Sustaira’s Top MSCI’s ESG and Climate Trends to Watch in 2023
As we move into 2023, we do so with a war in Europe, high inflation, energy markets in turmoil, political uncertainty, an ever growing list of climate-induced disasters, and a rapidly growing pressure on ESG and Sustainability. Based on the report, MSCI’s ESG and Climate Trends to Watch for 2023 we will summarize what experts in the field are watching out for in 2023 and what Sustaira hopes to provide around these topics.
With a whopping 32 trends identified in the 70 page document, there are four overarching key themes that we feel are important to watch closely this year. Those include:
Supply Chain innovation
Changing Governance
Responses to Regulations
Measurement and Transparency
These four themes include a focus on climate, governance, workforce, investments, regulation, biodiversity and supply chain, all of which are extremely important in the scope of ESG and Sustainability moving into 2023.
1. Supply Chain Innovation
The MSCI report goes into detail regarding innovation related to supply chain. This includes everything from tracking goods through blockchain technology, responsibly sourcing materials such as cotton, and even exploring replacement options for certain materials such as using lab-grown diamonds. It's without a doubt that supply chain transparency and understanding is no longer a nice-to-have, but instead a requirement for most organizations.
At Sustaira, navigating scope 3 and more specifically an organization’s supply chain is a journey. Beginning with Sustaira’s Carbon Accounting, Supplier communications, and even Contractors Commitment disclosures application, organizations can take a low-code building block approach to navigating the complexities of their supply chain. Offering core features and functionality that can be further customized and scaled to fit any need, allows organizations to get a tailored made application in a fraction of the time.
2. Changing Governance
According to the MSCI analysis, more investors voted against climate strategies in 2022 compared to 2021. This was especially the case for organizations whose emissions targets were not in line with global temperature targets.
“In 2023, we will be watching whether investor opposition to corporate climate strategies will continue to increase, or whether more investors will give companies the benefit of the doubt on their climate plans in challenging market conditions.”
The conversation around governance continues, including studies regarding the impacts of climate focused boards, hiring female directors, and even how age of board members can impact an organization. Governance being the massive topic that it is in sustainability and ESG is absolutely one to watch, and one that Sustaira is paying attention to. At minimum this topic highlights that investors and employees are making decisions based on the Sustainability and ESG information a company can provide. Information of which goes beyond the “E” of ESG but includes social aspects as well. Sustaira in 2023 is on a mission to continue to enable organizations in this area and to truly go beyond.
3. Responses to Regulation
In 2022 new ESG and sustainability regulations seemed to be announced almost everyday. The effects of these new regulations have yet to play out, and 2023 is sure to be an extremely defining year. MSCI outlines how regulators are looking at ESG funds, the inconsistencies within many of the climate target disclosure standards, how banks will navigate climate stress test regulations, regulation around deforestation, how ESG ratings may “fill in the blanks” of PAI indicators, and all in all how new regulations may alter the global digital landscape.
Within regulations we also run into investment challenges and uncertainties, many hope that with new regulation, there will be clarity and protection for both organizations and investors alike.
Ultimately as we explore sustainability and ESG we find that the challenges we see across the globe, whether they are based in disclosures, or supply chain, are in fact a digital issue that innovative technology and software can solve. At Sustaira, the core of the platform is dedicated to solving the most common challenges seen in Sustainability and ESG as a whole. These challenges include the following:
Sustainability/ESG data is siloed inside and outside the organization
No easy and efficient way to aggregate and manage the data online
Too many manual processes and excel spreadsheets: error prone
Lack of a centralized data hub and single source of truth
Inefficient reporting internally and externally
Difficult to demonstrate the impact
Once a year reporting versus real time and ongoing insights
Lack of transparency in the supply chain and product-lifecycle
Incapable to turn insights into measurable actions
No real way to track progress and results based on set goals
Unable to engage employees around sustainability
Hard to keep up with constantly changing requirements
One of Sustiara’s newest projects includes essentially a disclosures application to help construction firms disclose information at a site by site level.We’ve named this application Contractors Commitment. This app tracks everything from carbon impacts, to waste, to water and more! This is an expansion of an original disclosures tile that is able to walk users through their disclosure process using a pre-built disclosure structure that can be applied to frameworks such as GRI, CPD, SASB and more. Eventually, this application will link with other Sustaira applications such as Carbon Accounting to pull in emissions data throughout the year.
4. Measurement and Transparency
Measurement and transparency is perhaps one of the most important themes to watch this year as it is part of every single focus area when discussing sustainability and ESG. From climate, to governance, to biodiversity, to workforce and on, transparency and measurement is the first step. A huge push for transparency is coming from insurers and banks who’re setting up to expand the scope of emissions tracking. Ultimately, sustainability and ESG is part of each organization’s balance sheet and will in one way or another, affect the bottom line. MSCI outlines topics such as if investing in emissions is a new asset class, green bonds, labor shortages, human capital risks and impacts, exploring renewable energy, the impacts of COVID-19 and the war in Ukraine, even things like deforestation.
Sustaira’s Solutions
2022 was a year of change, and it’s clear that 2023 is going to bring even more change but hopefully more clarity and understanding as well. Like many others, Sustaira is continuing to watch these trends and topics, while delivering solutions to help users navigate this ever changing landscape. At Sustaira, we believe that ultimately the solution to all these challenges translates to needing a flexible, open, customizable solution that can connect with a wide variety of data sources, and that be rapidly tailored or changed to fit each organization as well as any changing goals or policies. A platform that also goes “beyond the E” of ESG. As mentioned before, the challenges in ESG and Sustainability are a digital issue that require digital solutions.
This is where the Sustaira ESG and Sustainability Application Platform truly shines. Leveraging Siemens’ leading low-code platform Mendix, Sustaira combines the speed of an off the shelf solution with the flexibility and made-to-fit feel of a totally custom application because of a smart, low-code, building block approach.
Using this low-code approach, Sustaira has pre-built application templates or building blocks within and between all domains of goals, data aggregation and awareness, taking action, results and rewards and digital reporting. All Sustaira applications or solutions are meant to be a starting point that organizations can then expand on, customize, and add to at any time. This allows organizations to implement a solution sooner, with the flexibility of customization to ensure that whatever they do adopt, completely fits their needs now, and has the option to grow and change with the organization as those needs or requirements change.
Next Steps
Be sure to follow Sustaira on social media to get updates throughout the year on the most important ESG and Sustainability news and solutions. For those wanting to join the journey or learn more about Sustaira today, be sure to sign up for the free version of the Sustaira platform through this link: https://www.sustaira.com/getstarted Or contact us directly if you have an interest in one of our ESG app templates or have ideas for new applications.
