As businesses around the world rally to fight climate change, governments increasingly pass stringent environmental regulations, and consumers become more aware of the importance of sustainable practices, corporate sustainability is becoming an absolute must.
By 2023, it will no longer be sufficient for companies to pay lip service to ecological responsibility—they must actively engage in meaningful initiatives and be able to back up their claims with verifiable proof.
Here are eight essential trends in corporate sustainability that will be essential for businesses to follow in 2023.
1. Consumers will become even more environmentally conscious.
Since consumer demand is the overarching force that determines whether a business survives or not, companies need to listen to their customers to stay afloat.
Environmental consciousness isn’t a new trend in consumers—young consumers are especially motivated by green initiatives. But now, Forbes reports that 90% of Gen X consumers would be willing to spend 10% more on a product if it was eco-friendly, and the same is true for the vast majority of millennials.
This means that almost everyone will look for products with a smaller ecological footprint. Companies must be prepared to cater to environmentally conscious consumers and create sustainable products throughout their lifecycle—from sourcing materials to disposal or reuse.
2. Green companies will get all the good workers.
It’s crucial to remember that consumers are the same people who make up the workforce. So it comes as no surprise that the same environmental consciousness that drives consumer decisions will also motivate job seekers.
An IBM survey found that 67% of employees would be more likely to apply for and 68% would be more likely to accept a position from a company that makes a positive environmental impact.
This means that the same strategies that make a product attractive to consumers will also help recruit the best employees—and those companies that don’t take sustainability seriously will struggle to find good workers.
Companies must actively demonstrate their commitment to sustainability to attract the best talent, particularly in high-demand professions like engineering, software development, and design.
Organizations in struggling industries (e.g., durable goods manufacturing and fossil fuels) must highlight their transition to renewable energy and sustainable practices quickly if they want to maintain their workplaces.
3. Social media and online engagement will be essential for companies promoting their green initiatives.
The importance of social media in the corporate landscape cannot be understated. As consumers become more aware of corporate sustainability initiatives, they will start to look for proof that companies are actually taking meaningful steps towards reducing their carbon footprint.
Over half the world already uses social media. And by 2027, that figure will reach 5.85 billion. Marketers and advertisers are already using this to their advantage, running ads, campaigns, and even entire websites dedicated to promoting green initiatives on the platforms their audience is already using.
In general, social media content is also seen as more genuine and trustworthy. User-generated content (UGC) and influencer marketing are especially effective ways of building trust and credibility with target audiences.
Companies can use their social media presence in several ways, including:
- Using TikTok, Instagram Reels, and YouTube Shorts to highlight sustainable business models.
- Partnering with micro-influencers who have followings among eco-conscious audiences.
- Engaging with their audience in Twitter conversations around sustainability initiatives.
- Creating content that educates people on how they can reduce their own carbon footprint.
- Encouraging user-generated content that highlights the products, services, and apps that are helping people become more sustainable.
Social media is essentially an extension of human interaction. Companies can use it to foster interaction with their audience, engaging in meaningful conversations demonstrating the company’s commitment to sustainability while gathering qualitative data about improving the customer experience and working toward sustainability goals.
4. AI and data-driven decision-making will drive sustainable choices.
Digital transformation was a big trend in 2022, and it will be even more essential to achieving sustainability goals in 2023.
Artificial intelligence (AI) and machine learning algorithms are already being used to reduce emissions in transportation and manufacturing, optimize energy usage, and track the sustainability of products throughout their lifecycle.
There are several ways that organizations can use artificial intelligence to drive sustainability:
- Building Management: AI-driven software can “teach” building management systems to predict and optimize energy usage.
- Supply Chain Management: AI-powered tools can help analyze data from across the supply chain to identify opportunities for sustainability improvement.
- Product Development: AI can be used to design products with a reduced environmental impact, by helping engineers optimize materials and processes for maximum efficiency.
- Manufacturing: Using advanced data processing algorithms, AI can help manufacturers reduce waste and emissions throughout the production process. And with process automation, technology can streamline the entire value chain for added sustainability.
- Data Warehousing and Management: Data itself can take up a lot of energy. AI tools can help organizations reduce the energy needed to store and manage data by using sophisticated algorithms to optimize data storage, access, and migration.
The European Green Digital Coalition invests heavily in AI and data analytics to create a greener digital economy in the EU. And that only scratches the surface of what the government is doing.
Companies like Google, with its eco-routing software and other sustainability-focused initiatives, are also making waves by changing their own technology platforms to favor sustainable operations and promote green behavior.
