For this to be achieved, companies need to measure direct (scope 1) and indirect (scope 2 and 3) emissions. Visit our Sustainability page and Sustainability store for further insights. Therefore, for companies to remain competitive and relevant in such fast-evolving sustainability environments, proactive collaboration with key stakeholders is crucial. Photo courtesy of Unilever. Victoria Kemanian, Senior Advisor, Business Transformation Initiative. There is an urgent need for private capital to enter frontier markets to help solve systemic grand challenges. Copyright The Economist Newspaper Limited 2023. The social dimension of the challenges of climate change, climate action and sustainability has often been an after-thought, but in 2023 this dimension will rise further up the sustainability agenda. Track existing and future opportunities to support critical decision-making across all functions within your organisation. Explore more than 75+ Executive Education programs at IMD. 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. Discover our campus locations in Switzerland and Singapore. esgSubNav, Discover more about S&P Global's offerings, we think that adaptation will become as material as climate transition, call at COP27 for multilateral development banks. How do you inspire your team? 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). April 13, 2023. 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. 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. All content is available on the global site. 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. Five key ESG Credit Trends for 2023 identified by Sustainable Fitch: 1. featured 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. Florian Hoos, Professor of Sustainability and ESG accounting. Many boards have responded to increasing ESG pressures by recruiting a sustainability specialist. Some facts are encouraging: So, there is a real case for a glass half full view on climate. The EU took a leadership position in creating the fund, but now it must be operationalised and made viable. Building a digital ecosystem of partners offers you a powerful lever to accelerate growth. As we head out of COP27, many are disappointed to see climate deterioration going much faster than any governmental moves to address the crisis. 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. AI: a friend and a foe for sustainability? The top strategic technology trends for 2023 are: Sustainability Sustainability traverses all of the strategic technology trends for 2023. We will scale new technologies to gradually disrupt our carbon economy. Girod, Professor of Strategy and Organizational Innovation. Luxury actors, traditionally fearless competitors, have come to realize that they need to collaborate to shift to positive impact. Leadership is about being positive and seeing opportunities, and we are living in a time where climate leadership is critically important. 27 April 2023 by Frederic Barge, Karl Schmedders in Sustainability. 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. Beyond capturing new markets, transforming your business towards sustainability is also a way to address changing customer and investor needs, as well as to attract and retain talent. Data in your Equity, Inclusion & Diversity strategy: friend or foe? Learn more about incorporating sustainability into your business operations to help create a future with zero emissions, zero waste, and zero inequality. Despite these headwinds, we continue to view that the sustainable debt market will help advance sustainability goals. She has worked in sustainability management, consulting, and education for more than 15 years. Carbon-negative means generating environmental benefits by removing more CO2 from the atmosphere than what is produced. Most companies struggle to measure scope 3 emissions, as they still need to work more closely with their suppliers. Do you need charisma? We tend to think about collaboration as an external challenge but the key to success lies in redesigning organizations that can align incentives around impact and mobilize complementary resources to achieve it. What Recent Trends Say About Sustainable Shopping In 2023 More From Forbes Apr 27, 2023,10:15am EDT Embracing Humanity In The Age Of AI: The Importance Of Company Culture Apr 27,. Against this backdrop, we anticipate that 2023 will test companies and investors on the strength and depth of their sustainability commitments and the priorities they support in light of a growing risk of ESG-related litigation. Key insights such as 'The Future of Jobs' report will map . With most models still at an experimental stage, a tougher challenge is spreading solutions globally. Successful examples include multi-stakeholder platforms like the Global Commitment, 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. Can development organizations, governments, firms and private financial institutions work together with the humanitarian sector to fill the gap? Net Zero & Energy: The recent focus on scope 3, carbon credits and carbon removal is set to accelerate. However, the continued lack of a global climate finance taxonomy remains a challenge to bringing transparency and comparability to the space. 2023 CDFI Sustainable Investing Trends. Discover more than 130,000 executives who are IMD alumni. As a result, 91% of the global economy and 810 out of the 2,000 largest companies have pledged to net zero. 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. The final drafts of these standards should be adopted in 2023. 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. 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. 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. Regulatory trends point to a hardening of what were largely voluntary frameworks for how companies manage human rights in their upstream operations. They have to act quickly as ESG frameworks and standards evolve, embedding into every business process sustainability metrics that are aligned with the company strategy, said Kaplan. But there are also reasons to be optimistic. The need for stronger collaboration shines through the five key sustainability and climate trends I expect to see in 2023. The latest developments in sustainability, trends in bathroom design and the industry's innovations are the focus of the Pop Up My Bathroom trend showcase at ISH 2023.Established by the VDS and Messe Frankfurt, the trend platform for the bathroom sector hosted a large-scale exhibition and accompanying talk forum, both of which were aimed not just at the trades but at . 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. 