition towards low-carbon systems. The EU Taxonomy came into force in 2020 but its first reporting provisions applied in 2022, and further disclosure requirements related to the Sustainable Finance Disclosure Regulation (SFDR) for financial market participants will become effective in 2023. By understanding and implementing these 2023 sustainability trends, restaurants can stay ahead of the curve . Not only are they asking those questions, but they are also planning how to pay back the CO2 debt that the company has created since its creation. This has resulted in calls for global convergenceto support consistency and avoid confusion and additional reporting workloads for companies and investors alike. AI: a friend and a foe for sustainability? Unlock your purpose and create positive, lasting change in your career, organization and society. In June 2021, the International Organization of . The 2023 Global Sustainable Development Report will be launched as the world approaches the half-way point of the 2030 Agenda and struggles to rebuild in the aftermath (or in the midst) of the COVID-19 pandemic. But while the costs of deploying solar have increased, these should start declining and have been relatively small compared to European natural gas price increases, which have risen nearly eight times higher over the past two years. However, they also face criticism because of their complexity and a continuing lack of global alignment. Money matters are also driving sustainable business norms. Essentially a digital thread, passports will track the products carbon footprint, waste, liability and risk, and more, sharing information company-wide and with suppliers and regulatory agencies. While this tick-box approach demands an incredible amount of data, it does not provide insight on how to seize the enormous opportunities that the sustainable transformation will open up across all sectors. Today, we have at least 13,000 large and medium-sized companies in Europe transitioning towards more sustainable operations by disclosing their climate footprint. In 2023, we think countries and companies will consider balancing energy security, affordability and the energy transition in a context of high inflation and rising interest rates. This will continue in 2023 as prioritizing efficiency and waste reduction remains on the leading edge of industry trends and innovations. content Economic and Political Challenges to Test ESG's Staying Power Recession, energy crisis and increased regulation are the. By their nature, they process huge amounts of data, and all those data centers carrying out storing and processing tasks require a lot of energy for cooling. A New Era for Sustainability Accountability Last year we saw an influx. Consumers still want to positively impact the environment, and expect companies to play their part in democratising sustainability; therefore, understanding the sustainability landscape will help companies to identify risks and seize new opportunities. The following issues are key in that discussion: Answering those questions and going beyond just complying with mandatory sustainability reporting standards is key to gaining and maintaining competitive advantage in the future. These price increases are leading to renewed interest in, The global market for consumer health continues to be influenced by the pandemic, leading to tepid real growth in 2022. Given the current challenging economy, it is essential that companies keep abreast of sustainability trends as they evolve, and understand the direct impact on business performance to remain competitive. Euromonitor International has identified five key trends affecting the global sustainability agenda in 2023. April 28, 2023 . Can development organizations, governments, firms and private financial institutions work together with the humanitarian sector to fill the gap? But in the near term, if economic conditions continue to deteriorate and labor market resilience wanes, companies may face calls from investors to scale back more progressive workplace practices. The MarketWatch News Department was not involved in the creation of this content. Litigation risk has also given rise to a new trend named by some as "greenhushing", whereby companies may refrain from disclosing details of their sustainability goals and practices for fear of being penalized for the information released. Enabling organizations to meet their learning objectives, in a more impactful, convenient and flexible way. The need for stronger collaboration shines through the five key sustainability and climate trends I expect to see in 2023. With most models still at an experimental stage, a tougher challenge is spreading solutions globally. On the other hand, the target of limiting the rise in global temperatures to 1.5 degrees Celsius above pre-industrial levels is barely alive. But we need to look beyond short-term benefits and keep an eye on the long-term implications of scaling AI too. The EU took a leadership position in creating the fund, but now it must be operationalised and made viable. 