5. Companies will focus on circular economy initiatives.
The concept of a circular economy is simple: reduce, reuse, recycle. But it’s not always easy to put into practice. For example, while companies may be able to reduce their waste through better packaging and recycling programs, they can also look at ways to create products that are designed with reuse and recycling in mind.
There are six primary components to the circular economy:
- Energy and Material Input: When products are used, the reusable components should be redirected back into the production process, or used for new purposes.
- Production: Businesses can devise and implement production methods that limit energy and resource waste, as well as consider leasing or renting options to enable more reuse of products. Remanufacturing and refurbishing products is essential for facilitating the reuse of components.
- Distribution: Companies can focus on distributing and circulating products that last longer and have a higher resale value. They should also look for ways to ship, store, and handle materials more efficiently (e.g., using reusable containers).
- Product Use: Developing products with longer life spans and performance capabilities will help ensure that products are used longer and reused more often.
- Disposal: Reuse, recycling, and materials recovery initiatives help reduce the environmental impact of product disposal.
- Waste and Emission Leakage: The unavoidable disposal of products must be done in a way that minimizes the environmental impact of waste and emissions.
When companies focus on green initiatives and implementing a circular economy, they can reduce their environmental impact while also saving money.
6. Increasingly stringent government regulations will guide business trends.
Since the pandemic, governments around the world have been increasingly introducing legislation to protect the environment and promote sustainable practices.
The EU’s new Corporate Sustainability Reporting Directive (CSRD) is game-changing for businesses, requiring them to report their environmental and social impacts to shareholders, investors, and the public.
To comply, companies need to do more than just learn how to identify and compile their climate data for stakeholders. They will be responsible for policy development, KPI tracking, and environmental impact assessments that aid in mitigating ESG risks. And they’ll only have until 2024 or 2025 to do it (depending on the company type).
Neither the US nor the UK mandates businesses to report their emissions levels. They also do not have any set target for reducing them, but that is beginning to shift.
The US Securities & Exchange Commission (SEC) has set forth ambitious regulations that would guarantee absolute transparency from all companies on their climate threats, Net Zero objectives, and Scope 1,2, and 3 emissions. If this policy is successfully established, businesses will have a time frame of one to three years to reach compliance.
On January 1st 2023, the UK will welcome a brand new set of Extended Producer Responsibility (EPR) laws. Aiming to pave the way for a circular economy and Net Zero carbon emissions, EPR endeavors to make businesses accountable regarding packaging design innovations and end-of-life treatment options. Companies that place products on shelves must also be prepared for changes in data collection methods, reporting regulations, and payment requirements.
7. Blockchain technology will become more prominent in sustainability and the world at large.
Crypto has already become commonplace in finance and investing, but the broader Web3 network has historically been environmentally taxing.
The Ethereum network, for instance, is a proof-of-work system that consumes more electricity than most small countries.
But recently game-changing solutions such as Ethereum 2.0 and Plasma have been developed, drastically reducing energy consumption without sacrificing performance. With this, blockchain-powered projects can increasingly be part of the sustainable solutions needed to bring us closer to a circular economy.
The technology can help track and trace materials, ensuring that a product’s provenance is traceable and that waste is kept to a minimum. And it can be used to track emissions, ensuring companies comply with the latest climate-related risks and emissions regulations.
Additionally, blockchain technology can provide an immutable audit trail of product lifecycles, helping companies become more transparent and work towards a sustainable future.
8. Business leaders will prioritize ESG principles.
Environmental, social, and governance (ESG) principles will be central topics of conversation for companies in 2023.
According to 2022 research from Gartner, environmental sustainability is one of the top ten strategic business priority areas for the first time, up from 13th place in previous data.
From all angles, CEOs and high-level executives are met with increasing demand for sustainable products and business practices.
- Consumers want greener products
- Investors and stakeholders want to see results
- Employees want to know their employer values sustainability
- The government wants companies to follow regulations
To satisfy all these demands, executives will need to make ESG principles central to their business strategy. This will include setting ambitious emissions reduction goals and investing in innovative green solutions that help them track key metrics and reach those goals.
Businesses must also leverage their assets to act as better corporate citizens, supporting local community initiatives and diverting resources towards social good.
The growing trend of ESG investing and corporate sustainability is here to stay.
By 2023, it’s likely that companies who don’t prioritize ESG principles will fall behind their peers, while those who lead the way stand to reap the benefits. To stay ahead, executives must prioritize long-term sustainability goals that look beyond the bottom line.
This means developing an effective sustainability strategy and embracing new technologies to achieve it. The key to success in 2023 will be proactive, comprehensive sustainability solutions embedded into a company’s core operations.
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