Company executives and boards of directors have become more attuned to the external reporting aspects of sustainability. yk Ik, Professor of Digital Strategy and Cybersecurity. Here are the top six trends that are shaping a more sustainable future for our planet. COP27 in November 2022 was quickly followed by the U.N.'s Convention on Biological Diversity, known as COP15. What are the new sustainability KPIs that are at the heart of your strategy execution? For the same reasons, we expect that company and investor lobbying activities will come under greater scrutiny to ensure that they are consistent with public commitments to both sustainability and fiduciary mandates. Economies and nature are interconnected. The U.S. Customs and Border Patrol is enforcing 55 active Withhold Release Orders and targeted over 3,500 inbound shipments from 2021 to 2022. Progressive employment practices implemented in the wake of COVID-19 will be tested by cost-cutting related to economic uncertainty. 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. The USA's Securities and Exchange Commission (SEC) has . We help businesses, policymakers, financiers, investors, NGOs and others achieve sustainability goals, faster. Stakeholder pressures on companies keep rising. However, organizational transformation and readiness is needed to push the boundaries of the problems that private capital can address and solve. 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. Policy incentives will also continue to emerge to stimulate innovation, help tackle climate change and fund the shift to clean energy. In the short term, businesses of all industries and sizes will look at energy-saving measures to reduce both costs and carbon emissions. Read more about how we track global trends. 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. Didier Cossin, Professor of Governance and Finance, Founder and Director of IMD Global Board Center, Sophie Coughlan, Associate Director, IMD Global Board Center. 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. 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. 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. Mind the ESG reporting trap! Many boards have responded to increasing ESG pressures by recruiting a sustainability specialist. In that publication, we suggested 2021 . During COP15, the International Sustainability Standards Board (ISSB) announced that it will research the link between climate and nature. 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. Here are five of the hottest sustainability trends they identified, as well as how you can prepare for them. 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. While policy and regulation play catch up, how will the financial sector, firms, and consumers step up to the challenge? Enabling organizations to meet their learning objectives, in a more impactful, convenient and flexible way. Stphane J.G. 2022 was a hot year for the climate. In a recent Gartner survey, CEOs reported that environmental and social changes are now a top three priority for investors, after profit and revenue. However, we still anticipate GSSSB issuance to grow to between $900 billion and $1 trillion in 2023 compared to nearly $850 billion in 2022 as the asset class capitalizes on various initiatives to fill the climate financing gap. In 2022, the U.S. stepped up the enforcement of laws aimed at restricting imports of goods believed to be made in whole or in part with forced labor. 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. 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. Considering all these pressures, its all too easy to stumble into the ESG reporting trap. 1. Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Regulatory trends point to a hardening of what were largely voluntary frameworks for how companies manage human rights in their upstream operations. 2023 CDFI Sustainable Investing Trends. We also think attention will shift to water ahead of the inaugural U.N. Water Conference in March 2023, where governments and other stakeholders will review the objectives of the International Decade for Action on Water for Sustainable Development, 2018-2028. Social Sustainability: The cost-of-living crisis intensifies, but offers opportunities for more-inclusive climate action. In 2023, we believe more investors and companies will seek to assess the social and financial costs associated with water scarcity and droughts. Discover more than 130,000 executives who are IMD alumni. 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. At the wake of the conflict that has stirred markets, Eco-Business rounds up six trends that could influence global sustainability in 2023. At any given time, we have at least one million green startups exploring new energy solutions. Log in here to join in the conversation with the I by IMD community. 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. Harnessing collaboration to enable the circular economy, Successful examples include multi-stakeholder platforms like the. Affordable sustainability There is unanimous agreement that 2023 will be a challenging year across global markets. Collaborative systemic solutions require new approaches to fragility and call for alternative sources of capital to complement traditional grant funding. Some nations loosened restrictions on operating coal-fired power plants, while others extended the lives of coal and nuclear power plants. 5 Major Sustainability Trends For 2023 By Rachael O'Flaherty Sustainability requires us to reduce our impact on climate change in every way possible. These trends are expected to impact a wide range of stakeholders, from companies, investors and workers to communities, regulators and policymakers. This push-and-pull dynamic could be a hallmark of sustainability discussions and decisions throughout 2023. , 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. 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. A New Era for Sustainability Accountability Last year we saw an influx. 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. 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. 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 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. 