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. On the one hand, developed countries finally agreed to set up a loss and damage fund to compensate developing countries for the climate chaos that industrialised countries have mainly causedalthough there is no money in it, for now. If not, select "Manage Preferences" to learn more about managing your cookie preferences. The picture looks especially complicated in Europe, where new investment in liquefied natural gas and a slower phaseout of coal could challenge decarbonization plans. 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 push-and-pull dynamic could be a hallmark of sustainability discussions and decisions throughout 2023. 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. First, the world is searching for new solutions. 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. In the short term, businesses of all industries and sizes will look at energy-saving measures to reduce both costs and carbon emissions. 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. Beyond capturing new markets, transforming your business towards sustainability is also a way to address changing customer and investor needs, as well as to attract and retain talent. 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. Our work on water stress in Jordan highlights the need for resilience. Our consulting team answers your commercial questions with data and insights generated by our research experts, industry knowledge and 1,200 on-the-ground analysts in 100 developed, emerging and frontier markets. We expect that 2023 will see significant attention paid to adaptation and resilience financing. These include Scope 3 emissions, those which do not come from their own operations but from their larger value chain. 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. 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. Today, we have at least 13,000 large and medium-sized companies in Europe transitioning towards more sustainable operations by disclosing their climate footprint. 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. Learn more about our world-class faculty team. 2. 7 sustainability trends to watch in 2023 1 In 2023, consumers will be holding brands responsible for progressing the world's state of sustainability. Being tech-savvy, the digital natives are willing to take a more data-driven approach in order to lead the way towards a net-zero future. Carlos Cordon, Professor of Strategy and Supply Chain Management. By Jonny Bierman. Private-public alignment is necessary to accelerate the transition towards circular models. Were seeing customers replace time-consuming, inaccurate manual approaches with a holistic steering and reporting solution like SAP Sustainability Control Tower. How do you incentivize the C-level and senior managers? 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. High rates of inflation in many markets are causing the prices of many products to rise steeply. We will go through the whole energy transition, and we will build a circular economy. Social Sustainability: The cost-of-living crisis intensifies, but offers opportunities for more-inclusive climate action. Curious about how we partner with you to help you solve your complex modern-day business problem? The Summit brings together leaders from business, government, civil society, and academia to shape a new future of work that is inclusive, sustainable, and equitable. IDC analysts predicted by 2024, 30% of organizations will use ESG data management platforms to steer ESG KPIs through a centralized system of record for reporting purposes and real-time operational decision-making support. Therefore, companies may face more scrutiny on appropriate board oversight and the maturity of their sustainability strategies and processes. In a recent Gartner survey, CEOs reported that environmental and social changes are now a top three priority for investors, after profit and revenue. Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk. This years forecast of sustainability trends looks like the perfect storm (in a good way) of purpose-minded, yet business opportunity-led progress. What is your plan to transition into the low-carbon era under different scenarios? This research is based on feedback from analysts and researchers across S&P Global. What are the new sustainability KPIs that are at the heart of your strategy execution? Mind the ESG reporting trap! 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. Environmental catastrophes are becoming more frequent, so stricter regulations, such as extended producer responsibility (EPR), and waste management and recycling policies, are expected to be seen in more markets to channel efforts towards governments long-term sustainable targets. 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. With this in mind, we think that adaptation will become as material as climate transition in terms of protecting lives, assets and the productive capacity of the economy over time. Studies project further losses in biodiversity by midcentury due to changes in both land use and climate, absent transformative changes to economies. Dedicated to the advancement of knowledge on world competitiveness. 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. Although Forrester analysts expected at least 10 companies to incur $5 million or more in greenwashing fines, the longer term outlook for meaningful environmental impact is far brighter. However, organizational transformation and readiness is needed to push the boundaries of the problems that private capital can address and solve. MIT Sustainability Summit. 2023 Post-filing season update; Electric vehicle federal tax credit rules tightened as of April 18, 2023; At the wake of the conflict that has stirred markets, Eco-Business rounds up six trends that could influence global sustainability in 2023. Via helps you navigate a fast-changing digital marketplace. Brief. Underpinning all of the changes that are likely to take place in 2023 are various sustainable regulation packages being implemented by governments across the globe. /esg/insights/featured/special-editorial/key-sustainability-trends-that-will-drive-decision-making-in-2023 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. In 2023, we think broader market conditions will continue to influence GSSSB issuance. Firms around the globe are shifting their focus on sustainability from talk to action. Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. Empowering senior teams to identify opportunities for growth and transformation. As it matures and evolves across asset classes and geographies, Andy Howard, Global Head of Sustainable Investment, considers the future of ESG and impact. The State of Sustainability for Emerging Beauty. That is not what makes for successful ESG governance. Although Forrester analysts expected at. Sustainability and ESG in 2023. The market for carbon credits will continue to evolve in 2023. 