Feb 2, 2023
Top 7 sustainability and climate trends to look out for in 2023
Looking ahead to 2023, the challenges we faced in 2022 with geopolitical turmoil, inflation, and the effects of climate change may persist, but that doesn't mean we can't make progress toward sustainability. With that said, there is an urgent need to focus on the things that matter.
We’ve put together a list of 7 trends that we think are going to be big in the sustainability world this year: these are trends that we foresee will impact everyone from businesses and investors to workers, communities, regulators, and decision-makers. Some of these trends have been brewing for a while, while some are new for 2023.
All of these trends highlight the tightrope walk that everyone is going to have to do this year, so without further ado, here are the top 7 sustainability and climate trends you can expect in 2023:
Increased focus on scope 3 emissions
Renewable energy and energy security
Greater transparency and disclosure pressures
Circular economy
Social sustainability
Protecting global biodiversity
Increased investments in adaptation and resilience
1. Increased focus on scope 3 emissions
The race to net-zero is heating up and one of the largest hurdles we need to tackle? Tricky indirect emissions from suppliers and consumers throughout an organization’s value chain, also known as scope 3 emissions.
Many countries have already made it mandatory for companies to report on their scope 1 and 2 emissions, with many companies having already set their own net-zero ambitions that cover their scope 1 and 2 GHG emissions.
However, only focusing on reducing the emissions that companies have direct control over (scopes 1 and 2) just won’t cut it if we want to hit net-zero quickly enough. While typically more complex to measure, scope 3 emissions make up a large, unignorable chunk of the global emissions pie.
Thankfully, global legislation on scope 3 emissions reporting are on the rise: recent climate disclosure rules from the US Securities and Exchange Commission (SEC) have recommended that scope 3 may also become mandatory. The UK has also already brought in a law to make climate-related financial disclosures mandatory for larger companies, being the first G20 country to do so.
Bottom line: If you’re not already measuring your scope 3 emissions, start now! More companies are starting to pay closer attention to their supply-chain partners and how their products and services are used by customers, as they catch on to the benefits and importance of reporting scope 3 emissions, and you should too. Getting the help of a sustainability software like SustainLab can help you make the task a little easier, with the ability to track, monitor and manage activity-based data.
2. Renewable energy and energy security
Unsurprisingly, the wars and humanitarian crises that started in 2022 and are still taking place, such as the Russia-Ukraine war, have had a big impact on global energy prices and supply. No one wants to be held hostage by energy prices and supply, so it's no surprise that we're seeing a push toward energy independence and renewable energy sources.
Gone are the days when solar panels and wind turbines were just for tree-hugging hippies – 2023 will usher in an accelerated and much-needed push toward renewable energy. This year, expect to see more companies reducing their consumption through energy-saving innovations and technologies, and also making the switch to renewable energy sources. It’ll be a win-win situation – saving the planet and saving money! Not to mention, if we don't start reducing our emissions soon, meeting the Paris Agreement goals will be even more difficult and expensive.
Sure, we get that investing in energy-saving and renewable energy projects might cost more in the short term, and if you’re not quite willing to make that investment, then you might be happy to hear that some governments are offering incentives to make it easier for companies. This includes Europe’s REPower EU plan, which incentivizes clean energy adoption and energy efficiency.
Bottom line: With an increasingly uncertain global context leading to increased risks and challenges, 2023 is a good time to start investing in energy-saving and clean energy technologies: you might want to start piloting different energy-saving measures, or test an innovative process in your product line.
To make sure your investments are making the impact you want them to, ensure you can compare new processes to existing processes – by helping you keep track of your data, a good sustainability management software like SustainLab can help you track and decide on the most efficient solution based on your data insights.
3. Greater transparency and disclosure pressures
Taking an honest look at your sustainability impact as a business may be a tough pill to swallow initially, but it’s also how much-needed change happens. You can't make changes or inspire change on a wider scale until you understand where you stand and what impact you’re creating. Besides, for some of us, disclosures are no longer a nice-to-have, but rather a legal obligation.
Last year we saw a surge of new sustainability laws and regulations around the world, and we won’t be surprised if 2023 promises even more. Governments and agencies are cracking down on corporations, making sustainability and ESG reporting a must.
Currently, Europe is by far the leader in sustainability regulations, and that's not gonna change this year. Within a short time span, the EU has passed the Sustainable Finance Disclosure Regulation (SFDR), the Corporate Sustainability Reporting Directive (CSRD), as well as the EU Sustainability Reporting Standards (ESRS), all of which will make comprehensive sustainability reporting a requirement for around 50,000 companies in the EU by 2026.
But not everyone has taken the new laws and regulations in stride. 2022 saw a rise in the number of climate-related lawsuits against corporates – don’t let that be you!
Bottom line: 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 – How strong and genuine are their sustainability commitments? Can they back up their words with action, especially on climate change? Investors will be paying close attention, especially with the growing risk of ESG-related lawsuits.
One way to ensure compliance with sustainability and climate-related legislation? Transparency and traceability! With SustainLab’s shareable dashboards with customizable user-viewing permissions, allow third-party data processors and auditors into your data and reporting processes with ease.
4. Circular economy
The “take, make, waste” model just isn’t cutting it anymore. Already a trend that was on the uptake in 2022, the wheel of change that is the circular economy will keep spinning in 2023.
