2022 ESG trends to watch out for

Businesses are now explicitly balancing profit with a stated public benefit, like creating jobs with inclusivity or restoring environmental ecosystems

by Akanksha Sharma, Global Head ESG- Social Impact & Sustainability, STL

In recent years, businesses have made commendable efforts towards committing to environmental, social, and governance (ESG) goals, the commitment to reorienting business toward ‘doing well by doing good. A growing number of investors and business leaders are on a journey to become sustainable, inclusive, and socially responsible. Investors with billions and trillions of assets have signed on to the United Nations Principles for Responsible Investment, which advocates for a greater focus on ESG issues in investing.

While there is increased regulatory attention on environmental and social hazards, and increasing customer preferences for sustainable products, businesses have been turning towards sustainable, resilient, ethical, and transparent supply chains.

Businesses are now explicitly balancing profit with a stated public benefit, like creating jobs with inclusivity or restoring environmental ecosystems. While they incorporate sustainability into the core of their strategy while rethinking their business models, let us look at some ESG trends that will impact businesses in 2022:

Transitioning from ‘net zero’ to ‘climate positive’

Businesses have realized that merely cutting down carbon emissions will no longer be enough to make up for damages done to the climate. Since the day of the industrial revolution, the earth’s climate has been exposed to a 40% increase in carbon dioxide concentration. In order to reverse this damage and environmental degradation, businesses will have to move towards climate positivity

Making biodiversity impact reporting mandatory

According to the WWF’s Living Planet Report 20201, in less than half a century, there has been a 68% increase in the loss of global species due to human activities. The mandatory disclosure and audit of biodiversity impact of business operations has been negligible till now. Starting from January 2022, EU SFDR will require businesses to fully disclose business operations that impact biodiversity-sensitive areas. Similarly other organisations will also start taking biodiversity-centric reporting seriously from 2022.

Rethinking packaging with sustainability

A widespread usage of plastic/single-use packaging has led to a heavy burden on the environment mainly due to a lack of recycling setups. ~80 million tonnes of plastic packaging is produced annually and the volume is likely to triple by 2050. Now companies and retailers are becoming more aggressive in their approach towards sustainable packaging in response to growing consumer awareness and increasing regulatory requirements. The global sustainable packaging market is likely to reach $207 billion by 20222 owing to the advent of bioplastic, stringent regulations and greater consumer awareness.

Standardising sustainability reporting

2022 will see evolving efforts for establishing standardised reporting requirements and its impact on ESG data and reporting will become more tangible. Operating on these lines, For instance, in India, SEBI has mandated3 sustainability reporting through the Business Responsibility and Sustainability Report (BRSR) framework for the top 1000 listed entities. Going forward, investors and regulators will expect a higher degree of standardisation and harmonisation in ESG data and disclosures from corporates. We are hopeful that 2022 will accelerate the trend, bringing greater transparency and accountability in the ESG adherence of businesses.

Shifting towards renewable energy with pace

Recently, nations have demonstrated intent to shift towards renewable energy at the COP26 Summit. With 197 nations committing to phase down the use of unabated coal, the message is clear that businesses are now serious about decarbonization and meaningful energy transition. This will not only help cost savings but also unlocking value through eco-conducive operations, going forward.

Growing social responsibility for businesses

The pandemic has clearly demonstrated that corporates can play a larger role in giving back to society. As businesses come of age, their responsibility will increase manifold in addressing systemic challenges and

contributing meaningfully in driving tangible outcomes. Along with their businesses they will now also need to improve health, education, employment generation, women empowerment, biodiversity preservation and developing community resilience.

Equipping workforce with next-gen training programs

The global economic crisis that has been looming after the pandemic has impacted all sectors alike and especially the employment sector. There are millions who have lost jobs to automation and this has emerged as the social and governance issue of utmost importance. Now business leaders have an added responsibility of training, empowering and adapting their workforce for a seamless transition into the new business realities. The intent is that they are better positioned to stay socially acceptable and economically profitable in the days ahead.

With mega-scale networks and data centre build-outs across the world, there is an increasing focus on minimizing carbon footprints. According to some estimates, the internet, supporting network systems and devices account for nearly 3.7% of global greenhouse emissions. To minimize their environmental footprint, the technology leaders are taking decisive steps by investing in energy efficiency initiatives and devising long-term plans to improve their sustainability efforts. As STL creates large-scale infrastructure across the globe and enables digital transformation at the edge, it will now accelerate its efforts towards a greener future by committing to Net Zero manufacturing and sustainable network build strategies. STL has been consistently working towards UN SDGs. Now the company is taking its efforts to the next level by committing itself to ambitious sustainability and social goals. STL has outlined a 20-year roadmap to deliver on its commitment for 100% zero waste to landfill by 2030, 100% sustainable sourcing, Water positivity by 2030, and Net Zero emissions in manufacturing facilities by 2040. Relentlessly innovating towards eco-friendly product development, STL has conducted Life Cycle Assessments (LCA) for ten OF cable families and aims to cover 100% of its portfolio by 2030.

By putting forth these trends companies want to look beyond ESG basics. The intent is to create more just, equitable, and sustainable societies that will thrive for decades to come.