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. Net Zero & Energy: The recent focus on scope 3, carbon credits and carbon removal is set to accelerate. 25 April 2023 by Arturo Bris in Sustainability. 2. Finally, the need to draw down greenhouse gases already in the atmosphere will continue to gain momentum in 2023, with technological carbon-removal solutionsin addition to nature-based onesseeing unprecedented investment following the Biden administrations announcement to invest US$3.5bn in carbon-removal technology. Social Sustainability: The cost-of-living crisis intensifies, but offers opportunities for more-inclusive climate action. Plastic-Free Living It's no secret that plastic pollution is a major environmental issue. Natalia Olynec is the Chief Sustainability Officer at IMD, where her work focuses on research, program development, strategy, governance, reporting and advisory. High rates of inflation in many markets are causing the prices of many products to rise steeply. Susan Goldsworthy, Affiliate Professor of Leadership, Communications and Organizational Change. To that end, here are the top sustainable living trends to watch in 2023. Also, businesses should work with key stakeholders such as governments, suppliers, and competitors to build scale economies that allow the acceleration of the transition. 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. 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. Companies have been struggling to communicate sustainability to consumers. 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. All too often, companies and business leaders are not getting any insights from ESG analyses, as they approach ESG reporting solely as a. 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. Meanwhile, new human rights regulations will introduce additional requirements for company supply chain management. One main driver for this is the next generation of family owners. 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. With all the regulatory changes ahead, 2023 will be a year dominated by managing ESG risks. Learn more about incorporating sustainability into your business operations to help create a future with zero emissions, zero waste, and zero inequality. 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. 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. Today, we have at least 13,000 large and medium-sized companies in Europe transitioning towards more sustainable operations by disclosing their climate footprint. 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. In the wake of the plastics treaty milestone, a new committee on chemicals was also set up. As we head out of COP27, many are disappointed to see climate deterioration going much faster than any governmental moves to address the crisis. 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.. In 2023, we believe sustainability initiatives could be tested by persistent inflation and economic uncertainty. Despite goods and services prices increasing globally, consumers sustainability awareness remains strong, with two thirds of global consumers worried about climate change, and also willing to play their part to positively impact the environment. Collaboration between government, financiers and innovators will be key to scale up these solutions. The top strategic technology trends for 2023 are: Sustainability Sustainability traverses all of the strategic technology trends for 2023. 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. Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. 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 this context, practical solutions that can accelerate progress on the SDGs will be urgently needed. However, organizational transformation and readiness is needed to push the boundaries of the problems that private capital can address and solve. A fully online experience that takes you on an in-depth exploration of topics that matter to you. 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. Resilience & Adaptation: There will be further progress on loss and damage and the global adaptation goal. 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. The current approach to sustainability is underpinned by guilt. 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. By Jonny Bierman. Ocean-related climate solutions will be crucial to making progress on global climate and nature targets in 2023, following the 2022 UN Ocean Conference. Finally, our companies are transforming. 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. 1. Build your core leadership skills, accelerate your career and harness your full potential as a leader. In a few years, almost all companies around the world will have adopted mandatory sustainability reporting standards either because they were obliged to by law or because they can no longer resist stakeholder pressures. . Whether it is reducing waste, optimizing the supply chain, or eliminating emissions, insights from sustainability data can help to reach net-zero emissions. Both crises call for increased focus on energy efficiency and acceleration of investment in renewables, suggesting alignment. The MarketWatch News Department was not involved in the creation of this content. For example, the humanitarian sector is currently experiencing a $32.3bn shortfall between funding and what the UN says is needed. From battery-powered cruise ships to aviation biofuel derived from microalgae. The final drafts of these standards should be adopted in 2023. MSc in Sustainable Management & Technology, Executives-in-Residence & Executive Fellows. 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. The State of Sustainability for Emerging Beauty. Setting up a loss and damage fund at COP27 was only the first step. Sustainability is good for business, and not just because it mitigates regulatory compliance risk. Lagging investments in the technologies and interventions needed to support adaptation are widening each year - up to $340 billion per year of adaptation finance is needed by 2030. Considering all these pressures, its all too easy to stumble into the ESG reporting trap. Family businesses will adopt new digital capabilities to manage sustainability data that guide sustainable business practices. Log in here to join in the conversation with the I by IMD community. 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. April 13, 2023. This years forecast of sustainability trends looks like the perfect storm (in a good way) of purpose-minded, yet business opportunity-led progress. The MarketWatch News Department was not involved in the creation of this content. This list builds on many of the trends we identified in 2022, several of which we believe will remain relevant in 2023. 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. An opportunity lens on sustainability. Circular Economies: There will be momentum on tackling plastic and chemical pollution. Corporate In fact, only 10% of global professionals consider that their company is very effective at communicating sustainability to consumers, according to Euromonitors Voice of the Industry: Sustainability Survey 2022. Girod, Professor of Strategy and Organizational Innovation. Experience IMD for yourself, join one of our upcoming events. 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.