Just a few days into January and a multitude of thought leaders have put forward their predictions for 2023 with respect to purpose & Environment, Social and Governance standards (ESG).
Unsurprisingly, they are couched in the context facing many economies around the world: inflation, rising interest rates, and decreased spending among their customers.
This post summarizes the top 8 purpose & ESG trends highlighted across these resources (sources listed below). You’ll also find specific, digestible actions your company can take to get ahead of each trend.
8 Purpose & ESG Trends to Act On
1) Trend: Companies may (mistakenly) divest from ESG and impact-oriented efforts.
ACTION: Economic circumstances may lead companies to divest their time, resources and attention away from impact. But they will be making a mistake. Now is the time to demonstrate your purpose and ESG commitments to those you need most – your customers and your employees. Anything less and you risk your integrity, and the opportunity to stand out in an increasingly competitive market.
In a downturn, embracing a marriage of sustainability and efficiency – which demands a substantial investment of data and effort – will put the business in a better place, yielding a series of financial gains from smarter operations as well as continuing to contribute and progress to carbon net zero.
2) Trend: ESG initiatives emphasized in 2023 will likely be a circular economy, a just transition to net zero, and the ‘S’ (social) in ESG.
ACTION: To keep up with rising expectations, double-down on your net zero efforts, examine your supply chain for energy and waste efficiencies while improving the life cycle of your products, and improve the wellbeing of your workers and the communities you operate within.
If that feels overwhelming, look to your purpose to guide you in setting your priorities for the year.
With more businesses embracing these new initiatives, we can take a step forward in transitioning from the subscription economy to the sustainability economy.
3) Trend: ESG critics and skeptics will continue to cast doubt on its legitimacy.
The three main financial documents we all work from today - the balance sheet, the income statement and cash flow statement - took centuries to evolve.
ACTION: The field of ESG is still in its infancy, which means there is bound to be varying opinions, lack of clarity around standards and reporting, and confusion. This gives nay-sayers ammunition to dismiss it altogether.
You can help by being as transparent as possible about your own ESG efforts and progress, including areas where you need to improve. Make sure your staff understand how your company defines ESG, corporate social responsibility (CSR), sustainability, and purpose.
The last year has seen a new movement of anti-ESG backlash that is opposed to consideration of ESG factors, in a push to revert to the outdated notion that the purpose of a corporation is to increase short-term shareholder profits.
4) Trend: Staff engagement & wellbeing, including the importance of diversity, equity and inclusion (DEI) within the organization, will continue to be a priority.
ACTION: If you haven’t already, survey your staff to get a baseline understanding of their needs, challenges and desires across a variety of topics, including engagement, flexibility, compensation & benefits, diversity, equity and inclusiveness within your organization.
Repeat the survey regularly. Analyze and review the results with your leadership team to identify priorities and address your company’s shortcomings.
The Global Diversity Equity & Inclusion Benchmarks developed by The Centre for Global Inclusion provides a guidebook and supporting suite of tools to support your organization's DEI journey.
Companies have more work to do on diversity and inclusion metrics including identifying risk areas, prioritizing initiatives, setting targets, assigning accountability, and measuring impact. But there is also a great opportunity to keep people interested, informed, involved, and inspired along the way.
5) Trend: ESG reporting standards will continue to evolve rapidly in 2023.
ACTION: Regardless of your industry or legal structure, build your capacity to interpret and navigate these changes– and increasing expectations–by investing in staff positions or consultants with particular expertise in this area.
While meeting the new mandates set forth through regulations may take time, effort, and money, the organizations that rise to meet these challenges will do much more than just future-proof their businesses via compliance. These proactive companies, alongside their executives, will exhibit the values that both stakeholders and potential investors and customers appreciate now and into the future.
6) Trend: A company purpose is critical, but more stakeholders will expect companies to demonstrate meaningful progress towards it.
ACTION: A company purpose statement without actions that move you towards it is purpose-washing. To be purpose-driven is to mobilize all of your company’s assets and resources in pursuit of your purpose.
Setting priorities and goals associated with your purpose will allow you to galvanize your staff, stretch their imaginations, and innovate for social good. Setting short and medium-term targets for each goal will allow you to maintain momentum, celebrate milestones and demonstrate to the world that you are making progress.
Start by clarifying the outcomes you want to achieve, and work backwards from there. For support with this, reach out.
Whether it is purpose, social diversity, climate, etc. all of this can be measured... I'm really excited that organizations are starting to put true grit into determining what's next and hold themselves accountable for that.
7) Trend: Companies will take bold stances on important social and environmental issues.
ACTION: Understand the issues that matter most to your company (your company purpose, again, will guide you here), your staff, and the communities you operate in. There are a myriad of ways to address these issues using the core capabilities of your company, but one way must be to use your platform to speak out. Many of these issues are complex; change requires much more than what your company can do alone.
But you can use your company’s voice to demand that policies, practices, hearts and minds better protect the wellbeing of the people (or environment) affected.
Leading CEOs determine which issues are most material to the company and act when the company is able to make a unique impact. CECP encourages companies to identify issues that matter most to them, speak out when appropriate, and take action to make a tangible impact.
8) Trend: In this economic context, more companies will look to partnerships to compound their impact.
ACTION: Identify aligned suppliers, non-profits, research institutions, government departments, and even competitors and start working together on a concrete initiative that benefits your organizations, and society.
Academics have deep knowledge in particular areas and can make sure you are up-to-date on your evidence. They’ll also help you think through unintended consequences.
Non-profits addressing the same or similar issues will want you to do more or go faster. It doesn’t mean you have to, but they’ll give you the push you need to grow beyond your comfort-zone.
Government workers can help you think through the political and/ or regulatory boundaries of the issues you’re addressing, and may help you identify the policy changes necessary to implement your biggest ideas.
Finally, remember that, societally, we often design solutions without input from those most affected by the problem. Be sure to follow appropriate ethic protocols and be careful not to tokenize – one person cannot adequately speak for a whole group.
This is not the time to go it alone. This is not the time to charge ahead...together is something we all have to get comfortable with.
Top Sources:
- Adam Moloney, CFO – “ESG in 2023: 3 Ways to Prepare for New Regulations”
- Andrew Winston, Harvard Business Review – “A Tumultuous Year in ESG”
- Carol Cone’s Purpose 360 Podcast – “2023 Purpose Predictions”
- Chief Executives for Corporate Purpose – “CECP 2023 Look Ahead”
- Eric Johansson, Verdict – “ESG Will Continue to Impact Business in 2023, Experts Predict”
- Leon Kaye, Triple Pundit – “3p’s Crystal Ball for 2023: The ESG Trends We See for the Coming Year”
- Martin Lipton et al, Harvard Law – “Thoughts for Boards – Key Issues in Corporate Governance for 2023”
- Natalie Runyon, Thomson Reuters – “Welcome to 2023: ESG & employees still win even in economic uncertainty”
