Get Ahead of the Curve ESG Trends to Watch for in 2023

The world of #esg (#environmental, #social and #governance) and #corporatesocialresponsibility (CSR) is ever-changing, and it can be tough to keep up with the latest #trends. In this article,?I'll share key trends to watch for in #2023.

If you want to stay ahead of the curve, read on. These trends will help you better understand the ever-evolving landscape of ESG and CSR?-?and how they impact your business.

Climate Crisis

You might have heard that the world is facing a #climatecrisis. That means we're running out of time to take the necessary steps to avoid the most catastrophic consequences of #climatechange. The #energy sector is a big part of the problem, and it's going to take a concerted effort from companies, governments and individuals to make the transition to a more #sustainable, inclusive and affordable global energy system.

One of the biggest challenges we face is getting financial resources and investments behind #climateaction. The good news is that there are already movements afoot in this direction. Investors are starting to see the value in making sustainability a key part of their #riskmanagement strategies. And as we see with the Paris Agreement and #cop27, there is increasing political will to address climate change.

ESG-focused funds

You're probably familiar with the term "ESG" by now. It's something that more and more #investors are taking into account when making decisions about where to put their money.

Recent studies found that the amount of money being funneled into ESG-focused funds is on the rise. That's a trend that's only going to continue in the years to come.

What's driving this growth? A lot of it has to do with the current state of the economy. With energy prices on the rise and conflicts like the one in Ukraine driving up demand for #fossilfuels, investors are looking for ways to diversify their portfolios and reduce their risk.

Consumers behavior?

In 2023, consumers will be holding brands more accountable than ever for their sustainability practices.

They'll be looking for brands committed to reducing their #environmentalimpact, whether through reducing energy consumption, using #renewableenergy materials, or waste reduction. Consumers will also be interested in how brands are engaging with their employees and local communities to improve #socialsustainability.

Brands that can demonstrate a genuine commitment to sustainability will be more successful in the coming years. Those that don't will likely find themselves at a competitive disadvantage.

Global regulation on deforestation?

As you plan ahead for 2023, expect to see global regulation on #deforestation accelerate. The global financial sector is increasingly putting pressure on companies to stop their contributions to #globaldeforestation. Many countries have already introduced regulations with stiff penalties, and the United States recently announced plans to regulate cross-border finance – both of which are likely to be in force by early 2023.

This will mean that companies exposed to deforestation will have to re-evaluate their environments and procedures or face prosecution. Furthermore, ESG investing and climate finance could be shaped by geopolitical and economic change, furthering the need for increased amounts of investment tools in early 2023 for tracking companies exposed to deforestation and other sustainability issues.

Ability to measure a company or investment’s ESG impacts

ESG investing requires investors to be able to measure their risk and impact. As the world moves towards greater ESG awareness, the ability to measure a company or investment’s environmental, social and governance impact is becoming increasingly important. We are seeing several innovative technologies being developed that focus on providing transparency and accountability when it comes to #esginvestments. Technology-driven data systems are enabling investors to more easily access, use and understand the data they need to make informed decisions when it comes to ESG investing.

Additionally, more rigorous reporting standards are being created. This could mean the need for companies - ranging from banks to oil majors - to make publicly available their strategies for managing climate risks and for investors having greater access to necessary information in order for them make better judgements about potential investments.

Transformation of Traditional Business Models

As environmental, social and governance and climate finance become more important, businesses are rapidly transforming their traditional business models. We’re seeing #digitaltransformation drive a shift to customer-focused solutions, using analytics to identify key trends, and automation to reduce costs. Companies that embrace innovation and undertake strategic re-engineering are the ones that will stay ahead of the curve in the long run.

The financial sector is also seeing a new wave of innovation and risk management that could hugely impact ESG and climate finance. ESG is being incorporated into traditional financial services to identify relevant risks for investors and issuers, as well as helping to assess the impact of climate change on companies' bottom lines. Increasingly sophisticated technologies like blockchain could also be used to create trust-free platforms for issuing ESG-related products.

The bottom line is that whether you are an investor, a business, or just someone who wants to stay ahead of the curve, you need to pay attention to ESG trends. The world is changing, and the sooner you start preparing for what's to come, the better.