Every year there are new trends emerging among ESG. Sustainability is currently one of the fastest evolving areas. Here are ten trends that we think will develop in the near future.
1. If business leaders fail to act, they may suffer consequences
If you are a director of a company that is failing to act on climate change, or actively and knowingly damaging the planet and its people, you will most likely face consequences.
In the same way that the #MeToo movement eventually caught up with high-profile abusers of the past, so too will the #ClimateEmergency movement catch up with eco-vandals in the future. If you want to know who the biggest eco-vandals currently are, google the most polluting companies in the world. It’s just 20 different state-owned and multinational companies.
2. There will be a convergence of governance and standards
The convergence of ESG terminology, standards, and initiatives, which began in 2020, is likely to be an area of focus for the foreseeable future.
The EU came out with its final Corporate Sustainability Reporting Directive (CSRD) focused on ESG strategy and reporting, just as the Corporate Sustainability Due Diligence Directive (CS3D) focused on sustainable supply chains is being finalised. But get ready for much more, you can read about it on our blog.
3. Sustainable products will become the norm
Sectors like fast fashion are quickly becoming ‘very uncool’. Young people are leading the way by purchasing more sustainable products. Millennials and Gen-Z are more aware than any other generation of the impact of climate change, the loss of biodiversity, and the need to take action.
As the people who were born in the 21st century enter the workforce, they will have more purchasing power, so you need to ensure your organisation adheres to environmental and sustainability standards if you want to attract them.
4. Greenwashing will be punished
Publicly claiming that your organisation’s activities or products are more sustainable than they actually are is greenwashing. Greenwashing carries with it reputational, regulatory and litigation risks for which companies should be prepared. We have been witnessing a rapid increase in litigations, such as lately the airline one.
The moral of the story is very simple: do not lie to your investors or customers; they will find out the truth eventually.
5. ESG investing will continue to rise
The ESG investing trend became very popular during the pandemic years, but it does face challenges. There is a number of greenwashing among ESG funds and as we saw recently, Switzerland's financial regulator is banning ESG funds from labeling themselves as sustainable or claiming contributions to sustainability.
However, the outlook for the global climate changes have led investors and organisations to realise the importance of non-financial considerations and look beyond profits. Plus, did you know that the topic of biodiversity is becoming mainstream in ESG investing?
6. Organisations will have to disclose any ESG risks they are responsible for
Companies, big and small, will soon have to report on their ESG and disclose any risks they may be responsible for creating, as well as their impacts and opportunities. This will lead to significant changes for firms in terms of share prices, attracting talent, customer loyalty and investor goodwill.
7. Carbon offsetting will get better
The term “carbon offsetting” refers to “making up for” the emissions of greenhouse gases like CO2. Companies and organisations that fund carbon offset projects aim to clean up greenhouse gas emissions, or prevent the release of harmful gases into the atmosphere.
As net-zero emissions become more prevalent in ESG circles, carbon offsets will become mainstream. Many people consider offsets to be greenwashing, but perceptions will change as more credible alternatives emerge, allowing quality offset projects to flourish.
8. ‘Climate positive’ becomes the new ‘net-zero’
With carbon offsets, organisations can reach ‘net-zero’ goals, but we can expect things to go a step further in the coming years.
Net-zero will be surpassed by ‘climate positivity’ as the next big ESG trend. Climate positive is where a companies’ activities actually reduce the amount of carbon dioxide added to the atmosphere.
9. Renewable energy will become cheaper
In the past, fossil fuels were cheaper than renewable energy, and this is rapidly changing. According to the International Energy Agency (IEA) Renewables 2020, wind and solar energy have become 70% and 89% cheaper in the last ten years, and their capacity will surpass coal within five years. Also, solar power is now cheaper than coal. I recommend looking into green energy procurement and using its potential.
10. Working from home will be a normal feature of many careers
This is one of the more notable trends in sustainability, but it is surprisingly popular. It turned out that working remotely is also very beneficial for the environment and the health of people.
Having people work from home reduces emissions and fossil fuel consumption because fewer cars are on the road, and less energy is used in office buildings. Commuting less is the fastest, easiest, and cheapest way for people and employers to reduce their carbon footprints. We can expect more innovations in remote working in the future.