Ending the Year with Sustainability Momentum and Hope

2022 was a breakout year for sustainability. Across companies, commerce, culture, and political action, an unprecedented amount of sustainable activity and developments happened this year. It’s welcome, it’s necessary, and it makes me hopeful to continue this work with all of you.

Here’s just a snapshot of how we’re entering the year and heading into 2023, and this all just happened in the past week:

New York Commits to Major Climate Action

New York state, the third largest state economy in the U.S., is now charting a path to slash emissions across nearly ever sector — from buildings to transportation — via a mix of mandates and incentives. A new state climate action plan approved last week empowers Albany to enact a “cap and invest” program similar to California’s established cap-and-trade system, which requires polluters to pay for the emissions they generate.

New York is targeting a 40% emissions cut from 1990 levels by 2030 and an 85% reduction by 2050, with the remaining offset to reach net zero emissions .

The steep cuts will require electrifying millions of New York homes, businesses, cars, and trucks, as well as investing in energy efficiency improvements and developing several gigawatts (GW) of new renewable energy projects.

Climate at the Center of Global Trade

Last week EU ministers reached a deal and finalized the world’s first major carbon border tax, as part of a sweeping plan to make its economy carbon-neutral by 2050.

The Carbon Border Adjustment Mechanism (CBAM ) will impose a carbon emissions tax on EU imports of emissions-intense goods and materials, including cement, certain chemicals, aluminum, iron, steel, and electricity. Importers will be required to purchase so-called CBAM certificates to pay the difference between the carbon price paid in the country of production and the price of carbon allowed in the EU Emissions Trading System (ETS), the EU’s flagship carbon market.

EU carbon tax implementation is scheduled to start in October 2023, with a transition period to give companies time to prepare. The transition period, as outlined, ends in 2026–2027 when CBAM goes into full effect.

Both the climate subsidy provisions of the U.S. Inflation Reduction Act, New York’s new climate action plan, and the EU’s CBAM scheme show how governments and major economies are pushing to penalize greenhouse gas emissions, incentivize sustainable business practices, and foster innovation.

While these moves may create some degree of trade tension, they’re a logical reaction and important shift in the globalization dynamic. Globalization, among other things, shifts upstream segments of one nations carbon footprint to another’s.

Historically, the globalization trade-off has been around cost: if it’s cheaper to manufacture a product in outsourced market B vs. domestic market A, it’s better for business to manufacture in B. However, we know, logically, it’s more sustainable to buy local, particularly when local manufacturing is more energy and resource efficient, runs on a cleaner grid, uses circular practices, and holds its environmental and social impacts to a higher degree of accountability.

CBAM, among other things, help rebalance the true cost of globalization by accounting for its environmental externalities. And because the EU is a major market for companies and suppliers around the world, just like the CSRD CBAM will have major impacts for both EU importers and businesses across the globe.

A Global Framework on Biodiversity

Last week was also the COP 15 Biodiversity Conference in Montreal, Canada, which gathered global policymakers to establish a formal set of goals for biodiversity and natural conservation.

The result is the Kunming-Montreal Global Biodiversity Framework (KMGBF), which adopts 23 conservation targets for 2030, outlines a global 2050 biodiversity vision, and shares guidance for implementation. This landmark document is the first international agreement dedicated to biodiversity that specifically invokes “rights of nature” and Earth.

KMGBF outlines four major long-term biodiversity goals:

1. Species and ecosystem preservation and protection — The integrity, connectivity and resilience of all ecosystems are maintained, enhanced, or restored, substantially increasing the area of natural ecosystems by 2050; Human induced extinction of known threatened species is halted, and, by 2050, extinction rate and risk of all species are reduced tenfold and the abundance of native wild species is increased to healthy and resilient levels; The genetic diversity within populations of wild and domesticated species, is maintained, safeguarding their adaptive potential.
2. Sustainable use and development of biodiversity — Biodiversity is sustainably used and managed and nature’s contributions to people, including ecosystem functions and services, are valued, maintained and enhanced, with those currently in decline being restored, supporting the achievement of sustainable development for the benefit of present and future generations by 2050.
3. Equity among monetary and non-monetary sharing of natural resources — The monetary and non-monetary benefits from the utilization of genetic and natural resources, and digital sequence information on genetic resources, and of traditional knowledge associated with genetic resources, as applicable, are shared fairly and equitably, including, as appropriate with indigenous peoples and local communities, and substantially increased by 2050, while ensuring traditional knowledge associated with genetic resources is appropriately protected, thereby contributing to the conservation and sustainable use of biodiversity, in accordance with internationally agreed access and benefit-sharing instruments.
4. Funding and resourcing for biodiversity action — Adequate means of implementation, including financial resources, capacity-building, technical and scientific cooperation, and access to and transfer of technology to fully implement the Kunming-Montreal global biodiversity framework are secured and equitably accessible to all Parties, especially developing countries, in particular the least developed countries and small island developing States, as well as countries with economies in transition, progressively closing the biodiversity finance gap of $700 billion per year, and aligning financial flows with the Kunming-Montreal Global Biodiversity Framework and the 2050 Vision for Biodiversity.

One way to think of KMGBF by analogy is like a United Nations Sustainable Development Goals (or Paris Agreement) specifically for biodiversity. I expect to see KMGBF adopted alongside frameworks like the Task-Force for Nature-Related Financial Disclosure (TNFD ) as more organizations and governments move beyond a carbon-only approach to a broader definition of sustainability and more holistic environmental target-setting.

Moving beyond all the news and policy developments, this year’s also been a tremendously constructive time overall for learning, collaboration, problem-solving, and setting ambitious sustainability goals. It’s been immensely rewarding to meet and have the opportunity to work and learn together with so many of you on how we shift different organizations and supply chains in more sustainable directions.

There’s plenty more to do, so now seems like a good time to take a pause, reflect, recuperate, and appreciate our industry’s collective accomplishments this year.

In the meantime, wishing you and those around you a happy holidays and new years.

See in you in 2023 for what looks to be another critically important and impactful year in sustainability.

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