This year’s forecast of sustainability trends looks like a perfect storm (in a good way) of purposeful but business opportunity-led progress. While Forrester analysts expect at least 10 companies to be hit with greenwashing fines of $5 million or more, the long-term outlook for meaningful environmental impact is much brighter. Gartner researchers predict that the global political establishment will support nation-state commitments to invest tens of trillions of dollars in climate change mitigation from 2025 to 2035. Driven by consumer demand and increasingly stringent regulations, the business sector has taken notice and acted to create a more sustainable future. Below is a summary of their investment priorities.
Access to accurate, high-quality ESG data
Environmental, social and governance (ESG) standards and regulations are becoming a dominant force in the way organizations operate, touching every aspect of business. In the US, the SEC plans to create more ESG regulations for investors, while the UK plastic packaging tax is expected to change global supply chains. According to Deborah Kaplan, global lead for sustainability at SAP Customer Success, collecting and making sense of large and disparate amounts of data is the biggest challenge organizations face — no matter where they are on the sustainability readiness spectrum.
“Companies need data transparency and detailed accuracy across the value chain. As ESG frameworks and standards evolve, they must move quickly to embed business process sustainability metrics in line with corporate strategy into every business process, ’ said Kaplan. “We are seeing customers replace time-consuming, inaccurate manual methods with holistic guidance and reporting solutions like SAP Sustainability Control Tower. It simplifies data visibility and allows companies to document and report on the entire value with built-in assurance and auditing capabilities quality data in the chain and act on it.”
IDC analysts predict that by 2024, 30% of organizations will use ESG data management platforms to control ESG KPIs through a centralized system of record for reporting purposes and real-time operational decision support. Within three years, ESG performance will be seen as the top three determinants of IT equipment purchases; more than 50 percent of RFPs will include metrics on carbon emissions, material use and labor conditions, the analysts said.
Connecting Data Provides Organizational Accountability
With the rise and ever-changing scope 3 emissions regulations, organizational leaders have realized the value of connected data in tracking, reporting and reducing climate impact. Gartner researchers say customers’ expectations for environmental and social sustainability will apply throughout the product lifecycle, predicting that “buyers will put their wallets to rest by purchasing only from companies and suppliers that truly deliver on their promises.” The firm found that 67 percent of organizations intend to hold supply chain leaders accountable to defined environmental and social sustainability KPIs.
By next year, IDC analysts predict that 80 percent of G2000 companies will collect carbon data and report their enterprise-wide carbon footprint using quantitative metrics, up from 50 percent today. According to Gartner researchers, by 2027, 50% of the top 10 consumer goods manufacturers will have a “digital product passport” for at least one product category. Passport is essentially a digital thread that will track a product’s carbon footprint, waste, liability and risk, among other things, sharing information company-wide and with suppliers and regulators.
Sustainability translates into business currency
Sustainable business is much more than reporting carbon emissions. Forrester expects five Fortune Global 200 companies to announce policies that limit travel to promote sustainable development this year.They don’t see companies resuming business travel as usual, writing that “some companies are using [post-pandemic] Reassess existing travel habits by tracking travel emissions data. “
Money matters are also driving sustainable business practices. Amid increasing SEC scrutiny, Forrester analysts expect public companies to “align their sustainability goals with corporate policies designed to drive environmentally sustainable behavior.” IDC analysts predict that by 2026, regulations and sustainability-related lending will drive more than 60% of global manufacturers to use product carbon footprint as a key metric to implement sustainability beyond reporting.
Innovative sustainable business model
Sustainability is good for business, and not just because it reduces compliance risk. The ability to effectively navigate the global regulatory environment and scale compliance systems will provide companies with a significant competitive advantage, according to Gartner researchers. Urging business leaders to think even further, the analysts predict a “carbon flip” following an “already ongoing period of intensive innovation in climate mitigation technologies, followed by the implementation of roughly 20 years of scalable solutions and carbon-emitting alternatives.” .based on technology.”
At the same time, the sustainability wave has produced many near-term business outcomes. By next year, IDC analysts predict that a quarter of organizations worldwide will demonstrate responsible leadership by increasing sustainability-related digital technology spending by more than 25 percent from 2022 levels. They say that within three years, 45% of G2000 organizations will implement integrated sustainability in their supply chains and effectively report impact data, reducing waste by 10% and increasing their competitive advantage.
As sustainability has shifted from carbon tracking to a company-wide commitment to a global imperative, organizations of all kinds find themselves working to create a healthier world. Of course, such advances will help us breathe easier and live longer.
Learn more about how to integrate sustainability into your business operations to help create a future with zero emissions, zero waste and zero inequality.