1) Changing Electric Infrastructure During COP15, the International Sustainability Standards Board (ISSB) announced that it will research the link between climate and nature. There is unanimous agreement that 2023 will be a challenging year across global markets. Consequently, many companies introduced new incentive structures, benefits, workplace culture initiatives (flexible work, DEI strategies and efforts to improve work-life balance) and career development opportunities to promote the employee experience and better attract and retain talent. yk Ik, Professor of Digital Strategy and Cybersecurity. Copyright The Economist Newspaper Limited 2023. This was billed as the first Africa COP, and a focus on developing-country issues, as well as the agreement on loss and damage, illustrated the vital need for inclusive communities and considering the impact of climate on the most vulnerable communities. In 2023, luxury players need to accelerate their decarbonization efforts by working on their Scope 3 emissions, and shift from a mindset of managing ESG risk to creating opportunities for strategic renewal and greater brand desirability through new purposeful and positive-impact business models. These new rules and disclosure standards aim to enhance transparency and consistency on sustainability-related issues and mitigate the risk of misrepresentation, perceived as greenwashing, in financial markets. Heres a summary of their investment priorities. However, companies need to back-up their announcements and messages on certified claims, considering upcoming stricter regulation, as governments and savvy consumers are demanding transparency and accountability. In 2023, we believe companies and investors will have to prepare for reporting under a number of new and complex sustainability disclosure standards and adapt as they continue to evolve. Be a part of a pioneering community. The goal is to agree on a post-2020 global biodiversity framework that builds on the Strategic Plan for Biodiversity 2011-2020. Article As sustainability has morphed from carbon emissions tracking into company-wide commitments to achieve global imperatives, organizations of all kinds find themselves in the business of creating a healthier world. For example, the ocean and food systems had their own dedicated pavilions. More Sustainable Materials. In the short term, businesses of all industries and sizes will look at energy-saving measures to reduce both costs and carbon emissions. All too often, companies and business leaders are not getting any insights from ESG analyses, as they approach ESG reporting solely as a required disclosure exercise. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. All this will require considerably more investments and capability building. Considering all these pressures, its all too easy to stumble into the ESG reporting trap. Five key ESG Credit Trends for 2023 identified by Sustainable Fitch: 1. For 2023, IMD experts have identified a series of sustainability trends that will drive further business transformation to create value, manage risks, and reconfigure industries and entire systems to ensure we respect our planetary boundaries and create a more inclusive and resilient economy. Therefore, companies may face more scrutiny on appropriate board oversight and the maturity of their sustainability strategies and processes. Additionally, these practices help them reduce their environmental footprint while saving costs associated with waste and resource and energy consumption. Authors: Andrew Angle, Aiste Brackley, Justin Nelson, Laura Street, Mark Lee. This shift has been fueled by increasing energy insecurity, rapidly changing regulatory and reporting standards, and investor appetite for environmental, social and governance (ESG) performance. mandatory biodiversity assessments and disclosures by 2030. In the longer term, this will likely lead to increased adoption of new types of energy and fuels. Here are five of the hottest sustainability trends they identified, as well as how you can prepare for them. This could help maintain investment momentum in key technologies and ultimately deliver a faster energy transition with increased energy security for countries and companies alike. Corporates investing in their own energy generation may find projects cost more in the short term. Supporting organizations with talent assessment, development and leadership progression. Taking a stack of post-it notes, team members write down all the things that are concerning them from their personal and professional perspectives. Five Key Trends Shaping the Sustainability Agenda in 2023, Our premier global market research database with detailed data and analysis on industries, companies, economies and consumers. More than 40,000 species are at risk of extinction in the coming decades, according to the UN progress report on the Sustainable Development Goals released in July 2022. Environmental, social, and corporate governance (ESG) standards and regulations are becoming a dominant force in how organizations operate, touching every part of the business. This is understandable in the face of competing metrics and reporting requirements and the resulting confusion but as with digital, geopolitics, or other specific areas of general impact, such roles have been limited to board work. Our global experts keep pace with sustainability trends providing timely insights on shifting consumer preferences and the latest innovations, strategies and investments shaping governments and business agendas. They also involve measures to enhance the working environment, supply chain emissions, employee well-being, and ethical reporting. From net zero to climate-positive supply chains This is why specific claims such as natural, organic, and vegan enjoyed outstanding momentum during 2021, according to Euromonitors Sustainability Opportunity Tracker. Following recent momentum, including that gathered during COP15, we believe policymakers, regulators, companies and investors will more explicitly look to factor biodiversity-related risks and opportunities into decision-making in 2023. Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. Sustainable solutions can, and should, be affordable, so consumers do not struggle when seeking more conscious habits. In 2022, McKinsey & Co. found that while total compensation remained important, other factors, including workplace flexibility and meaningfulness of work, have become more instrumental in many workers decisions to stay at or leave a job. Peter Vogel, Professor of Family Business and Entrepreneurship, Ivan Miroshnychenko, Research Fellow and Term Research Professor. The increasing risk of environmental, social and governance (ESG)-related litigation, including over sustainability disclosure, will be another challenge for companies and investors to navigate. According to the REN21 renewable energy community, we globally invested $366bn in renewables in 2021 alone. Research with more than 3,000 executives since April 2020 shows that between half and two-thirds of leaders say they are operating from a place of dis-ease rather than a position of well-being. As a result, 91% of the global economy and 810 out of the 2,000 largest companies have pledged to net zero. Here are four key trends from the ERM Sustainability Institute's 2023 Trends Report that are driving this transition: Corporate ESG disclosure will become more standardized across geographies and sectors. Along that path, they are now asking themselves if they could push even more and transform their supply chains to become CO. negative, going beyond net zero. Through this process, leaders co-create the conditions where people can flourish amidst adversity. In fact, a recent study by McKinsey estimated that the transition to net zero alone will provide business opportunities of $12trn per year. For example, long-term energy transition goals will be weighed alongside nearer-term considerations such as energy affordability and security. Carbon-negative means generating environmental benefits by removing more CO2 from the atmosphere than what is produced. Lagging investments in the technologies and interventions needed to support adaptation are widening each year - up to $340 billion per year of adaptation finance is needed by 2030. Circular Economies: There will be momentum on tackling plastic and chemical pollution. Here are the top six trends that are shaping a more sustainable future for our planet. Circular solutions such as second-hand and previously owned products are also gaining traction amongst global consumers as, according to Euromonitors Voice of the Consumer: Sustainability Survey, fielded January to February 2022, 34% of global respondents mentioned their willingness to buy these products. Storytelling and expertise from marketers, SAP BrandVoice: Green Customer Experiences Drive Ongoing Growth For Midsize Businesses. 6. Top Digital Sustainability Trends In 2023 April 25, 2023 Digital signage and sustainability: a thorny relationship Eco-conscious digital signage Power consumption awareness Improved energy efficiency For many years the word "sustainability" was used more as a PR stunt by companies than a wide-ranging concept of their operation. That is the hardest part, as usually 90-99% of a companys greenhouse gas emissions are Scope 3. Meanwhile, new human rights regulations will introduce additional requirements for company supply chain management. Brands that help consumers to adopt sustainable lifestyles will be better-positioned, and therefore preferred, when conscious consumers see increasing disposable incomes again. Water is likely to play a central role on the global agenda in 2023 following major water-related disasters such as the floods in Pakistan and the droughts in Europe. Valuable flows of goods (such as food and commodities) and ecosystem services (such as the climate regulation that occurs when oceans and forests store carbon) support economic growth and human wellbeing. Many restaurants now offer compostable containers and utensils that are much more eco-friendly than traditional plastic or styrofoam. We forecast that total global bond issuance will increase modestly in 20231 as rate rises subside, but inflation risks remain, and global growth is set to stagnate or even tip into recession in some regions. Climate change and associated topics such as water scarcity and biodiversity loss are likely to dominate stakeholder discussions, with long-term climate goals potentially reevaluated to address near-term urgencies. Explore more than 75+ Executive Education programs at IMD. So it is urgent to accelerate our progress towards this objective. Companies need data transparency with detailed precision along the entire value chain. Firms are advised to get ahead of the game and start accounting for biodiversity. They didnt see companies returning to business travel as usual, writing that some are using the [post-pandemic] restart to reevaluate existing travel practices by tracking travel emissions data.. Many report feeling overwhelmed, experiencing increasing anxiety, frustration and irritability, as organizations face a multitude of challenges in a world dealing with ecological collapse, biodiversity loss, social division and economic decline. This important theme will continue into 2023, with the annual meeting of the World Economic Forum in Davos focusing on "Co-operation in a Fragmented World". In the US, the SEC is slated to enact more ESG regulations for investors, while the UK Plastic Packaging Tax is expected to transform global supply chains worldwide. When: April 28 Where: Cambridge, Mass., and virtual Cost: $12.51-$138.43 Where to register: https://sustainabilitysummit.mit.edu The MIT Sustainability Summit is a student-run event to demystify carbon markets for aspiring and current leaders. Proactively using renewable energy, reducing waste and reusing materials will not only help companies to be ahead of legislation, but also demonstrate their interest in being part of the solution. We also note that some regulators and central banks have already made the case as to why and how financial institutions should respond to rising risks and biodiversity losses. Ecosystems & Resources: A new global biodiversity framework will set the stage for rising global scrutiny and collaboration on nature. Many companies will see an opportunity to accelerate the green energy transition, and the plans that were put in place before the war in Ukraine, as renewables become more