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. Brief. Private-public alignment is necessary to accelerate the transition towards circular models. Published: April 26, 2023 at 10:09 a.m. The current approach to sustainability is underpinned by guilt. Transform Your Innovation Strategy with Megatrends, Earth Day 2023: Now Is the Time to Take Climate Action, Plant-Based Products Boost Sustainability in Asia Pacific, Retailer Corporate Strategies in Private Label. If you've had any better visions, let us know in the comments. By their nature, they process huge amounts of data, and all those data centers carrying out storing and processing tasks require a lot of energy for cooling. Prodded by consumer demands and impelled by increasingly stringent regulations, the business sector has taken notice and actions to create a more sustainable future. Here are the top 5. 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. Learn more about incorporating sustainability into your business operations to help create a future with zero emissions, zero waste, and zero inequality. Didier Cossin, Professor of Governance and Finance, Founder and Director of IMD Global Board Center, Sophie Coughlan, Associate Director, IMD Global Board Center. Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. 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. An unprecedented level of co-operation and solidarity is now required to unleash the funds potential. 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. Circular Economies: There will be momentum on tackling plastic and chemical pollution. 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. The expectations from AI in terms of efficiency and costs savings is very high it is still considered to be the most disruptive technology of today. This research is based on feedback from analysts and researchers across S&P Global. Our global experts keep pace with sustainability trends providing timely insights on shifting consumer preferences and the latest innovations, strategies and investments shaping governments and business agendas. 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. Sustainable business is so much more than reporting carbon emissions. Taking a stack of post-it notes, team members write down all the things that are concerning them from their personal and professional perspectives. What are the new sustainability KPIs that are at the heart of your strategy execution? 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. 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. April 28, 2023 . Renewables and Nuclear Hold Promise for Net Zero Energy. 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. 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. 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. According to HolonIQ we already have 47 climate unicorns worth more than $1bn. 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. 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. Join Team IMD. At COP27 countries finally made progress on establishing a framework for a Global Goal on Adaptation (GGA). 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. Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. 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. 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 in November 2022 was quickly followed by the U.N.'s Convention on Biological Diversity, known as COP15. The sustainability trends in 2023 are predicted to plunge beyond eco-friendliness. An infographic based on the latest Climate Watch data highlights that energy usage contributes to 73.2% of global greenhouse gas emissions. 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. 2022 Sustainability Trends Report. 2022 was a hot year for the climate. Consequently, in 2023, we anticipate the durability of new employee-friendly workplace practices will be tested. 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. This will require multi-stakeholder partnerships between the public and private sectors as well as among scientists, communities and consumers. Unsurprisingly, sustainability was one of the key . 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. 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. yk Ik, Professor of Digital Strategy and Cybersecurity. Collaboration will also be needed to accelerate the building of circular economies. Source: Euromonitors Voice of the Industry: Sustainability Survey 2022. Tackling pollution from source to sea will be increasingly important. 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. The top strategic technology trends for 2023 are: Sustainability Sustainability traverses all of the strategic technology trends for 2023. Although Forrester analysts expected at. 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. Outlook 2023, Sustainability: five trends to watch. Meanwhile, new human rights regulations will introduce additional requirements for company supply chain management. 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. Here are our top 10 sustainability trends we're expecting to see gain momentum and define sustainability in 2023: 1. Critical actions could accelerate the transition while enhancing energy affordability and supporting inclusive economic growth. What is your plan to transition into the low-carbon era under different scenarios? It is not enough to just claim that the products are better for the planet or more sustainable, if there is no arguable evidence behind these claims. Promoting a strong employee experience can contribute to sustained competitiveness over the long term. 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. In that journey, many are also realizing that it is impossible to achieve net zero without looking outside of their traditional business. 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. Our work on water stress in Jordan highlights the need for resilience. A fully online experience that takes you on an in-depth exploration of topics that matter to you. All rights reserved. 