Topics In Demand
Notification
New

No notification found.

The Future of Corporate Sustainability: 2023 Predictions
The Future of Corporate Sustainability: 2023 Predictions

March 1, 2023

380

0

With the impact of climate change continuing to raise concerns around the globe, the constant push to incorporate sustainability initiatives has never been greater than before. With more consumers letting their actions speak louder than words, organizations are finding themselves in a fix. Organizations are now exploring new avenues to incorporate the same values as their consumers to act. For if the organizations don’t, then the consumers are likely to spend their money elsewhere.   

A recent survey by the IBM Institute for Business Value highlighted that around 62% of consumers are willing to alter their purchasing habits to contribute to reducing environmental impact. And half of the respondents of the survey expressed their willingness to spend a premium for sustainability. However, many organizations are yet to take a stern call to act seriously.  

Earlier this 2022, an Environmental Sustainability Index was established to help track and inform members of the global community about the current as well as future adoption of corporate sustainability initiatives around the globe. And today, sustainability goals sit at the top of the list for corporate initiatives. 

The Global Landscape is Changing  

Businesses are exploring new opportunities to thrive in the future. They are figuring out ways to harness the ongoing changes to address real human requirements, placing sustainability at the heart of business strategy.  

Over the past few, when the world was battling a pandemic, the consequences that followed made the future foggy. Despite the uncertainty, governments, as well as organizations, are striving for a green recovery. After understanding the gravity of the situation, businesses are deepening their commitment to bring along sustainable reform. What will a sustainable future look like 10-20 years from now?  

From Shareholder to Stakeholder   

In the coming years, shareholder capitalism will pave the way for stakeholder capitalism. Shareholder capitalism has been a dominant part of corporate governance for almost five decades. 

Shareholder capitalism positions the interests of shareholders above everyone else, thus leading organizations to operate with the sole purpose of maximizing their profits and bearing the highest possible dividends. However, shareholder primacy is known to have produced the best outcomes for society, as it places a major focus on the executives, thereby placing them as a top priority. This enables organizations to avoid any indecision or conflicts of interest. And decades later, shareholder capitalism has witnessed the exploitation and abuse of workers worldwide, giving rise to economic inequality and environmental degradation of land and the atmosphere. Decreasing tenure is additional evidence of the rising focus on short-term collaborations. 

And the consequences of shareholder capitalism are leading to a widespread public backlash and calls for significant change. With businesses moving towards a different model of corporate governance, the strongest contender is stakeholder capitalism. The model highlights that organizations should scrutinize the interests of their stakeholders, including customers, employees, communities, suppliers, and shareholders. Many businesses are supporting this shift to stakeholder capitalism, along with large institutional investors, progressive economists, and a wide range of large global enterprises. 

Prioritizing Sustainability in Corporate Framework   

Sustainability is becoming critical for organizations to remain relevant in today’s competitive world. Much like digital advancements, driving sustainability within organizational operations requires transforming every division of the business. With sustainability emerging as an integral part of developing corporate strategy, organizations are focusing on the three major areas in ESG - Environment, Social, and Governance.  

In the coming years, sustainability will play a key role in embedding ESG-backed values at the core of the corporate strategy. There has been a boost in the number of Fortune 500 companies appointing Chief Sustainability Officers (CSO) in their organizations. While giving importance to sustainability is vital to meet investor pressure, the rise in consumer demand for regulatory requirements is also triggering the need to appoint talent to ensure increased productivity.  

Regardless of the public perception, many organizations are greenwashing their environmental efforts, and those involved in corporate sustainability may not share the same skepticism. With organizations continuing to deal with a growing mountain of issues, such as geopolitical conflicts, the fallout from the pandemic, rising inflation, and recession, they are placing a focus on designing a framework to support sustainability initiatives. The wise choice for them is to continue to focus on ESG and sustainability initiatives in the coming years.  

Sustainability will sit at the top of the List of 2023 Priorities. 

Today, sustainability is top of mind for a majority of businesses. Perhaps most surprisingly, it is ranked higher than everything ranging from financial performance and digital transformation to market growth. The market today is plagued by several sustainability issues, and many businesses are still struggling with the post-pandemic concern. But corporations are finally realizing that the climate change concerns are real and here to stay. And due to this, they are identifying their place in trying to find a suitable solution for it. 

Many organizations are working on introducing different types of environmental initiatives to prioritize energy efficiency as a top focus. The concentrated focus on energy efficiency is leading to greater energy savings. While the focus on recycling and singularity is taking many organizations by surprise, they are welcoming the initiative. Businesses are now finding ways to minimize waste generation and establish a balance in their manufacturing cycle.    

Going Green in 2023 

While a lot of work still needs to be done, businesses must identify how the new corporate governance model can assist them in directing the winds of change. 

Since 2012, the growth of sustainable investing has grown by 107.4% and is considered to be accountable for 18% of sustainable assets in the industry. In the United States, this is even higher. 33% of all managed US assets are invited in sustainably. And more investors are now becoming interested in investing responsibly. A report highlighted that around 84% of the younger population is seeking to invest in ESG funds.    

In 2023, sustainability information will become a core part of investment decision-making. While political, social, and technological changes are shaping the future of sustainability globally, it is the flow of funds that is set to further drive the change as investors are opening to the idea of backing green strategies. 

SGAnalytics_Blog_environmental sustainability  

Key Highlights 

  • Today, 90% of executives acknowledge that sustainability is vital for their organization, but only 60% of organizations have incorporated sustainability strategies into their operations. 

  • Embedding sustainability in operations is necessary to meet the evolving investor pressure as well as consumer demand to meet the changing regulatory requirements.  

  • Sustainability is also proven to attract top talent to the organization, thereby reducing costs and boosting profits. 


That the contents of third-party articles/blogs published here on the website, and the interpretation of all information in the article/blogs such as data, maps, numbers, opinions etc. displayed in the article/blogs and views or the opinions expressed within the content are solely of the author's; and do not reflect the opinions and beliefs of NASSCOM or its affiliates in any manner. NASSCOM does not take any liability w.r.t. content in any manner and will not be liable in any manner whatsoever for any kind of liability arising out of any act, error or omission. The contents of third-party article/blogs published, are provided solely as convenience; and the presence of these articles/blogs should not, under any circumstances, be considered as an endorsement of the contents by NASSCOM in any manner; and if you chose to access these articles/blogs , you do so at your own risk.


A Global Insights and Analytics company

© Copyright nasscom. All Rights Reserved.