MIT Sustainability Summit. As we head out of COP27, many are disappointed to see climate deterioration going much faster than any governmental moves to address the crisis. Corporate sustainability into action: Business Trends 2023 - IESE Standout These instruments will have to increasingly address investor questions about the effectiveness of targets and incentives. Access and download reports and data purchased through Euromonitor.com. 10 Trends That Will Define Sustainability in 2023 - LinkedIn Firms are advised to get ahead of the game and start accounting for biodiversity. 6. 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. Outlook 2023, Sustainability: five trends to watch Vanina Farber, elea Professor of Social Innovation, Patrick Reichert, Term Research Professor and Research Fellow. Here are five of the hottest sustainability trends they identified, as well as how you can prepare for them. Enabling organizations to meet their learning objectives, in a more impactful, convenient and flexible way. 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. 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. 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. Copyright The Economist Newspaper Limited 2023. Authors: Andrew Angle, Aiste Brackley, Justin Nelson, Laura Street, Mark Lee. Published May 1, 2023 + Follow As the world continues to grapple with environmental and social challenges, sustainable finance is becoming increasingly important. 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. Our work on water stress in Jordan highlights the need for resilience. 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. 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 the longer term, this will likely lead to increased adoption of new types of energy and fuels. Julia Binder, Professor of Sustainable Innovation and Business Transformation. 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. 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. The past eight years are expected to become the eighth warmest on record, driven by rising greenhouse gas emissions and accumulated heat. 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. The Growth Summit 2023 is taking place on 2-3 May at the World Economic Forum's headquarters in Geneva, Switzerland. Forrester expected five Fortune Global 200 firms to announce policies limiting travel for sustainability this year. Harnessing collaboration to enable the circular economy, Successful examples include multi-stakeholder platforms like the. Circular solutions such as second-hand and previously owned products are also gaining traction amongst global consumers as, according to Euromonitors Voice of the Consumer: Sustainability Survey, fielded January to February 2022, 34% of global respondents mentioned their willingness to buy these products. 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. The new generation of business owners and leaders care deeply about the environment and are striving towards more sustainable and equitable business practices. By understanding and implementing these 2023 sustainability trends, restaurants can stay ahead of the curve . What's Next for Sustainable Business? A personalized transformation journey that teaches you how to unlock the full potential of your leadership. With most models still at an experimental stage, a tougher challenge is spreading solutions globally. Meanwhile, the number and duration of droughts globally have risen by almost a third since 2000, according to the U.N. The Intergovernmental Negotiating Committee (INC) will hold workshops over the course of 2023, with the aim of adopting the treaty in 2024. 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. COP27 failed to achieve any major breakthroughs in areas such as phasing out fossil fuels. They are developing sustainable products and services and supply chain practices to increase revenue, satisfy investors and regulators, and improve their reputation. 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. As a result, 91% of the global economy and 810 out of the 2,000 largest companies have pledged to net zero. Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. These macroeconomic and market conditions could constrain issuer appetite for GSSSB offerings. Our site uses cookies to improve functionality. In fact, a recent study by McKinsey estimated that the transition to net zero alone will provide business opportunities of $12trn per year. We will scale new technologies to gradually disrupt our carbon economy. 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. 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. From 2023 we may see more second-hand, vintage and repurposing brands becoming central to the way we shop. 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. Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk. 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. Take a scroll through our 2022 Annual and Sustainability reports. Renewables and Nuclear Hold Promise for Net Zero Energy. From battery-powered cruise ships to aviation biofuel derived from microalgae. 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. Economic and Political Challenges to Test ESG's Staying Power Recession, energy crisis and increased regulation are the. The provisional agreementin the EU for new regulation for deforestation-free supply chain will mean many companies will have to better understand biodiversity risk. 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. These are accelerating systems transformation by boosting multi-stakeholder innovation, thus reducing costs for players, surmounting obstacles, and advancing solutions adoption. Data in your Equity, Inclusion & Diversity strategy: friend or foe? 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. 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. ESG and Climate Trends to Watch for 2023 - MSCI For example, the humanitarian sector is currently experiencing a $32.3bn shortfall between funding and what the UN says is needed. Heres a summary of their investment priorities. However, the continued lack of a global climate finance taxonomy remains a challenge to bringing transparency and comparability to the space. Fundamentally, if we take a long-term perspective, we will deal with climate change. 