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. Many corporate leaders find sustainability also helps deepen their organizations sense of purpose to engage and retain a new generation of employees. During COP15, the International Sustainability Standards Board (ISSB) announced that it will research the link between climate and nature. Collaboration within and outside ecosystems in circular economy solutions is central to unlock benefits that organizations cannot achieve on their own. Join Team IMD. In the wake of the plastics treaty milestone, a new committee on chemicals was also set up. Companies need data transparency with detailed precision along the entire value chain. Go on - they only take five minutes. We extract and organise ecommerce data from over 1,500 online retailers in 40 countries providing daily updates on pricing, assortment size and key attributes. 2022 was a hot year for the climate. Circular Economies: There will be momentum on tackling plastic and chemical pollution. content Natalia Olynec is the Chief Sustainability Officer at IMD, where her work focuses on research, program development, strategy, governance, reporting and advisory. Enabling organizations to meet their learning objectives, in a more impactful, convenient and flexible way. 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. An unprecedented level of co-operation and solidarity is now required to unleash the funds potential. Unilever Hearts of Palm Ceviche. The IMD Alumni Network is a widespread but close-knit global community in a tightly interconnected and complex business environment. Some sectors, including utilities, oil and gas, and agribusiness, are more exposed to water stress than others and will face greater operating and financial challenges. 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. That is the hardest part, as usually 90-99% of a companys greenhouse gas emissions are Scope 3. Building on the key insights from World Water Week 2022, the UN Water Conference in March will focus on the water-climate nexus. Source: Euromonitors Voice of the Industry: Sustainability Survey 2022. COP27 failed to achieve any major breakthroughs in areas such as phasing out fossil fuels. This is why specific claims such as natural, organic, and vegan enjoyed outstanding momentum during 2021, according to Euromonitors Sustainability Opportunity Tracker. Despite goods and services prices increasing globally, consumers sustainability awareness remains strong, with two thirds of global consumers worried about climate change, and also willing to play their part to positively impact the environment. The USA's Securities and Exchange Commission (SEC) has . 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. Second, we are investing. Vanina Farber, elea Professor of Social Innovation, Patrick Reichert, Term Research Professor and Research Fellow. While policy and regulation play catch up, how will the financial sector, firms, and consumers step up to the challenge? In fact, 57% of global professionals mentioned their company is planning to develop products with carbon-neutral claims, according to Euromonitors Voice of the Industry: Sustainability Survey 2022, fielded January 2022. In the report that follows, we outline nine trends we see rising in prominence in the sustainability landscape during 2023. Susan Goldsworthy, Affiliate Professor of Leadership, Communications and Organizational Change. One simple exercise can be powerful in creating a more inclusive, productive environment. Take a scroll through our 2022 Annual and Sustainability reports. It is not enough to just claim that the products are better for the planet or more sustainable, if there is no arguable evidence behind these claims. The past eight years are expected to become the eighth warmest on record, driven by rising greenhouse gas emissions and accumulated heat. Only 18% of global respondents mentioned they are currently investing or planning to invest in supporting their suppliers to decrease carbon emissions, according to Euromonitors Voice of the Industry: Sustainability Survey 2022 , fielded January 2022. 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. Or learn more about our privacy policy and how we use and store your data. Develop fully customized programs that reflect the unique opportunities and challenges of your organization. The sustainability trends in 2023 are predicted to plunge beyond eco-friendliness. But that wasnt really the expectation at what was dubbed an implementation COP, where the focus was on how to turn pledges and commitments into real-world actions and solutions. Tackling pollution from source to sea will be increasingly important. While most cases have been against companies and investors for not doing enough on climate issues, we have seen an increase in lawsuits pushing back against ESG-related work or investment policies. Grow your network and explore the latest thinking on todays critical business challenges and opportunities. In January, Sherry Frey, VP of Wellness at NIQ hosted our annual Look Ahead Webinar covering the top wellness trends to watch in 2023. Surely thats progress that will help us breathe a little easier and live longer. Euromonitor International has identified five key trends affecting the global sustainability agenda in 2023. Some nations loosened restrictions on operating coal-fired power plants, while others extended the lives of coal and nuclear power plants. Prodded by consumer demands and impelled by increasingly stringent regulations, the business sector has taken notice and actions to create a more sustainable future. 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. Corporates investing in their own energy generation may find projects cost more in the short term. Yet collaborations are difficult to orchestrate as they demand systemic changes in clear contrast with the linear and profit-driven mindset prevailing in business. In 2023, we believe more investors and companies will seek to assess the social and financial costs associated with water scarcity and droughts. Peter Vogel, Professor of Family Business and Entrepreneurship, Ivan Miroshnychenko, Research Fellow and Term Research Professor. Only limited material is available in the selected language. Heres a summary of their investment priorities. 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. For example, the humanitarian sector is currently experiencing a $32.3bn shortfall between funding and what the UN says is needed. Considering all these pressures, its all too easy to stumble into the ESG reporting trap. We believe that dynamic could change as companies adjust in the face of economic uncertainty and changing labor market dynamics. Economist Impact, through its Back to Blue Initiative, has put a spotlight on the need to tackle chemical pollution. 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. 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.
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