In the period 2021-2022, product packaging and product claims rose 6.0 and 2.4 percentage points respectively in the share of global respondents, as efficient ways for businesses to communicate sustainability and improve their brand positioning. This will continue in 2023 as prioritizing efficiency and waste reduction remains on the leading edge of industry trends and innovations. We anticipate that some investors will increasingly check to see if companies are backing their words with actions, particularly on climate. They are developing sustainable products and services and supply chain practices to increase revenue, satisfy investors and regulators, and improve their reputation. Experience IMD for yourself, join one of our upcoming events. But there are also reasons to be optimistic. Economist Impact, through its Back to Blue Initiative, has put a spotlight on the need to tackle chemical pollution. As new sustainability disclosure standards come into effect around the globe, stakeholders will have to grapple with the complexity and potential challenges regarding alignment of these initiatives. What makes a great leader? Download this insight brief to learn about the top eight ESG and sustainability trends you should expect to see in 2022 and beyond. The top strategic technology trends for 2023 are: Sustainability Sustainability traverses all of the strategic technology trends for 2023. These macroeconomic and market conditions could constrain issuer appetite for GSSSB offerings. At the wake of the conflict that has stirred markets, Eco-Business rounds up six trends that could influence global sustainability in 2023. Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. As a result of COVID-19 and the intense competition for talent amid a period of exceptionally high employee turnover, employee expectations around health, well-being, culture, flexibility and benefits have evolved over the past two years. An infographic based on the latest Climate Watch data highlights that energy usage contributes to 73.2% of global greenhouse gas emissions. Meanwhile, institutional investors under pressure to deploy capital are turning to still-developing voluntary carbon offset markets to meet climate commitments while continuing to finance assets and companies linked to fossil fuels. 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. 5 Sustainability Trends for Businesses in 2023. Inspiration, a mini-series with Lorange Network and IMD, Business transformation: incumbents must not assume the right to win, Executive pay: balancing sustainability with profitability, We need a realistic, fact-based approach to sustainability, Reframing sustainability: from risk to opportunity, Activists are not the enemy,so lets work together. But, in order for circular models to succeed, there is a need for collaboration. Companies have been struggling to communicate sustainability to consumers. In turn, this has taken a heavy toll on the sea level rising, European glacier melting, and extreme weather events from . 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. Many restaurants now offer compostable containers and utensils that are much more eco-friendly than traditional plastic or styrofoam. Before we discuss the 2022 sustainability trends, we wanted to begin by reflecting on our 2021 edition and take stock of how our predictions played out. , led by the Ellen McArthur Foundation and the United Nations Environment Program, through which 500 signatories such as Nestl, PepsiCo, Coca-Cola, Unilever, Mars, and LOral which together utilize 20% of all plastic packaging produced globally have committed to ensuring that all plastic packaging is reusable, recyclable, or compostable by 2025, among other circularity goals. In 2022, the U.S. stepped up the enforcement of laws aimed at restricting imports of goods believed to be made in whole or in part with forced labor. Source: Euromonitors Voice of the Industry: Sustainability Survey 2022. The market for carbon credits will continue to evolve in 2023. Apr 26, 2023 (3BL Media via . To save on energy bills, firms will renovate buildings to prevent heating loss and implement digital solutions for temperature controls, shut off lighting and equipment when not in use, and replace less efficient outdated equipment. And the EU looks to advance its own human rights due diligence directive and regulation restricting goods made with forced labor throughout 2023. Discover our campus locations in Switzerland and Singapore. Family businesses will adopt new digital capabilities to manage sustainability data that guide sustainable business practices. Gartner researchers said the ability to efficiently navigate the global regulatory environment and scale compliance systems will offer companies a significant competitive advantage. Therefore, 2023 will be crucial in building on the agreement by 175 countries in 2022 to establish a legally binding treaty to end plastic pollution. The biodiversity challenge is closely intertwined with the climate crisis the consequences of climate change have negative consequences for the survival of vulnerable species and preserving biodiversity can help mitigate climate change. Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. All too often, companies and business leaders are not getting any insights from ESG analyses, as they approach ESG reporting solely as a. 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. Collaboration within and outside ecosystems in circular economy solutions is central to unlock benefits that organizations cannot achieve on their own. yk Ik, Professor of Digital Strategy and Cybersecurity. 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. 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. Promoting a strong employee experience can contribute to sustained competitiveness over the long term. Firms are advised to get ahead of the game and start accounting for biodiversity. Insights on Sustainability Article Toward a more orderly US energy transition: Six key action areas January 12, 2023 - The US drive to decarbonize is at an inflection point. 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. 2. Second, we are investing. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. Supporting organizations with talent assessment, development and leadership progression. 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. In 2022, the European Financial Reporting Advisory Group (EFRAG), the U.S. Securities and Exchange Commission (SEC) and the newly formed International Sustainability Standards Board (ISSB) drafted various proposals for disclosure standards relating to sustainability and/or climate-related issues. Of particular note was how consumers are approaching healthy living in the Beauty & Personal Care category. With most models still at an experimental stage, a tougher challenge is spreading solutions globally. The call at COP27 for multilateral development banks to scale up the use of blended finance to attract more private capital, and the push to boost adaptation finance, will underscore how GSSSBs can contribute to closing the climate finance gap. In June 2021, the International Organization of . Regulatory trends point to a hardening of what were largely voluntary frameworks for how companies manage human rights in their upstream operations. These trends highlight the delicate balancing act we see stakeholders facing and managing, weighing various and sometimes opposing forces. 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. Mind the ESG reporting trap! 