A rising tide of interconnected global challenges — from geopolitical conflict and natural resource shortages to rising inequality and increasingly frequent extreme weather patterns — has accelerated the collective need for consumers, companies and governments to address the impacts of climate change. But, if the world is to meet sustainability targets, then 2023 must be a year of not only greater interest, but also increased action and collaboration.
In partnership with Morgan Stanley, NationSwell convened a group of cross-sector leaders, each at the vanguard of sustainable innovation, to share ideas about what is at the top of their sustainability agenda for 2023. The sustainability leaders also provided insights into what their companies and organizations are doing to meet their goals and make progress towards a more equitable and sustainable future.
1) Lead the Charge on “E” “S” and “G” in Lockstep
Leaders must be forward-thinking about climate, diversity and inclusion, human rights and ESG reporting by advancing the understanding that each of these are interconnected and systemic. In 2023, expect to see more conversations about how to drive the low-carbon transition in a more inclusive and equitable manner, and particularly in ways that address longstanding issues of environmental injustice. As the energy transition ramps up, for example, this will require that public and private sector leaders ensure that new opportunities in the green economy are fairly distributed and available to everyone, especially marginalized communities that are already disproportionately impacted by extreme weather events.
One leader at the roundtable recommended reordering ESG to “GES” to better reflect the foundational role of governance in every tenet of an organization’s sustainability strategy.
2) Talk about Sustainability with Authenticity
Over the next year and beyond, the most effective leaders will place a premium on authentic storytelling and communications. They will ensure that the impact they are making — as well as the challenges they face — remain front and center to the narrative they share. A key starting point to harness the power of stakeholder-focused storytelling will include solving for the current lack of standardized data capture which makes it a challenge to accurately measure and share the true impact being created.
Upcoming changes to regulations around the world could help. A recent survey by the Morgan Stanley Institute for Sustainable Investing found that 59% of institutional investors believe that current proposed global ESG regulations will in fact help their organization better understand and talk about their impact.
3) Address the Sustainability Leadership and Talent Gap
While there is a reliable and increasing flow of talent in the field of sustainability through college pipelines, more experienced senior-level talent is still in high demand. A study by the Morgan Stanley Institute for Sustainable Investing found that just 39% of asset managers and 23% of asset owners, such as foundations or pension funds, say they have enough talent to meet their sustainability needs. Many leaders also believe that as sustainability is increasingly critical to the future of business the talent gap will continue to grow.
Part of this challenge may be the open question of where sustainability actually “lives” within a company. Leaders note that Chief Sustainability Officers (CSOs) are the most heterogeneous of all C-suite roles — they come from different backgrounds and may report to a different executive or senior leader than their C-suite counterparts. That is why as we head into 2023, some are exploring how to better structure their organizations and develop the skills to ensure that their sustainability leaders are central to their group.
4) Balance Energy Security, Affordability and Sustainability
The Russia-Ukraine war and the impacts of the pandemic have pushed the world into an energy crisis. This leaves many to ask, how can we ensure energy security and affordability while recognizing the need for more sustainable energy? As countries ramp up fossil fuel reserves to ensure their people are safe and secure, this can be seen as a setback in the global energy transition.
The reality is that 2023 will likely bring conversations about how we adopt longer-term strategies and boost investments that deploy renewable energy at an even larger scale. To help solve issues of energy security, affordability and sustainability, grabbing the “low-hanging fruit” of green energy sources like solar and wind should certainly continue. But 2023 will also likely see expanded conversations about “future fuels” like green hydrogen and further-in-the-future possibilities like the recent breakthrough in fusion ignition.
5) Set Higher Standards and Transparency for Voluntary Carbon Offsets
Leaders are poised to hit the ground running in 2023 to push for higher standards on the voluntary carbon offsets market. There is consensus that we will not offset our way out of the climate crisis and the priority must be on mitigating absolute emissions. However, while there remain parts of entire industries and supply chains that cannot yet be realistically decarbonized, voluntary carbon offsets add benefits by allowing businesses, governments, nonprofit organizations and individuals to offset their footprint and help balance the effect of any residual emissions.
The reality is also that the voluntary carbon markets exist outside a regulatory regime, meaning there isn’t always proper oversight or a guarantee that offsets will produce absolute emissions reductions or real-world impact. So, as carbon offsets increase in popularity and see rising demand, moving beyond “do-no-harm” and into place-based, community-centered climate interventions will likely continue to be a big theme. This is especially important as private and public sector leaders continue to call for greater transparency and verifiable standards for offsets providers around the world.
The Morgan Stanley Institute for Sustainable Investing provides leaders with the resources, tools, and insights they need to meet their most ambitious sustainability targets for 2023 and beyond. Learn more here.