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. 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. 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. Consequently, many companies introduced new incentive structures, benefits, workplace culture initiatives (flexible work, DEI strategies and efforts to improve work-life balance) and career development opportunities to promote the employee experience and better attract and retain talent. 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. Yet collaborations are difficult to orchestrate as they demand systemic changes in clear contrast with the linear and profit-driven mindset prevailing in business. One simple exercise can be powerful in creating a more inclusive, productive environment. Since 2019, the number of people affected by food shortages has more than doubled to 345 million, roughly 4% of the world population, from 135 million, as reported by the World Food Programme. Carbon-negative means generating environmental benefits by removing more CO2 from the atmosphere than what is produced. The luxury industries have continued in 2022 to accelerate innovation towards greater sustainability. 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. 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. Florian Hoos, Professor of Sustainability and ESG accounting. Whether it is reducing waste, optimizing the supply chain, or eliminating emissions, insights from sustainability data can help to reach net-zero emissions. The picture looks especially complicated in Europe, where new investment in liquefied natural gas and a slower phaseout of coal could challenge decarbonization plans. Building on the visibility of nature-based climate solutions at COP26, there was an enhanced profile for nature at COP27 too. However, they also face criticism because of their complexity and a continuing lack of global alignment. 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. Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. Collaboration between government, financiers and innovators will be key to scale up these solutions. COP27 has confirmed the need for stronger co-operation on key issues such as climate finance and corporate net-zero commitments. 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, 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. Thus, the need for sustainable trends will also possibly increase in 2023. 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. These are accelerating systems transformation by boosting multi-stakeholder innovation, thus reducing costs for players, surmounting obstacles, and advancing solutions adoption. Julia Binder, Professor of Sustainable Innovation and Business Transformation. Asia as a key supplier of fossil fuels Russia, the world's largest fossil fuels exporter in 2021, has thrown global energy markets into turmoil by its invasion of Ukraine. As a result, 91% of the global economy and 810 out of the 2,000 largest companies have pledged to net zero. 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. 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. In 2023, we believe sustainability initiatives could be tested by persistent inflation and economic uncertainty. Also, businesses should work with key stakeholders such as governments, suppliers, and competitors to build scale economies that allow the acceleration of the transition. To that end, here are the top sustainable living trends to watch in 2023. Nevertheless, Here are a few of my predictions for trends that will shape sustainability in 2023. 5 Sustainability Trends in 2023 and Beyond 07 April 2023Save Article Save Article In recent years, sustainability has become an increasingly important issue for businesses and individuals alike. 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. 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? Natalia Olynec is the Chief Sustainability Officer at IMD, where her work focuses on research, program development, strategy, governance, reporting and advisory. Therefore, companies may face more scrutiny on appropriate board oversight and the maturity of their sustainability strategies and processes. Another trend in sustainability that's gaining traction in restaurants is eco-friendly packaging. The MarketWatch News Department was not involved in the creation of this content. These macroeconomic and market conditions could constrain issuer appetite for GSSSB offerings. In the report that follows, we outline nine trends we see rising in prominence in the sustainability landscape during 2023. Carlos Cordon, Professor of Strategy and Supply Chain Management. There is unanimous agreement that 2023 will be a challenging year across global markets. ET. 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. With the right approach, everyone can be a winner. 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. Corporates investing in their own energy generation may find projects cost more in the short term. This could help maintain investment momentum in key technologies and ultimately deliver a faster energy transition with increased energy security for countries and companies alike. 25 April 2023 by Arturo Bris in Sustainability. An agreement reached at the U.N. climate change conference, known as COP27, for a loss and damage fund will seek to address adaptation and resilience challenges of developing countries. Russias invasion of Ukraine disrupted energy supplies across Europe, creating energy insecurity, soaring costs, and a strong incentive for investment in renewable energy sources. 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). Photo courtesy of Unilever. If the current trend continues, the number of disasters could rise to 560 per year by 2030, up 40% from 2015. Sustainable solutions can, and should, be affordable, so consumers do not struggle when seeking more conscious habits. 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. Environmental, social, and corporate governance (ESG) standards and regulations are becoming a dominant force in how organizations operate, touching every part of the 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. Outlook 2023, Sustainability: five trends to watch. Sustainable business is so much more than reporting carbon emissions.