Sustainability Trends to See in 2023
We had encouraging news come out of the United Nations Climate Change Conference (COP27) in 2022, with a ground-breaking decision to provide “loss and damage” funding for vulnerable countries hit hard by climate disasters.
What we continue to miss, however, is fast enough action and a credible pathway to prevent the climate impacts of rising greenhouse gas emissions, which are already affecting people around the world.
Looking ahead, here’s my four key predictions for sustainable business in 2023…
1) The climate change conversation continues to broaden
We are already seeing the impacts of climate change, to name but two examples: including unprecedented flooding in South Asia and a multi-year drought in the Horn of Africa.
Looking ahead, the UK Met Office has warned there is around a 50:50 chance of at least one of the next five years temporarily exceeding a 1.5°C temperature rise above pre-industrial levels. Meanwhile, a report by the UN Environment Programme finds that countries’ climate pledges point to a 2.4-2.6°C increase by the end of the century.
As temperatures rise, climate impacts will intensify across the globe. Vulnerable nations and communities need to respond.
I predict that the climate change conversation will broaden during 2023 to focus more prominently on adaptation alongside mitigation measures, as we collectively recognise that we are edging ever closer to exceeding the 1.5°C threshold after which climate disruption becomes more severe. When seeking to address and limit the impacts of climate change, we need to prioritise a just transition where economies are greened in a way that is as fair and inclusive as possible, and where no one is left behind.
There will also be a greater focus on the interconnections between climate change and biodiversity. The world is facing the sixth mass extinction event, driven mostly by habitat loss, while climate change is also pushing species out of their comfortable ranges. The UN biodiversity conference in late 2022 highlighted the urgent need to better safeguard key parts of the planet, and I predict that protecting nature will be a continued growing focus for businesses in 2023.
2) More investment in sustainability despite economic uncertainty
I also expect companies will continue to invest in sustainability throughout 2023, with more organisations recognising the long-term financial benefits of sustainable operations.
These increased investments are likely to be fuelled by more companies realising how investing in sustainability is a way of future-proofing their operations and supply chains. Take how, for example, our recent A World in Balance report found that “front-runners” (organisations who’ve progressed to a greater degree than their peers in implementing sustainable practices) witnessed 83% higher revenue per employee from 2020 to 2021 compared to the average.
Economic uncertainty may trigger new ways of thinking about how businesses can do more with less. Perhaps increased costs and potential shortages of some resources will prompt thinking on moving more quickly towards circularity as well as encourage more restrained (reduced) resource use. We have, for example, already seen record high prices factor in driving down gas demand in European industry, with prices leading to production curtailments in the most energy- and gas-intensive industries during the first eight months of 2022.
3) A growing scrutiny of corporate claims
Only half (53%) of people around the world trust business to do what is right on climate change, according to a recent Edelmann survey. On top of this, calls for greater clarity in corporate climate commitments have been ongoing for some time, which is why the Science Based Targets initiative created the Net-Zero Standard in late 2021. Most recently, COP27 saw a UN-appointed Expert Group call for an end to greenwashing, lambasting unclear net zero targets from non-state entities.
I predict that 2023 will see greater scrutiny of corporate claims, with companies responding by taking steps to publicly clarify approaches and milestones to reach carbon reduction targets.
If this is the case, it could prompt a welcome change as, despite the majority of companies including sustainability as a key agenda item for top leadership, it’s not necessarily translating into action. Our A World in Balance report found that while organisations may have long-term objectives for 2040 or 2050, many are failing to define clearly and prioritise sufficiently their sustainability initiatives in the short term. Less than half (49%) of the 1,003 executives surveyed said their company had defined a priority list of sustainability initiatives.
4) More companies using digital innovation in sustainability strategies
In 2023, I expect digital innovation to continue to be used as a tool to assist sustainable change. We’re already seeing organisations investing in AI and automation to support the sustainability agenda. Capgemini research has shown that businesses are deploying AI and automation in tandem, not only to obtain granular insights into their operations but also to measure impact on the environment across functions.
According to our AI for Climate Action report, for example, AI-enabled use cases have so far helped organisations reduce greenhouse gas emissions by 13% in the last two years, improving power efficiency by 11%. It’s also estimated that, by 2030, AI-enabled use cases have the potential to help organisations fulfil 11–45% of the “Economic Emission Intensity” targets of the Paris Agreement, depending on the scale of AI adoption across sectors.