sustainability trends 2023

Economies and nature are interconnected. Empowering senior teams to identify opportunities for growth and transformation. Here are five of the hottest sustainability trends they identified, as well as how you can prepare for them. 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. Knut Haanaes, Professor of Strategy and Lundin Chair Professor of Sustainability. Firms around the globe are shifting their focus on sustainability from talk to action. 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. 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. It is not a question of whether, it is a question of when. This year's forecast of sustainability trends looks like the perfect storm (in a good way) of purpose-minded, yet business opportunity-led progress. 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. 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. 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). 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digital solutions for temperature controls, shut off lighting and equipment when not in use, and replace less efficient outdated equipment. Corporate Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. At any given time, we have at least one million green startups exploring new energy solutions. 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. She has worked in sustainability management, consulting, and education for more than 15 years. As we become more aware of the impact our actions have on the environment, there is a growing need to find ways to operate in a more sustainable way. 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. With the right approach, everyone can be a winner. 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. They place them all on the wall, acknowledging and accepting them. While there is a degree of technical knowledge required, including integrated reporting methodologies and disclosure, there is the risk of a tick-box compliance focus that does not lever a real ESG identity. 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. These instruments will have to increasingly address investor questions about the effectiveness of targets and incentives. Finally, our companies are transforming. Source: Euromonitors Voice of the Industry: Sustainability Survey 2022. Here are the top six trends that are shaping a more sustainable future for our planet. 5 Sustainability Trends in 2023 and Beyond 07 April 2023Save Article Save Article In recent years, sustainability has become an increasingly important issue for businesses and individuals alike. Susan Goldsworthy, Affiliate Professor of Leadership, Communications and Organizational Change. They also involve measures to enhance the working environment, supply chain emissions, employee well-being, and ethical reporting. In the report that follows, we outline nine trends we see rising in prominence in the sustainability landscape during 2023. 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. While policy and regulation play catch up, how will the financial sector, firms, and consumers step up to the challenge? Despite these headwinds, we continue to view that the sustainable debt market will help advance sustainability goals. The luxury industries have continued in 2022 to accelerate innovation towards greater sustainability. At COP27 countries finally made progress on establishing a framework for a Global Goal on Adaptation (GGA). Learn more about our world-class faculty team. In addition to more substantial legal, operational, reputational and financial consequences of violations, companies may need to consider costs associated with adapting their sourcing models and managing higher input and production prices. COP27 in November 2022 was quickly followed by the U.N.'s Convention on Biological Diversity, known as COP15. Setting up a loss and damage fund at COP27 was only the first step. 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. The COP27 climate conference was a mixed bag. Firms are advised to get ahead of the game and start accounting for biodiversity. First, the world is searching for new solutions. Some facts are encouraging: So, there is a real case for a glass half full view on climate. Private-public alignment is necessary to accelerate the transition towards circular models. That said, we believe developing countries can only sustain so much debt to finance rising losses and lost revenues from physical climate risks. The current approach to sustainability is underpinned by guilt. mandatory biodiversity assessments and disclosures by 2030. 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 durability of sustainable employment practices, implemented in recent years in response to significant shifts in workforce expectations, will be challenged by recessionary risks in many markets. 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. Error: Something went wrong, try again in a few minutes. All rights reserved. Outlook 2023, Sustainability: five trends to watch. Finnair Chairman Jouko Karvinen values age and background diversity as part of the airlines emphasis on sustainability, shifting the scope of the dynamics and the discussion in the process. Established under the Paris agreement, the GGA aims to create an adaptation equivalent to the global mitigation goal of limiting the global temperature rise to 1.5C. The global energy landscape shifted in 2022 with record prices and supply disruptions related to the Russia-Ukraine war. Urging business leaders to think further ahead, these analysts predicted a carbon flip after an intensive period of innovation in climate mitigation technologies that is already under way, to be followed by roughly 20 years of implementation for scalable solutions and replacement of carbon-based technologies.. What makes a great leader? Published May 1, 2023 + Follow As the world continues to grapple with environmental and social challenges, sustainable finance is becoming increasingly important. Authors: Andrew Angle, Aiste Brackley, Justin Nelson, Laura Street, Mark Lee. In fact, a recent study by McKinsey estimated that the transition to net zero alone will provide business opportunities of $12trn per year. Net Zero & Energy: The recent focus on scope 3, carbon credits and carbon removal is set to accelerate. Can development organizations, governments, firms and private financial institutions work together with the humanitarian sector to fill the gap? This will require multi-stakeholder partnerships between the public and private sectors as well as among scientists, communities and consumers. Resilience & Adaptation: There will be further progress on loss and damage and the global adaptation goal. Meanwhile there are plenty of near-term business results from the sustainability wave. If you've had any better visions, let us know in the comments. Social Sustainability: The cost-of-living crisis intensifies, but offers opportunities for more-inclusive climate action. Firms are advised to get ahead of the game and start accounting for biodiversity. These trends highlight the delicate balancing act we see stakeholders facing and managing, weighing various and sometimes opposing forces. 