Seven (7) Corporate ESG & Climate Trends in US and Canada to watch out for 2023 and beyond

January 10, 2023
By CSE
By Prof Nikos Avlonas
President CSE (www.cse-net.org)
Adjunct Professor UIC

 

The landscape of ESG is certainly changing in North America. ESG investing, new SEC and IRA legislations, climate change risks are shaping global conversations. We have identified Seven Major Trends for 2023 and beyond that will shape the future in North America.

 

Additionally we have taken under consideration the recent CSE’s Research findings that explore why ‘doing business as usual’ is no longer a valid option and the shift to ‘doing business in a sustainable way’ is the only way  that will increase corporate  trust and financing.

 

 

  1. ESG Assets are Growing

There is an increasing role in finance and as reported by Bloomberg, it is possible that ESG assets will hit a massive $53 trillion by 2025. A number of investigations into finance-linked ESG activities has already begun in 2022 in US and is expected to intensify in 2023. Moreover, both US and Canada have been seeking to classify sustainable funds with more extensive ESG integration and disclosures. We’ll be watching for more changes and progress  in 2023.

 

  1. Net-Zero roadmaps and IRA will become a Big Deal

IRA, the Inflation Reduction Act, is  a REALLY Big Deal. is clearly the biggest climate legislation ever passed in the United States. The law will provide $379 billion in subsidies to clean energy in the form of direct payments and tax credits and will reshape the future of the energy in US.

 

Additionally according to Net Zero Tracker, 91% of the global economy and almost half of the 2,000 largest companies have net-zero pledges. This is also aligned with CSE’s research in North America, examining the ESG and Net Zero practices and commitments of more than 300 FT500 companies from 31 sectors.

 

  1. Push for greater Climate Disclosure Standards

All industries are under more intense scrutiny and skepticism than ever. The most important climate disclosure standards introduced in 2022 globally were from the U.S. Securities and Exchange Commission (SEC) but also from the International Sustainability Standards Board (ISSB) and the European Financial Reporting Advisory Group (EFRAG)

 

SEC’s timetable for its proposed climate disclosure rules is expected to begin in 2023, adding to companies’ regulatory burden and   receiving some kind of  political opposition especially in US. 

 

  1. Less focus on ESG Ratings

We have seen a widespread adoption of ESG ratings in investment processes in 2022. They are a useful starting point for companies to better manage and disclose a wider range of external impacts. The ratings awareness has increased along with companies’ knowledge on them but their  complexity and investment in internal resources had created skepticism . ESG ratings will lose the central stage in 2023 and they will be starting to surpassed by other ESG and Climate related  requirements and legislations

 

  1. Greenwashing Scrutiny and Transparency

Increased disclosures can lead to more accusations of false or misleading statements. SEC has been cracking down on misleading ESG claims and its efforts to rein in greenwashing will shape the future.

COP27 has highlighted the importance of transparency in the fight against greenwashing and the role of the Enhanced Transparency Framework (ETF). Starting no later than 2024, all countries that have ratified the Paris Agreement need to follow a single, universal transparency process.

 

 

  1. Scope 3 – The value chain emissions measuring challenge

The fact that many companies don’t fully count their Scope 3 emissions, or they use questionable measuring methodologies, has led to the growth of the Science-based Targets initiative, with the aim to set concrete emissions reduction goals. SBTi is also updating its Scope 3 target setting methods and criteria to ensure full alignment with its Net Zero Standard.   In 2023, reporting frameworks are expected to focus increasingly on scope 3 emissions. Emissions reporting will become a standard part of workflows, ensuring meaningful steps towards the reduction of carbon footprint. European regulation has introduced a four-year transition period for the inclusion of Scope 3 data and companies should soon  include them in their Sustainability Reporting

 

  1. Zero Waste

Nearly two thirds (59%) of consumers are making a conscious choice to purchase products that embrace greener alternatives. Technology will be at the forefront of change, providing opportunities to develop bioplastics, bio-derived materials or water-soluble packaging.

 

CSE has an ambitious agenda for 2023 to continue pushing corporate sustainability globally. Stay tuned for our upcoming trainings in 2023 and insights, which start with the Certified Sustainability ESG Practitioner Program, Advanced Edition 2023 on March 9-10-13, 2023. Click here to review all our programs.

 

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