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. Many companies are working hard to meet net-zero sustainability targetsby 2050 or other target dates. Ocean-related climate solutions will be crucial to making progress on global climate and nature targets in 2023, following the 2022 UN Ocean Conference. But, in order for circular models to succeed, there is a need for collaboration. Carlos Cordon, Professor of Strategy and Supply Chain Management. Regulation. While policy and regulation play catch up, how will the financial sector, firms, and consumers step up to the challenge? What is your plan to transition into the low-carbon era under different scenarios? Environmental, social, and corporate governance (ESG) standards and regulations are becoming a dominant force in how organizations operate, touching every part of the business. Were seeing customers replace time-consuming, inaccurate manual approaches with a holistic steering and reporting solution like SAP Sustainability Control Tower. Meanwhile there are plenty of near-term business results from the sustainability wave. AI: a friend and a foe for sustainability? Error: Something went wrong, try again in a few minutes. 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. Within three years, they said 45% of G2000 organizations will operationalize integrated sustainability in the supply chain and effectively report impact data, enabling 10% reduction in waste and improving competitive advantage. What Recent Trends Say About Sustainable Shopping In 2023 - Forbes 2023 CDFI Sustainable Investing Trends - MarketWatch Apr 26, 2023 (3BL Media via . Curious about how we partner with you to help you solve your complex modern-day business problem? Key insights such as 'The Future of Jobs' report will map . 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. Carbon-negative means generating environmental benefits by removing more CO2 from the atmosphere than what is produced. 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. ArtificiaI Intelligence, and specifically certain deep learning models such as those designed to process human language, requires huge amounts of energy. Learn more about incorporating sustainability into your business operations to help create a future with zero emissions, zero waste, and zero inequality. 5 Sustainable Finance Trends to Watch in 2023 - LinkedIn The good news is that AI can also help with better conservation of natural resources through better prediction, managing agriculture yield or managing the demand and supply of energy in energy grids. 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. /esg/insights/featured/special-editorial/key-sustainability-trends-that-will-drive-decision-making-in-2023 Many restaurants now offer compostable containers and utensils that are much more eco-friendly than traditional plastic or styrofoam. . Climate change is driving water scarcity and more severe and frequent droughts, hampering agricultural production, food supplies and economies. In a recent Gartner survey, CEOs reported that environmental and social changes are now a top three priority for investors, after profit and revenue. Despite economic uncertainty, consumers keep demonstrating interest in sustainable products to remain true to their values, opting for products that use inputs such as water and energy more efficiently, which consequently helps them reduce costs. Consumers still want to positively impact the environment, and expect companies to play their part in democratising sustainability; therefore, understanding the sustainability landscape will help companies to identify risks and seize new opportunities. ET. 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. In watches and jewellery, transformation started later, perhaps due to the longer life cycle of these products and their smaller volumes. But we need to look beyond short-term benefits and keep an eye on the long-term implications of scaling AI too. The Top sustainable living trends to watch in 2023 | WFLA And the EU looks to advance its own human rights due diligence directive and regulation restricting goods made with forced labor throughout 2023. An infographic based on the latest Climate Watch data highlights that energy usage contributes to 73.2% of global greenhouse gas emissions. Meanwhile, new human rights regulations will introduce additional requirements for company supply chain management. 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. 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. Sustainable solutions can, and should, be affordable, so consumers do not struggle when seeking more conscious habits. 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. 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). Amanda Williams,Term Research Professor and Research Fellow. estimated that the transition to net zero alone will provide business opportunities of $12trn per year. mandatory biodiversity assessments and disclosures by 2030. The human element of sustainability | Deloitte Insights 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. For example, the ocean and food systems had their own dedicated pavilions. Peter Vogel, Professor of Family Business and Entrepreneurship, Ivan Miroshnychenko, Research Fellow and Term Research Professor. The MarketWatch News Department was not involved in the creation of this content. Affordable sustainability There is unanimous agreement that 2023 will be a challenging year across global markets. 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. 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 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. One simple exercise can be powerful in creating a more inclusive, productive environment. Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. Following recent momentum, including that gathered during COP15, we believe policymakers, regulators, companies and investors will more explicitly look to factor biodiversity-related risks and opportunities into decision-making in 2023. 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. They also involve measures to enhance the working environment, supply chain emissions, employee well-being, and ethical reporting. 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. 