sustainability trends 2023

Many companies are working hard to meet net-zero sustainability targetsby 2050 or other target dates. ArtificiaI Intelligence, and specifically certain deep learning models such as those designed to process human language, requires huge amounts of energy. All content is available on the global site. 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. Collaboration will also be needed to accelerate the building of circular economies. 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. An infographic based on the latest Climate Watch data highlights that energy usage contributes to 73.2% of global greenhouse gas emissions. Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. 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. 7 sustainability trends to watch in 2023 1 In 2023, consumers will be holding brands responsible for progressing the world's state of sustainability. Trends that were driving innovation before the COVID-19 pandemic may have stalled for the past couple of years, but many now appear to be making a comeback. . 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. 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. 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. Firms are advised to get ahead of the game and start accounting for biodiversity. Many report feeling overwhelmed, experiencing increasing anxiety, frustration and irritability, as organizations face a multitude of challenges in a world dealing with ecological collapse, biodiversity loss, social division and economic decline. Join Team IMD. That is the hardest part, as usually 90-99% of a companys greenhouse gas emissions are Scope 3. This was billed as the first Africa COP, and a focus on developing-country issues, as well as the agreement on loss and damage, illustrated the vital need for inclusive communities and considering the impact of climate on the most vulnerable communities. 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. estimated that the transition to net zero alone will provide business opportunities of $12trn per year. How do you inspire your team? One simple exercise can be powerful in creating a more inclusive, productive environment. That said, we believe developing countries can only sustain so much debt to finance rising losses and lost revenues from physical climate risks. 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. Renewables and Nuclear Hold Promise for Net Zero Energy. 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. Copyright The Economist Newspaper Limited 2023. Critical actions could accelerate the transition while enhancing energy affordability and supporting inclusive economic growth. These are accelerating systems transformation by boosting multi-stakeholder innovation, thus reducing costs for players, surmounting obstacles, and advancing solutions adoption. In turn, this has taken a heavy toll on the sea level rising, European glacier melting, and extreme weather events from . According to new NielsenIQ survey data, 46% of consumers are looking to brands to take the lead on creating sustainable change. Unilever Hearts of Palm Ceviche. Heres a summary of their investment priorities. Discover our campus locations in Switzerland and Singapore. 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. 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. The need for stronger collaboration shines through the five key sustainability and climate trends I expect to see in 2023. These include Scope 3 emissions, those which do not come from their own operations but from their larger value chain. 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. Ocean-related climate solutions will be crucial to making progress on global climate and nature targets in 2023, following the 2022 UN Ocean Conference. This will require multi-stakeholder partnerships between the public and private sectors as well as among scientists, communities and consumers. The global green, social, sustainability and sustainability-linked bond (GSSSB) market in 2022 did not reach the highs set in 2021, as rising interest rates and the risk of recession in many parts of the world sidelined debt issuers. We know that sustainable fashion is high on our trend predictions for 2023, but what also featured in our research was the increased use of sustainable materials. 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. As new sustainability disclosure standards come into effect around the globe, stakeholders will have to grapple with the complexity and potential challenges regarding alignment of these initiatives. Didier Cossin, Professor of Governance and Finance, Founder and Director of IMD Global Board Center, Sophie Coughlan, Associate Director, IMD Global Board Center. The need for stronger collaboration shines through the five key sustainability and climate trends I expect to see in 2023. Inconsistent ESG data availability and quality hinder corporate ESG efforts and impact. Build your core leadership skills, accelerate your career and harness your full potential as a leader. 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. Building on the visibility of nature-based climate solutions at COP26, there was an enhanced profile for nature at COP27 too. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. 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. Empowering senior teams to identify opportunities for growth and transformation. Sustainable solutions can, and should, be affordable, so consumers do not struggle when seeking more conscious habits. Visit our Sustainability page and Sustainability store for further insights. The MarketWatch News Department was not involved in the creation of this content. I by IMD is produced by the Institute for Management Development, Unleashing the Power of Data and Digital Ecosystems (Management on the Cutting Edge), Lifelong learning. Here is a preview of a few of Forrester's 2023 predictions for sustainability: Carbon offsets and credits will be back in fashion but with less fraud. 2023 Post-filing season update; Electric vehicle federal tax credit rules tightened as of April 18, 2023; Resilience & Adaptation: There will be further progress on loss and damage and the global adaptation goal. 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. For this to be achieved, companies need to measure direct (scope 1) and indirect (scope 2 and 3) emissions. Progressive employment practices implemented in the wake of COVID-19 will be tested by cost-cutting related to economic uncertainty. 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. 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. Powerful business networks. 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. 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. Follow this link to learn more about our cookie policy and how we use cookies. 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. Yet only 21% believe that their organizations are very ready to address such issues. Protecting and restoring biodiversity under the Convention on Biological Diversity (CBD) has been on the agenda since 2020. 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. In 2023, we believe sustainability initiatives could be tested by persistent inflation and economic uncertainty. Companies need data transparency with detailed precision along the entire value chain. As sustainability has morphed from carbon emissions tracking into company-wide commitments to achieve global imperatives, organizations of all kinds find themselves in the business of creating a healthier world. Access and download reports and data purchased through Euromonitor.com. 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. As it matures and evolves across asset classes and geographies, Andy Howard, Global Head of Sustainable Investment, considers the future of ESG and impact. COP27 failed to achieve any major breakthroughs in areas such as phasing out fossil fuels. 