Sustainability and ESG in 2023: 5 Trends to Look Out For

2022 marked a pivotal year for sustainability and ESG initiatives. With pandemic-induced economic uncertainty, challenged energy markets, and the breaking down of supply chains across the globe, more businesses than ever turned their attention toward investing in a more sustainable future. While the past year laid a solid foundation for positive change, we’re just now getting started. At EnergyCAP, we expect 2023 to be the year of accelerated sustainability reform, increased investment, and more intentional communication.

We’ve identified a few key trends to keep an eye out for and included some ways to ensure your organization is positioned to succeed in the new year.

Consumers will continue to push for more sustainable business practices

Sustainable business practices have become an expectation from consumers rather than a “nice to have”—and it continues to gain importance year over year. In a 2021 global study conducted by Simon-Kucher & Partners, 50% of consumers rank sustainability as a top 5 value driver. The study also revealed the importance of sustainability in the purchasing process, stating that more than a third of the population would be willing to pay more for sustainable products and services. Increasing pressure from consumers, paired with the financial upside of sustainable offerings will influence businesses to focus their efforts on ESG initiatives come 2023.

New legislation and standards will begin to take effect

While consumer demands push for progress on one end of the spectrum, new legislation and standards will drive action and sustainability reform on the other. In November 2022, the European Union approved the Corporate Sustainability Reporting Directive (CSRD), requiring companies over a certain size to abide by mandates that allow for more transparency and accountability in their sustainability efforts. The new directive will go into effect January 1st, 2024, meaning organizations will need to spend the better part of 2023 preparing for these disclosures.

Along with geo-specific legislation, new international standards will guide corporate sustainability reporting efforts. The creation of The International Sustainability Standards Board (ISSB) in November 2021 signaled the growing awareness of sustainability initiatives and the imminent need for a more simplified framework for more consistent reporting across the globe.

Businesses will boost their ESG spending

To meet growing demands from consumers, investors, and legislators, organizations will need to spend more to keep up—and this trend shows no signs of slowing down beyond 2023.  Global market intelligence firm, IDC, recently published their forecast for ESG business services spending, predicting that the market will grow to $158 billion by 2025, with a compound annual growth rate of 32.3%. Furthermore, leading sustainability research and advisory firm, Verdantix, surveyed over 400 sustainability and ESG leaders across 30 countries, and found that 98% plan on spending more. The specific areas they intend to invest in spanned across new or upgraded sustainability software, carbon accounting, and compliance.

“Greenwashing” will get called out

A NielsenIQ survey found that 77% of respondents would stop buying from a company that was found guilty of “greenwashing”. With more consumers becoming privy to flimsy and unsubstantiated claims of corporate sustainability practices, we expect to see greenwashing on the out, and proof of action, data-backed reporting, and transparency coming to the forefront. Gen Z buyers are particularly attuned to misleading greenwashing practices and will be keenly paying attention if they detect that brands aren’t able to back up their claims. Not only will companies take a brand hit in the event they are called out, but their bottom line will be impacted too. This year, regulators across the world took a firm stance against greenwashing, imposing hefty fines in order to hold companies accountable.

Sustainability will attract top talent

The long-term success and viability of a business often comes down to one critical activity: attracting talent. As the world witnessed during the Great Resignation, recruiting, hiring, and retaining top talent proved to be challenging amidst a rapidly-shifting economy and labor landscape these past couple of years. Candidates look at more than just financial compensation in their job hunt, with 66% of people saying they must personally align with the company’s mission and core values when applying for a job, and 70% of people saying they are very likely or somewhat likely to depart from a company that does not implement sustainable business practices, according to research from iCIMS and Dynata.

Setting up for success

2023 will surely introduce a lot of new demands for businesses on the sustainability front, but the key ingredient to get ahead of it all is having trustworthy, actionable, financial-grade data for more accurate and informed decision-making. EnergyCAP’s leading energy and sustainability software helps organizations track their energy and water consumption, spend, and GHG emissions for more transparent reporting to both internal and external stakeholders. With the recent acquisition of Wattics, EnergyCAP customers can now take their energy reporting to the next level with real-time building- and device-level interval data analytics.

Request a demo of EnergyCAP Utility Management and EnergyCAP Smart Analytics (formerly Wattics) today and chart your organization’s course to a more sustainable future.