7 sustainability trends to watch in 2023 1 In 2023, consumers will be holding brands responsible for progressing the world's state of sustainability. Policymakers and senior executives need to navigate the increasing complexity of simultaneous climate and cost-of-living crises. We will scale new technologies to gradually disrupt our carbon economy. High rates of inflation in many markets are causing the prices of many products to rise steeply. Both crises call for increased focus on energy efficiency and acceleration of investment in renewables, suggesting alignment. By next year, IDC analysts predicted a quarter of organizations worldwide will demonstrate responsible leadership by increasing their sustainability-related digital technology spend by more than 25% from 2022 levels. That is the hardest part, as usually 90-99% of a companys greenhouse gas emissions are Scope 3. 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. 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. The Intergovernmental Negotiating Committee (INC) will hold workshops over the course of 2023, with the aim of adopting the treaty in 2024. April 28, 2023 . By understanding and implementing these 2023 sustainability trends, restaurants can stay ahead of the curve . The challenge to reduce scope 3 emissions (ie, indirect emissions by suppliers or consumers in an organisations value chain) will accelerate in 2023 as companies focus on their supply-chain partners and on how their products and services are used by customers. Agribusinesses are particularly sensitive to water scarcity, leading to more expensive irrigation, crop damage and weak harvests, which may raise food security and supply concerns, already exacerbated by the Russia-Ukraine war. Economic recovery after the pandemic has not been as fast as expected, while the Russian invasion of Ukraine has put extra pressure on consumer and business budgets due to supply chain and energy disruptions. Discover all upcoming events for IMD alumni! They are developing sustainable products and services and supply chain practices to increase revenue, satisfy investors and regulators, and improve their reputation. 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. We help businesses, policymakers, financiers, investors, NGOs and others achieve sustainability goals, faster. At COP15, the 2022 UN conference on biodiversity, leaders decided on our collective goals for the post-2020 global biodiversity framework and businesses. The U.S. Customs and Border Patrol is enforcing 55 active Withhold Release Orders and targeted over 3,500 inbound shipments from 2021 to 2022. 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. For example, the ocean and food systems had their own dedicated pavilions. 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. But actions speak louder than wordsand progress in areas such as food sustainability and reversing deforestation has been mixed over the past year. 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. 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. Nevertheless, Here are a few of my predictions for trends that will shape sustainability in 2023. 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. Of particular note was how consumers are approaching healthy living in the Beauty & Personal Care category. 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. Gartner researchers said that by 2027, 50% of the top 10 consumer goods manufacturers will have digital product passports for at least one of their product categories. One main driver for this is the next generation of family owners. Studies project further losses in biodiversity by midcentury due to changes in both land use and climate, absent transformative changes to economies. Collaboration within and outside ecosystems in circular economy solutions is central to unlock benefits that organizations cannot achieve on their own. We will go through the whole energy transition, and we will build a circular economy. 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. 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. 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. 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. 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. Do you need charisma? 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. Net-zero pledges have become mainstream in companies sustainability reports, as a way to demonstrate environmental commitment. Building a digital ecosystem of partners offers you a powerful lever to accelerate growth. 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. 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. Taking a stack of post-it notes, team members write down all the things that are concerning them from their personal and professional perspectives. All Trends Business Sustainability Our hand-picked collection of the top sustainability trends of 2023 & 2022. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises. These are accelerating systems transformation by boosting multi-stakeholder innovation, thus reducing costs for players, surmounting obstacles, and advancing solutions adoption. 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. Amanda Williams,Term Research Professor and Research Fellow. 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.. 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. 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. From battery-powered cruise ships to aviation biofuel derived from microalgae. Although the number of climate-related deaths has decreased threefold in the last 50 years thanks to early warning systems and better disaster management and preparedness, climate-related disasters are now nearly five times as frequent, according to the World Meteorological Organization. Storytelling and expertise from marketers, SAP BrandVoice: Green Customer Experiences Drive Ongoing Growth For Midsize Businesses. Harnessing collaboration to enable the circular economy, Successful examples include multi-stakeholder platforms like the. An opportunity lens on sustainability. Moving to a cloud service provider that has made such commitments may help organizations reduce their own carbon footprint as well! To that end, here are the top sustainable living trends to watch in 2023. Victoria Kemanian, Senior Advisor, Business Transformation Initiative. 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. The MarketWatch News Department was not involved in the creation of this content. 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. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. 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,. Sustainability trends to look out for in 2023 Michael Wilkins on December 30, 2022 There's an unpredictable year ahead and my futuristic thinking can only pierce so far into the haze. For example, integrating ESG standards faces some opposition in the U.S., while in Europe and Asia, there are calls for greater action through regulations and public commitments. With all the regulatory changes ahead, 2023 will be a year dominated by managing ESG risks. 