Download Transcript (PDF, 106 KB) The large-scale trends shaping the ESG investing world have become well recognized: Climate change risk and the road to net zero, the growing existential threat of biodiversity loss, social inequalities, regulation and, lately, debate and controversy over greenwashing and what ESG should be. Julia Binder, Professor of Sustainable Innovation and Business Transformation. Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. More Sustainable Materials. Though geopolitical conflicts, inflation and the effects of climate change continue to pose risks to supply chain operations, there are indications that the supply chain disruptions of recent years may be easing. 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. Error: Something went wrong, try again in a few minutes. Knut Haanaes, Professor of Strategy and Lundin Chair Professor of Sustainability. These macroeconomic and market conditions could constrain issuer appetite for GSSSB offerings. Leadership is about being positive and seeing opportunities, and we are living in a time where climate leadership is critically important. 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. This list builds on many of the trends we identified in 2022, several of which we believe will remain relevant in 2023. 2. What are the new sustainability KPIs that are at the heart of your strategy execution? Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. 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. Surely thats progress that will help us breathe a little easier and live longer. Or learn more about our privacy policy and how we use and store your data. Nevertheless, Here are a few of my predictions for trends that will shape sustainability in 2023. But, in order for circular models to succeed, there is a need for collaboration. 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. We expect that 2023 will see significant attention paid to adaptation and resilience financing. Do you need charisma? All stakeholders will bear the impacts from physical risks related to climate change. 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. COP27 failed to achieve any major breakthroughs in areas such as phasing out fossil fuels. Only limited material is available in the selected language. All Trends Business Sustainability Our hand-picked collection of the top sustainability trends of 2023 & 2022. , 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. She has worked in sustainability management, consulting, and education for more than 15 years. These trends highlight the delicate balancing act we see stakeholders facing and managing, weighing various and sometimes opposing forces. So it is urgent to accelerate our progress towards this objective. 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. Critical actions could accelerate the transition while enhancing energy affordability and supporting inclusive economic growth. Authors: Andrew Angle, Aiste Brackley, Justin Nelson, Laura Street, Mark Lee. Despite this, biodiversity, essential to sustaining natural capital and ecosystem services, is declining. According to the REN21 renewable energy community, we globally invested $366bn in renewables in 2021 alone. 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. One main driver for this is the next generation of family owners. Second, we are investing. Private-public alignment is necessary to accelerate the transition towards circular models. Gartner researchers said that customer expectations around environmental and social sustainability will apply to the entire product life cycle, predicting that buyers will speak with their wallets by purchasing only from companies and suppliers that demonstrate authentic achievement of commitments. The firm found that 67% of organizations intend to hold supply chain leaders accountable for defined environmental and social sustainability KPIs. 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. Ocean-related climate solutions will be crucial to making progress on global climate and nature targets in 2023, following the 2022 UN Ocean Conference. 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. Asia as a key supplier of fossil fuels Russia, the world's largest fossil fuels exporter in 2021, has thrown global energy markets into turmoil by its invasion of Ukraine. The We Mean Business Coalition and the Voluntary Carbon Markets Integrity Initiative have continued moving towards better regulation and standards for carbon credits. 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. 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. Take a scroll through our 2022 Annual and Sustainability reports. However, the need to bring citizens and workers on board with the climate-action agenda will remain a challenge. We will scale new technologies to gradually disrupt our carbon economy. Inconsistent ESG data availability and quality hinder corporate ESG efforts and impact. For example, quite a few food companies cant achieve net zero without having their suppliers (farmers) planting crops that are of no use for the company supply chain, but which capture CO2. In the short term, businesses of all industries and sizes will look at energy-saving measures to reduce both costs and carbon emissions. 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. Here are five of the hottest sustainability trends they identified, as well as how you can prepare for them. The top strategic technology trends for 2023 are: Sustainability Sustainability traverses all of the strategic technology trends for 2023. Data in your Equity, Inclusion & Diversity strategy: friend or foe? The IMD Alumni Network is a widespread but close-knit global community in a tightly interconnected and complex business environment. Whether it is reducing waste, optimizing the supply chain, or eliminating emissions, insights from sustainability data can help to reach net-zero emissions. Although Forrester analysts expected at. For many years, sustainability has remained top of mind for food and beverage processors and consumers. Economic and Political Challenges to Test ESG's Staying Power Recession, energy crisis and increased regulation are the. Several initiatives, such as the Global Reporting Initiative and ISSB collaboration or Net Zero Guidelines from the International Organization for Standardization, may play a role in harmonizing the various standards. 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. 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. Climate change is driving water scarcity and more severe and frequent droughts, hampering agricultural production, food supplies and economies. There is an urgent need for private capital to enter frontier markets to help solve systemic grand challenges. We will go through the whole energy transition, and we will build a circular economy. Another trend in sustainability that's gaining traction in restaurants is eco-friendly packaging. estimated that the transition to net zero alone will provide business opportunities of $12trn per year. At any given time, we have at least one million green startups exploring new energy solutions. 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. 1. Prodded by consumer demands and impelled by increasingly stringent regulations, the business sector has taken notice and actions to create a more sustainable future. 2023 Post-filing season update; Electric vehicle federal tax credit rules tightened as of April 18, 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. 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. The global energy landscape shifted in 2022 with record prices and supply disruptions related to the Russia-Ukraine war. The EU took a leadership position in creating the fund, but now it must be operationalised and made viable. 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. The goal is to agree on a post-2020 global biodiversity framework that builds on the Strategic Plan for Biodiversity 2011-2020. Some governments have responded with new packages such as the U.S. Inflation Reduction Act and Europes REPower EU to incentivize clean energy adoption and energy efficiency. In that publication, we suggested 2021 . 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. In the report that follows, we outline nine trends we see rising in prominence in the sustainability landscape during 2023. That said, we believe developing countries can only sustain so much debt to finance rising losses and lost revenues from physical climate risks. 