The 2023 forecast of sustainability trends point towards purpose-minded, yet business opportunity-led progress that moves past constant accusations of greenwashing.
Research and advisory company Forrester has predicted at least 10 companies will incur $5 million or more in greenwashing fines, however, the longer-term outlook for positive environmental impact is far brighter.
Technological research firm Gartner has suggested that between 2025-35 political bodies worldwide will support nation-state commitments to invest tens of trillions of dollars in climate mitigation. Spurred on by consumer demands and increasingly stringent regulations, the business sector has started to take action to create a more sustainable future. Here’s a summary of their investment priorities.
Getting accurate, quality ESG data
Environmental, social, and corporate governance (ESG) standards and regulations are becoming a vital part of how organisations operate. In the US, the SEC has been criticised for not enacting more ESG regulations for investors.
According to Deborah Kaplan, global head of sustainability at SAP Customer Success, understanding tons of disparate data is the biggest challenge for organisations – regardless of where they sit on the sustainability preparedness spectrum.
“Companies need data transparency with detailed precision along the entire value chain. They have to act quickly as ESG frameworks and standards evolve, embedding into every business process sustainability metrics that are aligned with the company strategy,” said Kaplan. “We’re seeing customers replace time-consuming, inaccurate manual approaches with a holistic steering and reporting solution like SAP Sustainability Control Tower. It simplifies data visibility, allowing companies to record, report, and act on quality data across the value chain with built-in assurance and audit capabilities.”
IDC analysts predict by 2024, 30% of organisations will use ESG data management platforms to steer ESG KPIs through a centralised system of record for reporting purposes and real-time operational decision-making support. Within three years, these analysts claim ESG performance will be viewed as a top three decision factor for IT equipment purchases.
Connected data provides organisational accountability
With Scope 3 emission regulations on the rise, organisational leaders have realised the importance of supply chain data to track and report. Gartner researchers said that customer expectations around environmental and social sustainability will now apply to the entire product life cycle, predicting that “buyers will speak with their wallets by purchasing from companies that demonstrate authentic achievement of commitments.”
Gartner has also said that by 2027, 50% of the top 10 consumer goods manufacturers will have “digital product passports” for at least one of their product categories.
Sustainability translates to business currency
Sustainable business is more than reporting carbon emissions. For instance, Forrester expects five Fortune Global 200 firms to announce policies limiting travel for sustainability this year, “some are using the [post-pandemic] restart to reevaluate existing travel practices by tracking travel emissions data.”
Furthermore, Under increasing SEC scrutiny, Forrester expects public companies to “anchor their sustainability goals with corporate policies aimed at driving environmentally sustainable behaviour.”
Innovating sustainability business models
Sustainability is good for business, and not only because it mitigates regulatory compliance risk. Gartner research shows the ability to navigate the global regulatory environment and scale compliance systems will offer companies a significant competitive advantage. Encouraging business leaders to think further ahead, these analysts predicted a “carbon flip” after “an intensive period of innovation in climate mitigation technologies that are already underway, to be followed by roughly 20 years of implementation for scalable solutions and replacement of carbon-based technologies.”
By next year, IDC analysts predicted a quarter of organisations worldwide will increase their sustainability-related digital technology spending by more than 25% from 2022 levels. Within three years, they said 45% of G2000 organisations will integrate sustainability in the supply chain, enabling a 10% reduction in waste.
Business sustainability has transitioned from carbon emissions tracking into company-wide commitments to achieve global climate targets, and organisations of all kinds are finding the benefits for their business of creating a healthier world.
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