cost competitive. Unsurprisingly, sustainability was one of the key . That is not what makes for successful ESG governance. In watches and jewellery, transformation started later, perhaps due to the longer life cycle of these products and their smaller volumes. Sharing emotions for healthy, sustainable high performance, Luxury developing sustainable supply chains, Board composition and responsibilities adapt to ESG purpose, Innovation, investment, and business transformation fuel climate hopes. Recent research reinforces the link between increasing drought frequency and severity and climate change, which has made Northern Hemisphere droughts in summer 2022 at least 20 times more likely. Sustainability-linked bond issuance fell sharply over the second half of 2022 as investors raised concerns about issuer ambitions and incentives to achieve sustainability targets. Progress on ESG goals can be encouraged by aligning compensation policies to the long-term impact that organizations have on financial, social, and environmental value creation. Regulation. 4 Sustainable Travel Innovations Shaping the Future of the Tourism Industry. The Russian attack on Ukraine and subsequent surge of refugees, growing inflation, and lingering concerns about the COVID-19 pandemic also raise doubts about governments ability to ensure an inclusive society. Our premier, award-winning syndicated market research database provides detailed data and analysis on industries, economies, countries and consumers across 781 cities, 210 countries.. For the same reasons, we expect that company and investor lobbying activities will come under greater scrutiny to ensure that they are consistent with public commitments to both sustainability and fiduciary mandates. 5 Sustainability Trends for Businesses in 2023. Many boards have responded to increasing ESG pressures by recruiting a sustainability specialist. In 2022, efforts to integrate ESG into corporate policies and investment decisions faced diverging pressures, either for lack of or inadequate action or for going too far. These trends highlight the delicate balancing act we see stakeholders facing and managing, weighing various and sometimes opposing forces. A total of 60% of family businesses with strong digital capabilities, surveyed by PwC in 2021, placed sustainability at the core of their daily operations. High rates of inflation in many markets are causing the prices of many products to rise steeply. The three trends IEEE Standards Association (IEEE SA) expects to see in 2023 in the energy sector pertain to the following topics: changing electric infrastructure, the water-energy nexus, and more broadly, energy efficiency. At COP15, the 2022 UN conference on biodiversity, leaders decided on our collective goals for the post-2020 global biodiversity framework and businesses advocatedfor mandatory biodiversity assessments and disclosures by 2030. In 2022, Cartier and Kering formed the Watch & Jewellery Initiative 2030 which, like the Fashion Pact, aims to drive progress on sustainability in its sector. Finally, the need to draw down greenhouse gases already in the atmosphere will continue to gain momentum in 2023, with technological carbon-removal solutionsin addition to nature-based onesseeing unprecedented investment following the Biden administrations announcement to invest US$3.5bn in carbon-removal technology. Follow this link to learn more about our cookie policy and how we use cookies. With most models still at an experimental stage, a tougher challenge is spreading solutions globally. Within three years, they said 45% of G2000 organizations will operationalize integrated sustainability in the supply chain and effectively report impact data, enabling 10% reduction in waste and improving competitive advantage. 1. The provisional agreementin the EU for new regulation for deforestation-free supply chain will mean many companies will have to better understand biodiversity risk. Considering all these pressures, its all too easy to stumble into the ESG reporting trap. Meanwhile, the number and duration of droughts globally have risen by almost a third since 2000, according to the U.N. Therefore, communicating sustainability through specific claims will still open up opportunities for companies to penetrate and improve their positioning in 2023. At COP15, the 2022 UN conference on biodiversity, leaders decided on our collective goals for the post-2020 global biodiversity framework and businesses. According to Deborah Kaplan, global head of sustainability at SAP Customer Success, corralling and understanding tons of disparate data is the biggest challenge for organizations regardless of where they sit on the sustainability preparedness spectrum. Along that path, they are now asking themselves if they could push even more and transform their supply chains to become CO2 negative, going beyond net zero. The Growth Summit 2023 is taking place on 2-3 May at the World Economic Forum's headquarters in Geneva, Switzerland. As a result, we think more companies, particularly those in industries with the greatest exposure to working conditions risks, will face greater costs associated with building the systems and capacities needed to comply with new requirements. Setting up a loss and damage fund at COP27 was only the first step. With all the regulatory changes ahead, 2023 will be a year dominated by managing ESG risks. They place them all on the wall, acknowledging and accepting them. Harnessing collaboration to enable the circular economy, Successful examples include multi-stakeholder platforms like the. However, we still anticipate GSSSB issuance to grow to between $900 billion and $1 trillion in 2023 compared to nearly $850 billion in 2022 as the asset class capitalizes on various initiatives to fill the climate financing gap.
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