Key ESG Trends for 2023: Part 2
Key ESG Trends for 2023: PArt 2
16 January 2023
This article follows on from part 1 in this series, where we looked at energy security vs sustainable energy and whether nuclear power will play a role in achieving this, as well as new ESG regulation in the EU. We now shift the focus onto other sustainability topics which we expect will gain more attention in 2023, such as food sustainability, critical minerals, employee relations and indirect emissions reporting.
Food Sustainability
It is expected that consumers’ food choices will continue to be driven by sustainability factors in 2023. Planetary health is now the main concern for consumers when buying food, rather than personal health, and more people are choosing plant based foods not only for sustainability reasons, but also for increased variation in their diet. This is reflected in the way that food brands market their products, shown by a 121% increase of carbon footprint labels on food and beverage packaging within the last year.
Additionally, with the global population now at 8 billion, it can trigger a rhetoric around whether the earth’s resources will cover the needs of everyone to have enough to eat. In reality there is more than enough food on the planet to feed everyone, but food is not distributed evenly. New policies that could affect better access to food in 2023 are the proposed relaxation of laws on Genetically Modified Organism (GMO) crops. The EU and China have expressed that they may change regulations on GMO seed products. This could help with food security, since more countries are experiencing climate-related extreme weather events, which can have an impact on food production.
Sustainably Sourcing Critical Materials
The COP15 biodiversity summit recently took place in Montreal, Canada, and seven nations have committed to the Sustainable Critical Minerals Alliance. This policy focuses on reducing some of the negative impacts of mining critical minerals on greenhouse gas emissions, indigenous communities and biodiversity loss. Critical minerals include copper, lithium, nickel, cobalt and rare earth elements. They are vital for achieving net zero because they are used for sustainable technology such as wind turbines, solar power and electric vehicles. As these technologies are becoming more widely used, the need for critical minerals is also increasing - for example by 2030 half of light vehicle sales will be electric. It is therefore vital that the demand for critical minerals is met in a sustainable way that respects the workers and the planet, and hopefully we will see more of this in 2023 following the new policies laid out in COP15.
Employee Relations and the Cost-of-Living Crisis
Another aspect to consider for 2023 is the relationship between staff and employees. In the UK we have been repeatedly reminded of uneasy relations between train companies and rail unions through rail strikes which have affected many peoples’ journeys. It is not only rail workers who are applying their right to unionise for better conditions, but also postal workers, NHS staff, bus drivers and other industry sectors who have been on strike recently, most of whom want their pay to reflect the current cost-of-living. As the cost-of-living crisis continues to affect peoples’ ability to pay for basic needs in 2023, employers will need to respond. One way that companies have dealt with this is by giving extra benefits to staff, such as John Lewis, who has provided free meals to their workers over winter, and other companies who have offered financial bonuses to support staff through these tough times.
Increased Demand for Indirect Emission Reporting
As banks focus more on their climate related risks, they are demanding data from companies they loan to or invest in to disclose their emissions. This is part of a wider trend where larger businesses are disclosing scope 3 (indirect) emissions, meaning that they must collect this data from other businesses that they work with. At the moment, under the UK’s Streamlined Energy and Carbon Reporting (SECR), only some companies are required to disclose their energy usage and emissions in their annual reports. This includes companies who are quoted, as well as some limited liability partnerships and unquoted companies who are large (to be large they must satisfy two of the following criteria: have more than 250 employees, a turnover greater than £36 million, and a balance sheet greater than £18 million). Therefore, smaller businesses in the UK do not currently have to report their emissions but larger companies may ask them for data on this if they are doing business together.
These short overviews of different sustainability topics hopefully give some insight into the kind of issues that business, governments and consumers can expect to see throughout 2023. We hope that globally the push for sustainability will continue and that it will be a priority for different stakeholders going into the new year.