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. All stakeholders will bear the impacts from physical risks related to climate change. The picture looks especially complicated in Europe, where new investment in liquefied natural gas and a slower phaseout of coal could challenge decarbonization plans. Sustainability and ESG in 2023. Brands that help consumers to adopt sustainable lifestyles will be better-positioned, and therefore preferred, when conscious consumers see increasing disposable incomes again. That said, we believe developing countries can only sustain so much debt to finance rising losses and lost revenues from physical climate risks. So it is urgent to accelerate our progress towards this objective. As a result, 91% of the global economy and 810 out of the 2,000 largest companies have pledged to net zero. 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. This has been reflected in more litigation, with an increasing number of climate-related lawsuits against corporates. Yet only 21% believe that their organizations are very ready to address such issues. The Taskforce on Nature-related Financial Disclosures (TNFD), which should finalize its recommendations in September 2023, will provide frameworks to identify, measure and disclose nature-related risks and impacts. For many years, sustainability has remained top of mind for food and beverage processors and consumers. Didier Cossin, Professor of Governance and Finance, Founder and Director of IMD Global Board Center, Sophie Coughlan, Associate Director, IMD Global Board Center. An agreement reached at the U.N. climate change conference, known as COP27, for a loss and damage fund will seek to address adaptation and resilience challenges of developing countries. 1. 1. Workers increasingly demonstrate willingness to adjust the time and effort they dedicate to their job or leave their positions for new opportunities if workplace culture does not align with their values and expectations. Despite this, biodiversity, essential to sustaining natural capital and ecosystem services, is declining. Lead authors: Lai Ly, Global Head of ESG Research, S&P Global Ratings | Lindsey Hall, Head of ESG Thought Leadership, S&P Global Sustainable1 Co-authors: Bruno Bastit, Terry Ellis, Paul Munday, Bruce Thomson, and Dennis Sugrue, S&P Global Ratings; Esther Whieldon and Jennifer Laidlaw, S&P Global Sustainable1 This report neither addresses views about credit ratings on individual entities nor constitutes a rating action. 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. Key insights such as 'The Future of Jobs' report will map . What's Next for Sustainable Business? In 2023, we believe more investors and companies will seek to assess the social and financial costs associated with water scarcity and droughts. 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. Automobile and fashion have had by far the heaviest adverse impacts on the environment and society, so actors operating in these two sectors have been ahead of the pack in reversing this trend. Sustainability is good for business, and not just because it mitigates regulatory compliance risk. It appears increasingly challenging to meet the Paris Agreement goal to limit warming to 1.5 degrees to 2 degrees Celsius relative to preindustrial levels, as emissions should reach all-time highs in 2023. Consequently, in 2023, we anticipate the durability of new employee-friendly workplace practices will be tested. She has worked in sustainability management, consulting, and education for more than 15 years. 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. What is your plan to transition into the low-carbon era under different scenarios? Be a part of a pioneering community. Amanda Williams,Term Research Professor and Research Fellow. From net zero to climate-positive supply chains, Many companies are working hard to meet net-zero sustainability targetsby 2050 or other target dates. MSc in Sustainable Management & Technology, Executives-in-Residence & Executive Fellows. As we head out of COP27, many are disappointed to see climate deterioration going much faster than any governmental moves to address the crisis. Renewables and Nuclear Hold Promise for Net Zero Energy. Follow this link to learn more about our cookie policy and how we use cookies. During COP15, the International Sustainability Standards Board (ISSB) announced that it will research the link between climate and nature. In the Deloitte 2023 Global Human Capital Trends survey, 84% of respondents acknowledge that understanding the impact of sustainability on their organization and defining ownership for driving progress and outcomes is important to their organizations' success. Resilience & Adaptation: There will be further progress on loss and damage and the global adaptation goal. 27 April 2023 by Frederic Barge, Karl Schmedders in Sustainability. 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. Leadership is about being positive and seeing opportunities, and we are living in a time where climate leadership is critically important. Net-zero pledges have become mainstream in companies sustainability reports, as a way to demonstrate environmental commitment. We believe that dynamic could change as companies adjust in the face of economic uncertainty and changing labor market dynamics. Meanwhile, the number and duration of droughts globally have risen by almost a third since 2000, according to the U.N. 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. For example, the ocean and food systems had their own dedicated pavilions. 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. Critical actions could accelerate the transition while enhancing energy affordability and supporting inclusive economic growth. Scope 3 typically accounts for the vast majority of emissions, so reducing those that companies have direct control over (scope 1 and 2) can only go so far in reaching net zero. Despite these headwinds, we continue to view that the sustainable debt market will help advance sustainability goals. Knut Haanaes, Professor of Strategy and Lundin Chair Professor of Sustainability. In the longer term, this will likely lead to increased adoption of new types of energy and fuels. Carlos Cordon, Professor of Strategy and Supply Chain Management. A fully online experience that takes you on an in-depth exploration of topics that matter to you. 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. 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. This interconnected challenge presents a timely opportunity for companies that are getting serious about ambitious climate targets to account for nature and biodiversity protection in their climate targets as a means to net zero. Sustainability Conferences to attend in 2023. The provisional agreementin the EU for new regulation for deforestation-free supply chain will mean many companies will have to better understand biodiversity risk. There is unanimous agreement that 2023 will be a challenging year across global markets. Go on - they only take five minutes. It will likely grow even more, especially in most of North America, Europe, and in fast-growing countries in the Asia-Pacific region and the Middle East. Visit our Sustainability page and Sustainability store for further insights. Gartner researchers predicted that political bodies worldwide would support nation-state commitments to invest tens of trillions of dollars in climate mitigation from 2025 to 2035. 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. By next year, IDC analysts predicted 80% of G2000 companies will capture their carbon data and report their enterprise-wide carbon footprint using quantifiable metrics compared with 50% today. Our world-class coaching anchors and embeds knowledge and accelerates performance and behavioral change.
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