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. Not only are they asking those questions, but they are also planning how to pay back the CO2 debt that the company has created since its creation. This years forecast of sustainability trends looks like the perfect storm (in a good way) of purpose-minded, yet business opportunity-led progress. COP27 has confirmed the need for stronger co-operation on key issues such as climate finance and corporate net-zero commitments. In 2023, Environmental Sustainability Will Become A Strategic - Forbes These include Scope 3 emissions, those which do not come from their own operations but from their larger value chain. Sustainability Trends 2023 | Predictions for Business, People, B2B & B2C Therefore, it is important for companies to align with international standards and get advice from experts, such as the United Nations or the Ellen MacArthur Foundation, to pave the way to efficient and impactful implementation. Yet collaborations are difficult to orchestrate as they demand systemic changes in clear contrast with the linear and profit-driven mindset prevailing in business. The IMD Alumni Network is a widespread but close-knit global community in a tightly interconnected and complex business environment. 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. 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. 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. Finally, our companies are transforming. Natalia Olynec is the Chief Sustainability Officer at IMD, where her work focuses on research, program development, strategy, governance, reporting and advisory. More Sustainable Materials. The Taskforce on Nature-related Financial Disclosures (TNFD), which should finalize its recommendations in September 2023, will provide frameworks to identify, measure and disclose nature-related risks and impacts. 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. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. Today, we have at least 13,000 large and medium-sized companies in Europe transitioning towards more sustainable operations by disclosing their climate footprint. Gartner Identifies the Top 10 Strategic Technology Trends for 2023 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. Confrontation was always seen as an essential weapon for campaigners, but a new era of cooperation is proving equally effective. 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. Policymakers and senior executives need to navigate the increasing complexity of simultaneous climate and cost-of-living crises. What kind of regulation forecast mechanism is needed to be prepared for changes in standard setting at different levels (ISSB, EU regulation, etc.)? 2023 Euromonitor is privately owned & trademarked. Collaboration will also be needed to accelerate the building of circular economies. Proactively using renewable energy, reducing waste and reusing materials will not only help companies to be ahead of legislation, but also demonstrate their interest in being part of the solution. According to the REN21 renewable energy community, we globally invested $366bn in renewables in 2021 alone. An opportunity lens on sustainability. 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. Knut Haanaes, Professor of Strategy and Lundin Chair Professor of Sustainability. There is an urgent need for private capital to enter frontier markets to help solve systemic grand challenges. However, meeting these objectives will require actors to undergo organizational transformation: NGOs will need to be receptive to more market-based approaches, governments will need to provide stable policies and backstop the riskiest initiatives, development finance institutions will need to identify opportunities to provide additionality (i.e., focus on interventions that would have not occurred without their participation), and corporates will need to be willing to collaborate with traditional non-market actors. With the world continuing to emerge from Covid-19 lockdowns, cracks in economies, societies and environmental ambitions are becoming clearer. 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. These trends highlight the delicate balancing act we see stakeholders facing and managing, weighing various and sometimes opposing forces. All content is available on the global site. Regulatory trends point to a hardening of what were largely voluntary frameworks for how companies manage human rights in their upstream operations. For many years, sustainability has remained top of mind for food and beverage processors and consumers. This is why specific claims such as natural, organic, and vegan enjoyed outstanding momentum during 2021, according to Euromonitors Sustainability Opportunity Tracker. 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. , 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. I have ordered these by the five pillars of Economist Impacts Sustainability Project: Net zero is the ambition to reduce greenhouse-gas emissions as much as possible towards zero, and to counter any remaining emissions with carbon-negative solutions, whether nature-based (for example, planting trees or restoring mangroves) or technological (such as direct air capture). 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". The sustainability trends in 2023 are predicted to plunge beyond eco-friendliness. We believe that dynamic could change as companies adjust in the face of economic uncertainty and changing labor market dynamics. 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. However, the need to bring citizens and workers on board with the climate-action agenda will remain a challenge. 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. At any given time, we have at least one million green startups exploring new energy solutions. The 6 Biggest Sustainability Trends in 2023 - Exploding Topics Growth Summit 2023: Here's what to expect | World Economic Forum Organizational readiness for sustainable transformation, The next generation in family business will power data-driven sustainability, War and energy shortages accelerate adoption of energy efficiency and renewable energy. 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. In 2023, we believe more investors and companies will seek to assess the social and financial costs associated with water scarcity and droughts.