Before we discuss the sustainability trends shaping the business agenda in 2023, we wanted to reflect and take stock on the events of the past year.
Every year has its defining events, but the last 12 months seemed to produce moments and issues of decadal if not generational consequence. Foremost among these, Russia’s invasion of Ukraine transformed geopolitics, economics, and sustainability, with the implications still playing out. In many ways, global societal interconnections and dependencies like social media and supply chains amplified the impacts of the invasion, particularly those relating to energy, food security, and migration inside Ukraine and beyond. Economic disruptions wrought by the war coupled with the highest inflation levels in decades further challenged government and business leaders. As 2023 begins, recession threatens, and societies are bracing for financial hardship after years of strong growth and low unemployment in many regions.
Global and local corporations have been deeply affected by the war in Ukraine, its market impacts, and wider economic headwinds. This has forced the private sector to decide whether to fall back on fundamentals and lessen corporate sustainability efforts or whether ESG efforts should be maintained. While some companies have reduced sustainability activity and investment, more have embraced and upheld them in recognition that strong sustainability performance is likely to increase their resiliency to external shocks and bolster long-term profitability.
Corporate sustainability highlights from 2022 include companies linking executive compensation to ESG factors, helping their employees deal with economic upheaval with bonuses and unscheduled raises, setting net zero and nature positive goals, pursuing circular solutions like reuse and repair business models to reduce waste, and increasing supplier diversity to strengthen inclusion and equity efforts and boost overall business resiliency.
Corporate sustainability also faced challenges this past year. On the one hand, Russia’s invasion complicated ESG-related investment decisions as investors grappled with whether investments in fossil fuel and defense companies are ethical given the energy and security challenges triggered by the war. While on another front, some investors and politicians pushed back against sustainability and ESG initiatives, accusing them of putting societal issues over profitability.
The war in Ukraine cast a shadow across 2022. We were, and are still, appalled by the human suffering caused by this crisis. In such unique and tragic circumstances, it can be difficult to push forward on other pressing issues like climate change and the nature crisis. However, as we alluded to above, there is much to celebrate too.
The 2023 Sustainability Trends Report details the progress companies are making in working toward a more just and sustainable world. We hope that you enjoy reading about the trends we identify and the corporate responses emerging to them, and that some of this inspires action in your own lives and at your own organizations. As always, we welcome any feedback you may have.