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. For example, quite a few food companies cant achieve net zero without having their suppliers (farmers) planting crops that are of no use for the company supply chain, but which capture CO2. 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. Forrester expected five Fortune Global 200 firms to announce policies limiting travel for sustainability this year. COP27 in November 2022 was quickly followed by the U.N.'s Convention on Biological Diversity, known as COP15. 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. The need for stronger collaboration shines through the five key sustainability and climate trends I expect to see in 2023. 1. 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. 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. With most models still at an experimental stage, a tougher challenge is spreading solutions globally. Euromonitor International has identified five key trends affecting the global sustainability agenda in 2023. Many restaurants now offer compostable containers and utensils that are much more eco-friendly than traditional plastic or styrofoam. 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. A series of workshops under the Glasgow Sharm El-Sheikh Work Programme (GlaSS) during 2023 aims to pave the way for adoption of the framework at COP28 in Dubai in late 2023. 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. Corporate 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. 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. 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. Key insights such as 'The Future of Jobs' report will map . COP27 has confirmed the need for stronger co-operation on key issues such as climate finance and corporate net-zero commitments. The picture looks especially complicated in Europe, where new investment in liquefied natural gas and a slower phaseout of coal could challenge decarbonization plans. Collaboration will also be needed to accelerate the building of circular economies. 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. At the wake of the conflict that has stirred markets, Eco-Business rounds up six trends that could influence global sustainability in 2023. Firms are advised to get ahead of the game and start accounting for biodiversity. Foodservice innovation drivers in 2023 include health and wellness, nostalgia, sustainability, and a desire for adventure. Through this process, leaders co-create the conditions where people can flourish amidst adversity. Family businesses will adopt new digital capabilities to manage sustainability data that guide sustainable business practices. Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. Published: April 26, 2023 at 10:09 a.m. Develop fully customized programs that reflect the unique opportunities and challenges of your organization. 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. 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. Brief. Many boards have responded to increasing ESG pressures by recruiting a sustainability specialist. 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. 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. Economist Impact, through its Back to Blue Initiative, has put a spotlight on the need to tackle chemical pollution. This will require multi-stakeholder partnerships between the public and private sectors as well as among scientists, communities and consumers. That is the hardest part, as usually 90-99% of a companys greenhouse gas emissions are Scope 3. Stphane J.G. One of the main reasons for that is the cost-of-living crisis in many countries, exacerbated by the war in Ukraine and rising energy and food prices. 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. Since 2019, the number of people affected by food shortages has more than doubled to 345 million, roughly 4% of the world population, from 135 million, as reported by the World Food Programme. Discover our campus locations in Switzerland and Singapore. For years now, car makers like Porsche have been working on their shift to electrical power traction, while Kering started its journey towards decarbonization in 2012, introducing along the way the first Environmental Profit & Loss account in luxury fashion and sharing its methodology so that other companies can learn from it and use it as a model. 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. Many corporate leaders find sustainability also helps deepen their organizations sense of purpose to engage and retain a new generation of employees. Discover more than 130,000 executives who are IMD alumni. Curious about how we partner with you to help you solve your complex modern-day business problem? 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. While policy and regulation play catch up, how will the financial sector, firms, and consumers step up to the challenge? 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. Source: Euromonitor's Voice of the Industry: Sustainability Survey 2022. As a result, 91% of the global economy and 810 out of the 2,000 largest companies have pledged to net zero. 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. MSc in Sustainable Management & Technology, Executives-in-Residence & Executive Fellows. 1) Changing Electric Infrastructure However, organizational transformation and readiness is needed to push the boundaries of the problems that private capital can address and solve. Regulatory trends point to a hardening of what were largely voluntary frameworks for how companies manage human rights in their upstream operations. 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. One simple exercise can be powerful in creating a more inclusive, productive environment. Sustainable solutions can, and should, be affordable, so consumers do not struggle when seeking more conscious habits. That is not what makes for successful ESG governance. MIT Sustainability Summit. 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. Mind the ESG reporting trap! 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. This years forecast of sustainability trends looks like the perfect storm (in a good way) of purpose-minded, yet business opportunity-led progress. Renewables and Nuclear Hold Promise for Net Zero Energy. While policy and regulation play catch up, how will the financial sector, firms, and consumers step up to the challenge? Carbon offsets have been criticized for. The past eight years are expected to become the eighth warmest on record, driven by rising greenhouse gas emissions and accumulated heat. 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. In addition, products carrying carbon-neutral/reduced carbon claims globally increased by 38% during 2020/2021, according to Euromonitors Sustainability Opportunity Tracker (15 countries in seven industries). 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. We believe that these initiatives, among others, will serve as catalysts for greater reflection by stakeholders about the impact, risks and opportunities associated with nature and biodiversity. Read more about how we track global trends. 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. Yet only 21% believe that their organizations are very ready to address such issues. Net-zero pledges have become mainstream in companies sustainability reports, as a way to demonstrate environmental commitment. 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. 2023 Euromonitor is privately owned & trademarked. . 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. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. Sustainability Conferences to attend in 2023. 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. All this will require considerably more investments and capability building. For this to be achieved, companies need to measure direct (scope 1) and indirect (scope 2 and 3) emissions. Firms are advised to get ahead of the game and start accounting for biodiversity. With challenges such as global economic, The pandemic, cost-of-living crisis and high inflation continue to have an unprecedented impact on affluent consumers, their wealth, and their shopping habits.
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