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. Corporate sustainability into action: Business Trends 2023 C-Suite Functional Directors Senior Executives Young Professionals December 1, 2021 "We only have a few years left to achieve the ambitious UN sustainable development goals we set out to achieve by 2030. Firms are advised to get ahead of the game and start accounting for biodiversity. Progressive employment practices implemented in the wake of COVID-19 will be tested by cost-cutting related to economic uncertainty. Climate change is driving water scarcity and more severe and frequent droughts, hampering agricultural production, food supplies and economies. In the longer term, this will likely lead to increased adoption of new types of energy and fuels. Gartner researchers said the ability to efficiently navigate the global regulatory environment and scale compliance systems will offer companies a significant competitive advantage. At the wake of the conflict that has stirred markets, Eco-Business rounds up six trends that could influence global sustainability in 2023. Second, we are investing. These new rules and disclosure standards aim to enhance transparency and consistency on sustainability-related issues and mitigate the risk of misrepresentation, perceived as greenwashing, in financial markets. 2023 Post-filing season update; Electric vehicle federal tax credit rules tightened as of April 18, 2023; Therefore, for companies to remain competitive and relevant in such fast-evolving sustainability environments, proactive collaboration with key stakeholders is crucial. However, organizational transformation and readiness is needed to push the boundaries of the problems that private capital can address and solve. 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. Family businesses will adopt new digital capabilities to manage sustainability data that guide sustainable business practices. 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. Building on the visibility of nature-based climate solutions at COP26, there was an enhanced profile for nature at COP27 too. In 2022, efforts to integrate ESG into corporate policies and investment decisions faced diverging pressures, either for lack of or inadequate action or for going too far. 19 hours ago by Winter Nie, Ivy Buche, Mahwesh Khan in Competitiveness, by Natalia Olynec Published 2 January 2023 in Sustainability 12 min read. From 2023 we may see more second-hand, vintage and repurposing brands becoming central to the way we shop. But, in order for circular models to succeed, there is a need for collaboration. 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. With most models still at an experimental stage, a tougher challenge is spreading solutions globally. If the current trend continues, the number of disasters could rise to 560 per year by 2030, up 40% from 2015. Also, businesses should work with key stakeholders such as governments, suppliers, and competitors to build scale economies that allow the acceleration of the transition. 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. What's Next for Sustainable Business? The market for carbon credits will continue to evolve in 2023. MIT Sustainability Summit. But actions speak louder than wordsand progress in areas such as food sustainability and reversing deforestation has been mixed over the past year. Can development organizations, governments, firms and private financial institutions work together with the humanitarian sector to fill the gap? 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. These instruments will have to increasingly address investor questions about the effectiveness of targets and incentives. We are the independent guide to sustainability, helping our audience cut through the noise and supporting them as they achieve sustainability goals and reach outcomes with actual business value. Inconsistent ESG data availability and quality hinder corporate ESG efforts and impact. 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. 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. In turn, this has taken a heavy toll on the sea level rising, European glacier melting, and extreme weather events from . 5 Sustainability Trends for Businesses in 2023. Florian Hoos, Professor of Sustainability and ESG accounting. However, they also face criticism because of their complexity and a continuing lack of global alignment. 19 April 2023 by Natalia Olynec, Julia Binder in Sustainability. 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. Build your core leadership skills, accelerate your career and harness your full potential as a leader. Natalia Olynec is the Chief Sustainability Officer at IMD, where her work focuses on research, program development, strategy, governance, reporting and advisory. 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. We need a more constructive engagement between the US-led West and non-Western countries. These include Scope 3 emissions, those which do not come from their own operations but from their larger value chain. Many companies will see an opportunity to accelerate the green energy transition, and the plans that were put in place before the war in Ukraine, as renewables become more cost competitive. The We Mean Business Coalition and the Voluntary Carbon Markets Integrity Initiative have continued moving towards better regulation and standards for carbon credits. In fact, 57% of global professionals mentioned their company is planning to develop products with carbon-neutral claims, according to Euromonitors Voice of the Industry: Sustainability Survey 2022, fielded January 2022. 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. 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. Affordable sustainability There is unanimous agreement that 2023 will be a challenging year across global markets. 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. Victoria Kemanian, Senior Advisor, Business Transformation Initiative. Visit our Sustainability page and Sustainability store for further insights. Although Forrester analysts expected at least 10 companies to incur $5 million or more in greenwashing fines, the longer term outlook for meaningful environmental impact is far brighter. Log in here to join in the conversation with the I by IMD community. Unlock your purpose and create positive, lasting change in your career, organization and society. 2. In the longer term, this will likely lead to increased adoption of new types of energy and fuels. On the other hand, the target of limiting the rise in global temperatures to 1.5 degrees Celsius above pre-industrial levels is barely alive. They place them all on the wall, acknowledging and accepting them. How do you inspire your team? If not, select "Manage Preferences" to learn more about managing your cookie preferences. Both crises call for increased focus on energy efficiency and acceleration of investment in renewables, suggesting alignment. 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. This includes swapping packaging materials . 1. We expect that 2023 will see significant attention paid to adaptation and resilience financing. With Scope 3 emission regulations on the rise, organizational leaders have realized the competitive value of connected data to track, report, and reduce climate impact. 