Top five sustainability trends 2022
Sustainability is unquestionably one of the most important issues of our time. Pressure from stakeholders is almost tangible as the demand to become more sustainable rises. Organizations and institutions of all kinds must address sustainability if they are to survive and thrive.
The COVID-19 pandemic has had a significant impact on businesses around the world, influencing decision making as well as health and safety; but environmental issues are gaining momentum, especially sustainability reporting.
Expectations were high before COP26, held in Glasgow in 2021, but the results of the conference were not as bright as we hoped for. However, the event did turn the spotlight on climate change and the topics of sustainability and accountability. Sustainability will play a key role in 2022, even though worries about COVID-19 remain.
Sustainability reporting is an important tool for organizations of all kinds, allowing them to showcase and verify their level of sustainability. However, smaller companies are not required to produce these reports. Sustainability programs and reports can be a strategic asset, even when they are not compulsory. Investors are making more demands as they become increasingly conscious of today’s world. A visible environmental policy along with confirmation that your business is sustainably operated will boost your company’s reputation and lead to improved turnover. Monitoring and reacting to sustainability trends can give your organization a competitive advantage as you demonstrate to your audience that your business is addressing urgent issues.
We cannot predict the future, but we can share some insights into the sustainability reporting trends we expect to see in 2022.
1. Creating and committing to common metrics
Sustainability reporting today lacks common metrics and unified reporting standards. Comparisons of different reports and companies have been almost impossible due to the wide range of reporting methods. Sustainability reports have also been viewed with uncertainty as readers are often sceptical about the reliability of the data they contain. We should see this situation resolved in the near future as common metrics in sustainability-related financial reporting will be launched by the newly-created International Sustainability Standards Board (ISSB). Almost 50,000 companies worldwide must comply with the new standards from January 2023. Early implementation of these new standards in 2022 could give your organization a head start in transparent sustainability reporting.
2. Increased commitment of management to sustainability reporting
Sustainability investment will continue to play a vital role in the future. A number of studies show that long-term sustainability investments can actually increase the profitability of some organizations compared to their competitors. A greater emphasis on green values can make a company more attractive to a wider range of investors. The number of companies reporting sustainability on a voluntary basis will rise as they will not want to find themselves excluded from investment portfolios.
3. Climate change will continue to play an important role
Prevention of climate change will remain a headline issue as the world battles to find a path to carbon neutrality. Governments, investors and populations as a whole are showing a growing interest in disclosures related to environmental effects alongside verifiable sustainability reporting.
4. Transparency more important than ever
Business transparency is becoming more important. Information is easy to access due to global digitalization. But false or inaccurate information can destroy an organization’s reputation in a very short time. Companies failing to understand the importance of transparency could be accused of greenwashing, attempting to appear more environmentally sustainable than they really are. Transparency must be applied from the top down; the approach of management plays a key role in successful communication and credible transparency. External audits are also likely to become more popular; they are an effective means to convince stakeholders that a business is giving out honest and reliable sustainability data.
5. Using technology to better understand ESG data
Using appropriate technologies will provide us with the best tools for analysing and understanding the sustainability data we possess. As the flow of information increases and data analysis becomes more complex, stakeholders demand more relevant information. New technology and advanced analytical tools can make complex data more understandable.
The year 2022 will likely continue to have difficult and challenging themes, especially around public health and climate change. ESG - Environmental, Social and Governance - is an acronym which will be more widely used as we see growing concerns over biodiversity losses and a circular economy. Sustainability reporting can help companies improve their reputations and stakeholder relations. It can also help managers and employees improve their environmental awareness. A truly sustainable organization must have sustainability at the core of its corporate strategy.