Stphane J.G. The proposals from the ISSB, EFRAG and SEC all use the TCFD framework as a reference for climate-related issues, but differences remain in their specific requirements and how they treat wider sustainability issues. Therefore, for companies to remain competitive and relevant in such fast-evolving sustainability environments, proactive collaboration with key stakeholders is crucial. 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. The IMD Alumni Network is a widespread but close-knit global community in a tightly interconnected and complex business environment. High rates of inflation in many markets are causing the prices of many products to rise steeply. 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. Knut Haanaes, Professor of Strategy and Lundin Chair Professor of Sustainability. 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. Leadership is about being positive and seeing opportunities, and we are living in a time where climate leadership is critically important. 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. 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. Or learn more about our privacy policy and how we use and store your data. A New Era for Sustainability Accountability Last year we saw an influx. Apr 26, 2023 (3BL Media via . Discover our campus locations in Switzerland and Singapore. Nevertheless, Here are a few of my predictions for trends that will shape sustainability in 2023. Dedicated to the advancement of knowledge on world competitiveness. Fundamentally, if we take a long-term perspective, we will deal with climate change. 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. 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. /esg/insights/featured/special-editorial/key-sustainability-trends-that-will-drive-decision-making-in-2023 The COP27 United Nations Climate Change Conference in Egyptand the UN Biodiversity Conference COP15 in Montreal stressed the need for business to create action plans to mitigate human influence on the climate and on nature. Critical actions could accelerate the transition while enhancing energy affordability and supporting inclusive economic growth. 5 Sustainability Trends for Businesses in 2023. 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. From 2023 we may see more second-hand, vintage and repurposing brands becoming central to the way we shop. 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. Some nations loosened restrictions on operating coal-fired power plants, while others extended the lives of coal and nuclear power plants. For example, carbon taxesas vital as they may be for meeting climate targetsmay continue to face a backlash as cash-strapped voters react adversely to the imposition of taxes during a recession (even if well-intentioned), particularly if these moves are perceived as a hidden government agenda to raise taxes. Victoria Kemanian, Senior Advisor, Business Transformation Initiative. Didier Cossin, Professor of Governance and Finance, Founder and Director of IMD Global Board Center, Sophie Coughlan, Associate Director, IMD Global Board Center. Building on the key insights from World Water Week 2022, the UN Water Conference in March will focus on the water-climate nexus. Studies project further losses in biodiversity by midcentury due to changes in both land use and climate, absent transformative changes to economies. By Jonny Bierman. 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. mandatory biodiversity assessments and disclosures by 2030. Many boards have responded to increasing ESG pressures by recruiting a sustainability specialist. A fully online experience that takes you on an in-depth exploration of topics that matter to you. Results-based climate finance was presented by the World Bank and others as an effective method to drive financing to projects that could generate such credits. The increasing risk of environmental, social and governance (ESG)-related litigation, including over sustainability disclosure, will be another challenge for companies and investors to navigate. 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. Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. 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. In the report that follows, we outline nine trends we see rising in prominence in the sustainability landscape during 2023. All rights reserved. 2023 Euromonitor is privately owned & trademarked. Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. Euromonitor International has identified five key trends affecting the global sustainability agenda in 2023. Discover more than 130,000 executives who are IMD alumni. If not, select "Manage Preferences" to learn more about managing your cookie preferences. That is not what makes for successful ESG governance. Also, several AI giants such as Google and Microsoft have already pledged to become carbon negative soon. Carbon offsets have been criticized for. Sustainable solutions can, and should, be affordable, so consumers do not struggle when seeking more conscious habits. 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. The luxury industries have continued in 2022 to accelerate innovation towards greater sustainability. Photo courtesy of Unilever. Source: Euromonitor's Voice of the Industry: Sustainability Survey 2022. During COP15, the International Sustainability Standards Board (ISSB) announced that it will research the link between climate and nature. 1. 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. 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. 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. 2022 Sustainability Trends Report. Access and download reports and data purchased through Euromonitor.com. 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. In fact, a recent study by McKinsey estimated that the transition to net zero alone will provide business opportunities of $12trn per year. A risk-focused mindset could be preventing businesses from developing the ambitious strategies they need to capitalize on the opportunities of sustainability 28 March 2023 by Etelle Higonnet in Sustainability. 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. We will scale new technologies to gradually disrupt our carbon economy. But there are also reasons to be optimistic. Build your core leadership skills, accelerate your career and harness your full potential as a leader. 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. Powerful business networks. 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. At COP15, the 2022 UN conference on biodiversity, leaders decided on our collective goals for the post-2020 global biodiversity framework and businesses. 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. 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. ET. In addition, ESG investors and rating agencies are holding firms accountable for their sustainability records. Read more about how we track global trends. Prodded by consumer demands and impelled by increasingly stringent regulations, the business sector has taken notice and actions to create a more sustainable future. The Intergovernmental Negotiating Committee (INC) will hold workshops over the course of 2023, with the aim of adopting the treaty in 2024. 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.

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