"A circular economy is one that reduces material use, redesigns materials, products, and services to be less resource intensive, and recaptures “waste” as a resource to manufacture new materials and products." - United States Environmental Protection Agency (EPA)
In 2023, expect to see more companies taking more strategic action towards embracing a circular economy, such as including circularity as a key operational sustainability initiative, and innovation into recycling technology, re-use options, and reusable packing options. But even before the 5Rs, thinking more circularly starts with the design, and the principle of not taking more than nature can offer.
The EU Circular Economy Action Plan (CEAP), one of the main building blocks of the European Green Deal, has been in force since 2020 and has recently been referenced in the EU Sustainability Reporting Standards (ESRS). To be specific, the ESRS E5 outlines disclosure requirements for companies covered by the CSRD, in relation to their resource use and circular economy.
And in case you didn’t already know, the EU taxonomy has already kicked in since January 1st 2023! And why is this relevant? The EU taxonomy on sustainable activities will start to include a circular economy for the first time, thus accelerating the incorporation of circularity in the investment community’s scrutiny of corporate activities.
Bottom line: The circular economy has been relevant for a while and will continue to be. If you haven’t already taken more strategic steps toward embracing circularity, now is the time – reduce emissions, enable more resilient value chains, AND enable a healthier planet? Say less. Not to mention that the topic of circular economy is already now, and more so will be, incorporated into reporting legislation.
5. Social sustainability
Sustainability is not just about the environment – it's time for businesses to start thinking about their impact on people too. While the social dimension of the challenges of climate change, climate action, and sustainability has often been an afterthought, this dimension will rise further up the sustainability agenda in 2023.
This will include everything from fair labor practices to diversity and inclusion initiatives. We definitely expect to see a lot of companies making a real effort to be good corporate citizens in the coming year.
The rules are getting tougher for how companies treat their employees and suppliers, so those in industries with the riskiest working conditions better brace themselves. Regulatory trends point to a hardening of what were largely voluntary frameworks for how companies manage human rights in their upstream operations. Not only will they face bigger legal, financial, and reputation consequences for breaking the rules, but they'll also need to shell out more money to make sure they're following the rules. Get ready for higher prices and a need to rethink how things are made.
Bottom line: It’s high time we start looking at sustainability more holistically. With this in mind, having a sustainability software like SustainLab that can help you collect, track and monitor all your KPIs will take the weight off your shoulders. SustainLab has a diverse KPI library, and besides, creating your own KPIs would only take less than 10 seconds – want to see it in action?
6. Protecting global biodiversity
Something that has been overlooked for way too long, but is thankfully getting the attention it needs? The threat to our biodiversity.
Safeguarding and reviving our planet's diverse array of species and biodiversity under the Convention on Biological Diversity (CBD) has been high on the agenda since 2020, and the goal is to create a new, post-2020 global framework for biodiversity that takes the best from the previous Strategic Plan from 2011-2020. While the latest biodiversity COP15 in Montreal discussed this new framework, the hard work starts now.
With the momentum of COP15, we might just be on the right path: we expect that policymakers, regulators, companies, and investors will look more explicitly into factoring biodiversity-related risks and opportunities into decision-making in 2023. For instance, the provisional agreement in the EU for new regulation for deforestation-free supply chains will mean that many companies will have to better understand biodiversity risk.
From a legislative point of view, 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. Some regulators and central banks have also started making strong cases as to why and how financial institutions should respond to rising risks and biodiversity losses. Hopefully, these initiatives, among others, will serve as catalysts for greater reflection by stakeholders about the impact, risks, and opportunities associated with nature and biodiversity.
Bottom line: 2023 is shaping up to be a big year for keeping tabs on progress toward new goals for global biodiversity by 2030. We expect to see more eyes on the situation and people working together to make sure we stay on track. Confused about the connection between your business and global biodiversity? Read our blog post: “10 Questions on Biodiversity and Business Answered”
7. Increased investments in adaptation and resilience
Climate change is a reality that affects us all, and we're all gonna feel the heat (literally). Despite making some strides in reducing climate-related deaths by threefold in the last 50 years with early warning systems and better disaster management, these types of disasters are happening way more often now – we're looking at potentially 560 disasters per year by 2030, which is a 40% increase from 2015.
The truth is, we're not investing enough in the technology and interventions we need to adapt (according to the UN Environment Programme $340 billion per year of adaptation finance is needed, by 2030) and it's only getting worse – and let's face it, it's the poorest countries that are gonna feel it the hardest. A slither of good news: the UN is on the case with a ‘loss and damage’ fund which was discussed at COP27, which aims to support developing countries with adaptation and resilience.
Adaptation is just as important as transitioning when it comes to safeguarding our lives, assets, and economy from the impacts of climate change. This year, we're expecting some major focus on financing for adaptation and resilience. Expect to see more grants, loans, and equity, as well as some creative financing options like debt-for-climate swaps (where countries redirect payments towards adaptation projects) and special bonds for adaptation and resilience.
Bottom line: Let's not wait for Mother Nature to come knocking on our door. The UN’s ‘loss and damage’ fund is a great start in helping developing countries with adaptation and resilience, but we remain critical while waiting for the committee to come up with more recommendations of an action plan, and for the real work to start.
There we have it!
There you go, the 7 key sustainability and climate trends to keep an eye out for in 2023. If there’s any conclusion, it’s that you won’t become a better business for the planet without putting in the work.
At SustainLab, we’ve built a cutting-edge sustainability management software that is your SaaS one-stop shop for gathering, processing, and visualizing your sustainability data and progress.
Book a demo with us so you can see firsthand how SustainLab’s sustainability management software can help your company keep up with sustainability trends in 2023 and beyond!
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