The last few years have been incredibly intense for the sustainability areas of organizations. Keeping up with the pace of change, and performing accordingly, has been a major challenge.
Looking ahead to 2023, the demands will not diminish. Companies are expected to play a greater role in addressing environmental and social challenges. In this context, it will be of great importance to understand the issues that will need to be managed and adapt strategies to cope with the changes.
Here are the five corporate sustainability trends of 2023 so your company can face them in a prepared way.
1. The rise of sustainable financing
Financial agents and institutional investors are paying more attention to companies that focus their growth strategies and actions around sustainable practices, triggering a global shift towards green financing, where ESG bonds are expected to be the protagonists by 2023.
The first green bond issuance took place in 2007 by the European Investment Bank and since then it has only grown year by year, with placements reaching U$ 522.7 billion in 2021, with an annual growth of 75%.
Since this type of instrument is intended for specific uses, it allows investors to make "investments with purpose" (sustainable and socially responsible assets).
2. Increasing regulations
In order to homogenize the way in which organizations manage environmental, social and corporate governance issues, Latin American countries have followed the European Union's lead and have begun to issue ESG regulations applicable to companies.
As a result, new sustainability and corporate governance reporting regulations have been appearing with the aim of making entities report on ESG policies, practices and goals adopted in line with international standards, making companies within each industry 100% comparable.
To meet the new requirements, companies have relied on digital tools to keep their ESG performance data organized and traceable, which has also allowed them to meet the demand for transparency, coherence, and consistency between commitments and corporate performance.
3. A new era of sustainability reporting
Stakeholders (customers, suppliers, investors and shareholders) are demanding increasingly detailed, measurable and verifiable information about organizational performance. This trend has led more than 80% of the world's largest companies to report on ESG metrics and results, a figure that will undoubtedly increase.
Reporting requirements are clear and put pressure on organizations regarding the validity of the data presented in sustainability reports. This increased accountability demands thoroughness and greater dedication from companies.
On the other hand, companies continue to face a confusing spectrum of standards, which are expected to be decanted and unified in the medium term, achieving that all of them report under the same standard.
4. Enhanced carbon management
At recent global climate summits, the international community agreed that the worst effects of climate change can only be avoided if the world becomes a carbon-neutral planet by mid-century.
While more than 130 countries and a third of the world's largest publicly traded companies will be forced to take action on their carbon emissions, the pressure on small and medium-sized enterprises to follow suit is growing.
To enable these companies to align their short- and long-term climate action with limiting global warming to 1.5°C, a new net-zero emissions framework was introduced by the Science-Based Targets initiative (SBTi), which will guide and certify corporate net-zero emissions targets in line with the Paris Agreement.
5. Using data to drive corporate sustainability
The paradigm of the amount of data to manage was broken long ago. Today, by making efficient use of technology, it is possible to measure all relevant variables, generate management indicators and, going one step further, build models that allow us to anticipate events.
Data and the efficient use of technology are helping to drive a sustainable future. When companies cannot properly analyze their footprint because they do not have all the information, ESG management software is stepping forward to help organizations collect all the data needed to maintain efficient operations with low environmental impact, promoting action against climate change.
ESG software aligned with international standards strengthens data and process management, enabling accurate information on operations, continuous tracking of targets, trends, improved transparency in operations and much more.
CEOs report that environmental and social change is now one of the top three priorities for investors, behind only earnings and revenue. Sustainability is the key strategic technology trend for 2023.
Corporate sustainability is a transcendent consideration for organizations as they look ahead to the new year.
The decisions taken by the organizations from now on will have a direct bearing on the ability to limit the temperature increase to 2 degrees Celsius above pre-industrial levels, not to exceed 1.5 degrees Celsius by the end of the century and to achieve climate neutrality by 2050.
The trends for 2023 are aligned with these objectives and are undoubtedly the path to take to achieve them; a path that must be traveled with the right tools to ensure success.
