Ctg sit23 hub banner.jpg

2023 predictions: the trends shaping sustainable business

What trends will shape corporate sustainability in 2023?

2023 will bring increased scrutiny on businesses, more investment in green technologies and higher awareness

Image:

2023 will bring increased scrutiny on businesses, more investment in green technologies and higher awareness

In yet another year of increasing climate events around the world – from extreme weather to unprecedented losses in nature – companies today have a more crucial role than ever before in helping limit global warming.

What trends will shape corporate sustainability strategies in 2023? How will technology increasingly assist firms to achieve sustainability goals? Here's my predictions for the year ahead, from overarching trends to the role of digital innovation.

Image

Description

Dr James Robey is Global Head of Environmental Sustainability at Capgemini

The widening corporate focus

We are already seeing the impacts of climate change. To name but a few examples: widespread flooding in South Asia, a multi-year drought in the Horn of Africa, and the recent record-high winter temperatures across parts of Europe.

Looking ahead, despite some promising developments at the recent UN Climate Change Conference (COP27), we are edging ever closer to exceeding the 1.5°C threshold after which climate disruption becomes more severe. The UK Met Office, for example, has warned there is around a 50:50 chance of temporarily breaching a 1.5°C rise above pre-industrial levels in the next five years.

During 2023, I predict that the climate change conversation will continue broadening to focus more prominently on adaptation alongside mitigation measures, whilst prioritising a just transition where economies are 'greened' in a way that is as fair and inclusive as possible. Climate change adaptation will become a more prominent consideration for companies, which need to ensure operational resilience as well as coordination with multi-stakeholder efforts to protect vulnerable communities in areas where they operate.

We'll also see the desire to protect nature as a growing focus for businesses in 2023, as greater attention is given to the interconnections between climate change and biodiversity. The world is facing the sixth mass extinction event, driven mostly by habitat loss, while climate change is pushing species out of their comfortable ranges. Some companies are already making the connection - for example, Capgemini's 2022 Tech for Positive Futures challenge required employees globally to develop technology solutions that help protect biodiversity in our changing climate.

A growing scrutiny of corporate claims

Image

Description

Only half (53%) of people around the world trust business to do what is right on climate change, and calls for greater clarity in corporate climate commitments have been ongoing for some time. Recently, COP27 saw a UN-appointed Expert Group call for an end to greenwashing, lambasting unclear net zero targets from non-state entities.

I predict that 2023 will see greater scrutiny of corporate claims, with companies responding by taking steps to publicly clarify approaches and milestones to reach carbon reduction targets.

If this is the case it could prompt a welcome change, as despite the majority of companies including sustainability as a key agenda item for top leadership, it's not necessarily translating into action. Our A World in Balance report found that while organisations may have long-term objectives for 2040 or 2050, many are failing to clearly define and sufficiently prioritise their sustainability initiatives in the short term. Less than half (49%) of the 1,003 executives surveyed said their company had defined a priority list of sustainability initiatives.

Investment in digital innovation to support sustainability agendas

Image

Description

Companies will continue to invest in sustainability throughout 2023, with more organisations recognising the long-term financial benefits of sustainable operations. Economic uncertainty, increased costs and potential shortages of some resources may even trigger new ways of thinking about how businesses can do more with less.

I predict that digital innovation will play an increasingly important role in supporting businesses to develop, deploy and track their sustainability agendas. More than half of organisations globally are investing in IoT or Industrial Internet of Things (IIoT) to better monitor and reduce energy consumption. The technology helps streamline operations by predicting energy demands and usage patterns to reduce energy consumption.

Artificial intelligence (AI) is another example of how digital innovation is increasingly supporting the sustainability agenda. According to our AI for Climate Action report, AI-enabled use cases have so far helped organisations reduce greenhouse gas emissions by 13% in the last two years, improving power efficiency by 11%.

Investments in sustainability will likely be fuelled by more companies realising how this helps future-proofing their operations and supply chains. We found that 'front-runners' (organisations who've progressed to a greater degree than their peers in implementing sustainable practices) witnessed 83% higher revenue per employee from 2020 to 2021 compared to the average.

Awareness of the impact of technology

Image

Description

While digital innovation can support a shift to net zero operations, businesses also need to be mindful of the carbon footprint associated with technologies.

Take AI, for example. Despite the advances made in cognitive computing, AI systems can consume a lot of power and can generate high volumes of climate-changing carbon emissions. Training an AI language processing system can produce 635kg of carbon-equivalent emissions - about the amount produced by flying one person roundtrip between New York and San Francisco.

Businesses need to be aware of the carbon emissions associated with deploying digital innovations and technology, and this is a trend I hope to see slowly develop during 2023. According to our Sustainable IT report, IT is not a high sustainability priority for most organisations - only 43% of executives are even aware of their organisation's IT environmental footprint - but I think that as more companies strategise how to deliver net zero commitments, interest in managing IT- and digital-related carbon emissions will begin to gradually grow.

Conclusion

If businesses are to stand a chance at successfully combating carbon emissions, their actions need to be as loud as their words. Growing scrutiny of corporate claims coupled with digital innovations that unlock operational efficiencies and other improvements will help companies further their sustainability agendas in 2023. The caveat is that we all need to remember the digital world also has a climate impact to manage sustainably.

2023 predictions: the trends shaping sustainable business