1. 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. Supporting organizations with talent assessment, development and leadership progression. This list builds on many of the trends we identified in 2022, several of which we believe will remain relevant in 2023. Do you need charisma? But we need to look beyond short-term benefits and keep an eye on the long-term implications of scaling AI too. Julia Binder, Professor of Sustainable Innovation and Business Transformation. The goal is to agree on a post-2020 global biodiversity framework that builds on the Strategic Plan for Biodiversity 2011-2020. Grow your network and explore the latest thinking on todays critical business challenges and opportunities. 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. The global energy landscape shifted in 2022 with record prices and supply disruptions related to the Russia-Ukraine war. Meanwhile, institutional investors under pressure to deploy capital are turning to still-developing voluntary carbon offset markets to meet climate commitments while continuing to finance assets and companies linked to fossil fuels. 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. Despite these headwinds, we continue to view that the sustainable debt market will help advance sustainability goals. In this context, practical solutions that can accelerate progress on the SDGs will be urgently needed. We help businesses, policymakers, financiers, investors, NGOs and others achieve sustainability goals, faster. We anticipate that some investors will increasingly check to see if companies are backing their words with actions, particularly on climate. With the world continuing to emerge from Covid-19 lockdowns, cracks in economies, societies and environmental ambitions are becoming clearer. 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. 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. Progress on ESG goals can be encouraged by aligning compensation policies to the long-term impact that organizations have on financial, social, and environmental value creation. Five key ESG Credit Trends for 2023 identified by Sustainable Fitch: 1. These are accelerating systems transformation by boosting multi-stakeholder innovation, thus reducing costs for players, surmounting obstacles, and advancing solutions adoption. By understanding and implementing these 2023 sustainability trends, restaurants can stay ahead of the curve . IDC analysts predicted by 2024, 30% of organizations will use ESG data management platforms to steer ESG KPIs through a centralized system of record for reporting purposes and real-time operational decision-making support. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. One main driver for this is the next generation of family owners. This is why specific claims such as natural, organic, and vegan enjoyed outstanding momentum during 2021, according to Euromonitors Sustainability Opportunity Tracker. 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. 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. For example, long-term energy transition goals will be weighed alongside nearer-term considerations such as energy affordability and security. The UK also intends to bring forward sustainability-related disclosure requirements at the entity and product level. It is not a question of whether, it is a question of when. 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. Article 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. 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. Experience IMD for yourself, join one of our upcoming events. 25 April 2023 by Arturo Bris in Sustainability. Economies and nature are interconnected. 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. The impacts from climate change will not be evenly distributed, with lower- and lower-middle income countries more at risk than higher-income peers and less ready to cope. Go on - they only take five minutes. Additionally, these practices help them reduce their environmental footprint while saving costs associated with waste and resource and energy consumption. With all the regulatory changes ahead, 2023 will be a year dominated by managing ESG risks. 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 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. What kind of regulation forecast mechanism is needed to be prepared for changes in standard setting at different levels (ISSB, EU regulation, etc.)? Within three years, these analysts said ESG performance will be viewed as a top three decision factor for IT equipment purchases; over 50% of RFPs will include metrics regarding carbon emissions, material use, and labor conditions. 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. In the short term, businesses of all industries and sizes will look at energy-saving measures to reduce both costs and carbon emissions. In the report that follows, we outline nine trends we see rising in prominence in the sustainability landscape during 2023. What are material sustainability issues for your company above the standard setters guidelines? Knut Haanaes, Professor of Strategy and Lundin Chair Professor of Sustainability. Key insights such as 'The Future of Jobs' report will map . 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. Carbon-negative means generating environmental benefits by removing more CO2 from the atmosphere than what is produced. 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. Learn more about our world-class faculty team. Most companies struggle to measure scope 3 emissions, as they still need to work more closely with their suppliers. The latest biodiversity COP (or COP15) in Montreal discussed this new framework, but the hard work starts now: 2023 will see rising global scrutiny and collaboration to ensure momentum towards the new nature milestones for 2030. At COP15, the 2022 UN conference on biodiversity, leaders decided on our collective goals for the post-2020 global biodiversity framework and businesses. This push-and-pull dynamic could be a hallmark of sustainability discussions and decisions throughout 2023. The State of Sustainability for Emerging Beauty. April 13, 2023. This important theme will continue into 2023, with the annual meeting of the World Economic Forum in Davos focusing on Co-operation in a Fragmented World. Corporates investing in their own energy generation may find projects cost more in the short term. 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.

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