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. There is unanimous agreement that 2023 will be a challenging year across global markets. Curious about how we partner with you to help you solve your complex modern-day business problem? 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. 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. 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. Meanwhile, the number and duration of droughts globally have risen by almost a third since 2000, according to the U.N. Supporting organizations with talent assessment, development and leadership progression. 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. 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. While policy and regulation play catch up, how will the financial sector, firms, and consumers step up to the challenge? Collaboration between government, financiers and innovators will be key to scale up these solutions. From battery-powered cruise ships to aviation biofuel derived from microalgae. 1. The COP27 climate conference was a mixed bag. Insights on Sustainability Article Toward a more orderly US energy transition: Six key action areas January 12, 2023 - The US drive to decarbonize is at an inflection point. 1. During COP15, the International Sustainability Standards Board (ISSB) announced that it will research the link between climate and nature. 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. 27 April 2023 by Frederic Barge, Karl Schmedders in Sustainability. In that journey, many are also realizing that it is impossible to achieve net zero without looking outside of their traditional business. 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. Be a part of a pioneering community. Taking a stack of post-it notes, team members write down all the things that are concerning them from their personal and professional perspectives. Meanwhile, new human rights regulations will introduce additional requirements for company supply chain management. In the short term, businesses of all industries and sizes will look at energy-saving measures to reduce both costs and carbon emissions. Leadership is about being positive and seeing opportunities, and we are living in a time where climate leadership is critically important. Consequently, in 2023, we anticipate the durability of new employee-friendly workplace practices will be tested. 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. To that end, here are the top sustainable living trends to watch in 2023. That is the hardest part, as usually 90-99% of a companys greenhouse gas emissions are Scope 3. 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 . Thus, the need for sustainable trends will also possibly increase in 2023. 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. 6. Source: Euromonitor's Voice of the Industry: Sustainability Survey 2022. Photo courtesy of Unilever. From net zero to climate-positive supply chains, Many companies are working hard to meet net-zero sustainability targetsby 2050 or other target dates. The market for carbon credits will continue to evolve 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. The State of Sustainability for Emerging Beauty. 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. In 2023, we think continued geopolitical turmoil, persistent inflation, looming recession and worsening physical impacts of climate change will create new tensions between managing near-term risks and making meaningful progress on longer-term sustainability goals. 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. An opportunity lens on sustainability. At COP15, the 2022 UN conference on biodiversity, leaders decided on our collective goals for the post-2020 global biodiversity framework and businesses. 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. Therefore, for companies to remain competitive and relevant in such fast-evolving sustainability environments, proactive collaboration with key stakeholders is crucial. There is an urgent need for private capital to enter frontier markets to help solve systemic grand challenges. 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. At COP27 countries finally made progress on establishing a framework for a Global Goal on Adaptation (GGA). COP27 in November 2022 was quickly followed by the U.N.'s Convention on Biological Diversity, known as COP15. 1. They place them all on the wall, acknowledging and accepting them. Download this insight brief to learn about the top eight ESG and sustainability trends you should expect to see in 2022 and beyond. Susan Goldsworthy, Affiliate Professor of Leadership, Communications and Organizational Change. Despite this, biodiversity, essential to sustaining natural capital and ecosystem services, is declining. 2 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. The challenges of transitioning to the circular economy are such that one single actor cannot tackle them alone. Boards leading on ESG drive the ESG culture of the board through its composition. Prodded by consumer demands and impelled by increasingly stringent regulations, the business sector has taken notice and actions to create a more sustainable future. Knut Haanaes, Professor of Strategy and Lundin Chair Professor of Sustainability. The luxury industries have continued in 2022 to accelerate innovation towards greater sustainability. Authors: Andrew Angle, Aiste Brackley, Justin Nelson, Laura Street, Mark Lee. 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. yk Ik, Professor of Digital Strategy and Cybersecurity. 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. 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. There is plenty of room for penetration in most markets, as the share of digital shelf remains low. In the report that follows, we outline nine trends we see rising in prominence in the sustainability landscape during 2023. Explore more than 75+ Executive Education programs at IMD. In the short term, businesses of all industries and sizes will look at energy-saving measures to reduce both costs and carbon emissions. Via helps you navigate a fast-changing digital marketplace. The EU took a leadership position in creating the fund, but now it must be operationalised and made viable. Error: Something went wrong, try again in a few minutes. If not, select "Manage Preferences" to learn more about managing your cookie preferences. This has resulted in calls for global convergenceto support consistency and avoid confusion and additional reporting workloads for companies and investors alike. More Sustainable Materials. 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. If you've had any better visions, let us know in the comments. 2023 Euromonitor is privately owned & trademarked. 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. 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. Experience IMD for yourself, join one of our upcoming events. April 28, 2023 . By circulating products and materials, eliminating waste, and regenerating nature, circular models can help businesses to overcome some of the barriers to investment in sustainability, such as high costs, lack of internal knowledge, and implementation difficulties. 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. With the world continuing to emerge from Covid-19 lockdowns, cracks in economies, societies and environmental ambitions are becoming clearer. 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. Finally, our companies are transforming. Companies have been struggling to communicate sustainability to consumers. 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. In 2022, McKinsey & Co. found that while total compensation remained important, other factors, including workplace flexibility and meaningfulness of work, have become more instrumental in many workers decisions to stay at or leave a job. For example, long-term energy transition goals will be weighed alongside nearer-term considerations such as energy affordability and security.

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