In many ways, a new year provides a fresh slate for business and government leaders. Four quarters brimming with chances to improve upon the previous year. Among the many categories that these leaders can target to achieve their goals, sustainability again presents fertile ground for opportunity.
While material progress was made toward outlining sustainable targets by businesses and governments alike in 2022, much is still yet to be done. As the threat of climate change becomes more apparent, exposure to environmental, social, and governance (ESG) risks only increase, and thus place a mandate upon leaders to act.
Critical to this equation are communicators, who have a unique opportunity to usher in best practices in sustainability, such as transparent reporting, accountability, and goal setting.
A Brief Look Back…
To say the least, 2022 was a challenging year for sustainable business. First, the burgeoning practices of ESG, impact, and socially responsible investing (SRI) were assailed left and right. Be it from the media or the pulpits of state governors and legislators across the country, sustainable investing hit roadblocks as special interest groups sought to prop up increasingly obsolete industries, such as oil and gas.
Often lacking any connection to facts or reality, these critics clipped the wings of sustainable progress in multiple states, to the tune of billions of dollars of losses in the state pensions of Indiana, Florida, and Texas. And the midterm elections saw the GOP win a slim House majority, awarding them the privilege to put sustainable investing under their scrutinizing oversight over these next two years.
On the climate change front, these critics certainly aren’t reading the room. We saw a fraction of what a warming earth can produce in the realm of supercharged natural disasters.
Millions were displaced and thousands were killed due to flooding, drought, increasingly powerful storms, and more. This problem is multifaceted and all-encompassing and will require bold solutions if we are to stand any chance against it. And yet, those in opposition to sustainable business continue to drag their feet.
In the face of these momentum-killing efforts, some meaningful change was passed on the legislative front.
The Biden Administration delivered on a major campaign promise of ushering in a comprehensive climate change bill, the Inflation Reduction Act (IRA). The package includes $369 billion in green incentives that hope to elevate clean energy manufacturing, spur electric vehicle adoption, and re-establish the US on the sustainability world stage.
For other nuggets of good ESG and environmental news, check out our blog that rounds up some of the latest positive trends.
The Months Ahead in Regulation
Looking ahead, there are many topics worth tracking in sustainable business as the year rolls on.
Regulation will remain a major theme of 2023, as nations seek to clarify, tighten, and revise sustainability rules. At home, the Securities and Exchange Commission (SEC) will continue its campaign to guide climate disclosure and ESG rules.
As investors and consumers increasingly crave sustainably-minded companies, these rules will outline the ways that these climate risks and opportunities can be reported. With stronger regulation, companies can avoid the harmful practice of greenwashing. While an exact date has yet to be announced, a new slew of SEC rules should arrive this year.
Abroad, the European Union will be busy issuing sustainability guidance to its 27 member states this year. The most recent Corporate Sustainability Reporting Directive (CSRD) expanded the scope of which entities are required to report on ESG topics. These rules matter for US corporations, too. Any company with EU business could be required to develop ESG reports in-step with EU regulations.
Across the board, the EU’s regulations are far more thorough and expansive than the SEC’s offerings.
For example, the latest CSRD will include definitions and requirements related to “pollution, water and marine sources,” “resource and circular economy,” and “biodiversity and ecosystems.”
None of these terms are required in the current or proposed SEC rules. As such, US companies with European business must prepare to adapt to these stricter guidelines. For US corporations, alignment with the EU on sustainability will both maintain existing business ties and lead to more comprehensive ESG reporting.
Trouble in the Desert?
Another major sustainability item to add to your calendar, this coming November and December, the world will turn to Dubai, UAE for the United Nations’ annual Conference of Parties climate summit.
Last year’s COP 27 meeting in Sharm El-Sheikh, Egypt produced limited returns but welcome progress was made on climate reparations.
The US and EU agreed for the first time to contribute to a global fund that would benefit poorer nations that are adversely beset by climate challenges. This victory was muted, however, by the lack of consensus on radical emissions reductions. More, a buzzer-beater inclusion of a natural gas endorsement signaled another step in the wrong direction.
This year’s COP 28 will surely learn from the mistakes of COPs past, right? Well, the conference got off on the wrong foot by naming Sultan Al Jaber, CEO of the Abu Dhabi National Oil Company, as President.
At the outset, tabbing an oil boss may erode the credibility of the conference. However, optimists have suggested that Al Jaber’s ties to both renewables and fossil fuels mean he can play mediator for these warring industries.
Communicators on Climate Change
Communicators will play a major role in advancing sustainable business in 2023. An area where comms professionals can especially excel is holding internal and external stakeholders accountable.
Internally, as experts on brand voice, communicators can ensure that a team is on the same page when it comes to sustainability messaging. Leadership will turn to communicators to make sense of climate and ESG data. Turning these numbers into a succinct language that accurately conveys a company’s sustainable identity is imperative.
Failure to do so can expose your company to greenwashing or make it seem as if you play fast and loose with your data. If you want your stakeholders to take your sustainability campaigns seriously, they need to be bulletproof.
Externally, communicators can control the sustainability narrative for the better. Communicators set and maintain best practices for reporting, maintaining transparency, and goal setting.
As with any industry, journalists are on the front lines of keeping corporations and governments accountable. With sustainability, journalists have been responsible for publicizing the dubious ways that leaders have tried to mislead the public with their “sustainable” practices.
Finally, it’s up to communicators to make these issues, which are often rife with jargon, accessible to the public through approachable language.
In sum, 2023 holds enormous potential for sustainable business progress. But, as we’ve explored, this progress won’t come easy. We’re going to see desperate bids to ground ESG investing in state legislatures and oil bosses heading up climate summits.
Thankfully, those that believe in these causes have a major advantage over those standing in the way: cold hard facts.
We know that pushing sustainable business can have a meaningful impact on lowering emissions and reducing ESG risks. Certainly, the focus is disclosure and communications, but let’s not lose sight of the innovation and value that sustainability brings to businesses.
The pivotal players to get this message across? Communications professionals. We need these experts to package up the facts in a digestible manner not only for the public but for their bosses in the C-Suite, too. This campaign will lead to more investors echoing these truths and force leaders’ hands. It may seem like this progress is impossible, but it’s all well within our reach.
