Sustainability Trends To Watch Out For In 2022

This year, we should expect to see stricter laws to expose 'green washers' and rising demand for clear disclosure and reporting?standards. The prolonged coronavirus pandemic continued to force seismic shifts in public policy and company behavior. It brought about important fixes in the financial system and altered how businesses reacted to the impacts of climate change. Before the COP26 climate conference in Glasgow, more than 1,000 companies had committed to adopt science-based targets to reduce emissions in line with the Paris Agreement goals. At the landmark summit, governments and businesses put forth more grand pledges and ambitious plans to decarbonize. These governments and corporates, however, have given scant detail on how they plan to meet their?climate pledges.?In the year 2022, there would be a need to push for more transparency, to ensure that the promises are matched with genuine action. The key outcomes from COP26 are expected to influence climate action.

Sustainability, as the new normal for the conduct of life and business, will give a push to the ongoing trends as well as throw up new trends. Here are some sustainability trends to watch out for in 2022:

All about data:??With the spotlight on sustainability, data will be the ticket to not only the low-carbon bandwagon but also to showcase results to the regulators, investors, and other stakeholders. All this while the data analytics lifecycle keeps getting more nuanced to better measure, manage, record, and showcase results. Companies will have to keep track of emerging products like leading asset manager Arabesque’s recently launched ESG Book, a data platform for companies and investors to disclose ESG data in real-time.

Rise in ESG investment:?Investing is being guided more and more by ESG (Environmental, Social, and Governance) considerations. Triggered by COVID-19, ESG investment, which factors in a lasting impact on the environment and the society, has got a boost. The surge in ESG investments is expected to continue and now has a helping hand from the Omicron coronavirus variant, which may not even be the last variant.

Push for renewable power:?The phasing down of the use of unabated coal and subsidies for fossil fuels were mentioned in the Glasgow Climate Pact adopted by 197 countries. That can be achieved, to a large extent, on the back of retiring coal power plants that are warming up the planet and by increasing the share of renewables in the energy mix. More investments will flow for the setting up of solar, wind, and other renewable energy facilities as compared to fossil fuel facilities.

Push for carbon offsetting:?Carbon offsetting is about the replacement or reduction of carbon emissions. Usually, high-emission companies fund projects that either prevent the emission of greenhouse gases (GHGs) or remove GHGs. These projects can range from planting trees to deploying technology to capture carbon emissions. With the framing of carbon market rules, low-carbon emitters will increasingly tap the carbon offset market.

From net-zero to climate-positive:?Nations and companies committed to net zero or climate neutrality will sooner or later set the climate-positive or carbon-negative goals. While cutting down on emissions and removing carbon dioxide is expected to check global warming, climate positivity is needed to enrich the environment to reverse degradation.

More stringent regulations:?While emission reduction regulation will keep getting tighter, reporting and compliance will be enforced strictly as we go forward and as the process deadlines of net-zero near. Leaders indulging in a lofty talk on sustainability will have to walk the talk under the scrutiny of not only regulators but also investors.

Increase in stakeholders' influence:?Mass awareness about sustainability is on an upswing. Not just investors, even customers, employees, and job seekers are subjecting companies to the lens of sustainability. From being only shareholder-centric, companies will have to become stakeholder-sensitive.?

More shelf space for green products:?The younger population is more concerned about the environmental challenges that threaten to become bigger with each day. Add to that the future generation and the two will together make up a major share of the eco-conscious population. From food to fashion to lifestyle, green products will occupy not only a larger mind space but also a bigger shelf space.

Work from homestays for good:?It is convenient for a lot of employees and is also beneficial for the environment as it reduces commute and vehicles on the road and also energy use in office buildings, thereby reducing emissions. It is a win-win situation for the employees and employers as well as the planet. Work from home will continue and become permanently institutionalized as part of a more acceptable hybrid working model.

Electric vehicles to rev up:?At present, it is one of the lesser-known annual days but World EV Day, first celebrated on September 9, 2020, is set to become popular. While India seeks to achieve its vision of 100% electric vehicles by 2030, there will be pressure on the industry to source its raw material responsibly. The bigger issue will be to overcome the challenge of sourcing electricity from renewable sources to charge vehicles.

Innovation will be the key as always. We need to groom innovative minds so that we can eliminate the cons we discuss all around. Let's hope for a cleaner future.

Reference: Outlook