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. Foodservice innovation drivers in 2023 include health and wellness, nostalgia, sustainability, and a desire for adventure. 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. During COP15, the International Sustainability Standards Board (ISSB) announced that it will research the link between climate and nature. Here's our breakdown of some of the biggest sustainability trends impacting retail in 2023: Greater transparency, increased regulation Focus on improving delivery to reduce the carbon footprint Rise of the circular economy Eco-friendly, fair workplaces Ethical supply chain Growing role of data and AI in sustainability efforts Today, we have at least 13,000 large and medium-sized companies in Europe transitioning towards more sustainable operations by disclosing their climate footprint. Via helps you navigate a fast-changing digital marketplace. And the EU looks to advance its own human rights due diligence directive and regulation restricting goods made with forced labor throughout 2023. 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. Thank you to all our colleagues across S&P Global who contributed to this research: Laurence Allen, Rameez Ali, Marion Amiot, Giacomo Bareato, Corinne Bendersky, Erin Boeke Burke, Beth Burks, Carlos Cardenas, Bernard de Longevialle, Florence Devevey, Alexandra Dimitrijevic, Jaspreet Duhra, Silvia Favasuli, Michael Ferguson, Rita Ferreira, Taos Fudji, Pierre Georges, Lotte Griek, Lapo Guadagnuolo, Bertrand Jabouley, Roman Kramarchuk, Raoul LeBlanc, Gregg Lemos-Stein, Rick Lord, Tom Lowenstein, Matt MacFarland, Rose Marie Burke, Mary Minton, Matthew Mitchell, Anna Mosby, Karl Nietvelt, Laurent Ruseckas, Francesca Sacchi, Jamie Salo, Roberto Sifon-arevalo, Michael Stoppard, Vijay Subramanian, Priya Suvarna, Cornelis theunis Van der lugt, Kieran Trevor, Barbara Velado, Emmanuel Volland, Ken Wattret, Nora Wittstruck, Xizhou Zhou. Economist Impacts Martin Koehring highlights why stronger collaboration will be required to accelerate progress in 2023, Head, World Ocean Initiative & Senior Manager, Sustainability at Economist Impact. 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 top strategic technology trends for 2023 are: Sustainability Sustainability traverses all of the strategic technology trends for 2023. This research is based on feedback from analysts and researchers across S&P Global. However, they also face criticism because of their complexity and a continuing lack of global alignment. That is not what makes for successful ESG governance. Yet only 21% believe that their organizations are very ready to address such issues. According to HolonIQ we already have 47 climate unicorns worth more than $1bn. What are the new sustainability KPIs that are at the heart of your strategy execution? Executive teams will increasingly have to address these emotional challenges. Collaboration between government, financiers and innovators will be key to scale up these solutions. Meanwhile, the number and duration of droughts globally have risen by almost a third since 2000, according to the U.N. For example, long-term energy transition goals will be weighed alongside nearer-term considerations such as energy affordability and security. 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. In a recent Gartner survey, CEOs reported that environmental and social changes are now a top three priority for investors, after profit and revenue. Fundamentally, if we take a long-term perspective, we will deal with climate change. Julia Binder, Professor of Sustainable Innovation and Business Transformation. 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. 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. 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. 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. Article Against a backdrop . Download this insight brief to learn about the top eight ESG and sustainability trends you should expect to see in 2022 and beyond. 19 hours ago by Winter Nie, Ivy Buche, Mahwesh Khan in Competitiveness, by Natalia Olynec Published 2 January 2023 in Sustainability 12 min read. Droughts impact major economies, including Europe, the U.S. and China, raising prices and creating potential food shortages that disproportionately impact the worlds most vulnerable communities. 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. A fully online experience that takes you on an in-depth exploration of topics that matter to you. 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. Sustainable solutions can, and should, be affordable, so consumers do not struggle when seeking more conscious habits. 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. Apr 26, 2023 (3BL Media via . Thus, the need for sustainable trends will also possibly increase in 2023. 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. The EU taxonomy on sustainable activities will start to include the circular economy for the first time from January 1st 2023, thus accelerating the incorporation of circularity in the investment communitys scrutiny of corporate activities. Also, businesses should work with key stakeholders such as governments, suppliers, and competitors to build scale economies that allow the acceleration of the transition. Here are our top 10 sustainability trends we're expecting to see gain momentum and define sustainability in 2023: 1. With Scope 3 emission regulations on the rise and continuously changing, organizational leaders have realized the value of connected data to track, report, and reduce climate impact. Many boards have responded to increasing ESG pressures by recruiting a sustainability specialist. One such law, the German Supply Chain Due Diligence Act, goes into effect in January 2023 and requires covered companies to conduct human rights and environmental due diligence to identify risks, remedy issues and establish grievance mechanisms, among other things. 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. Economic and Political Challenges to Test ESG's Staying Power Recession, energy crisis and increased regulation are the. What are material sustainability issues for your company above the standard setters guidelines? Copyright The Economist Newspaper Limited 2023. 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. More Sustainable Materials. However, the continued lack of a global climate finance taxonomy remains a challenge to bringing transparency and comparability to the space. Nevertheless, we think companies will be pressed in 2023 to invest more resources into managing the resilience and sustainability of their supply chains in the face of a more rigorous regulatory landscape governing corporate responsibility around the impact on human rights. All this will require considerably more investments and capability building.

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