According to McKinsey research, companies with high ESG (environmental, social, and governance) ratings outperform the market average in both medium and long-term earnings, Business Because reports.
But what will businesses be doing to become more sustainable in the coming years? Here are five sustainable business trends to look out for in 2022.
- Data will play a key role
Measuring the impact of sustainability efforts is a real challenge for organizations. In the coming years, data analytics practices could be used to ensure businesses are getting results from their ESG projects.
“There is a demand for data-driven decision makers who consider social impact when making business decisions,” explains professor Tai-Yuan Chen (below), associate dean of MBA programs at HKUST Business School.
- Sustainable Investing accelerates
According to Deloitte, 53% of financial services firms say that sustainability is—or is becoming—’central’ to the organization.
And with ESG funds receiving $5.1 billion of investment in 2020 alone, the trend is set to continue, creating new career paths for business leaders with a passion for sustainability.
- From shareholders to stakeholders
Awareness of sustainability issues is growing. One BCG study found that 70% of people are more aware of climate issues now than before the COVID-19 pandemic, and 40% plan to adopt more sustainable behaviors.
This trend means that customers, investors, and job-seekers are looking more critically at a businesses’ sustainability efforts before interacting with them.
- Government targets grow renewable energy use
The transition to renewable energy will also impact organizations in 2022.
Renewable energy generation is growing—expanding by 7% in 2020, and 8% in 2021 according to an International Energy Agency (IEA) report. However, this growth isn’t enough to keep up with global demand, and the gap could challenge businesses to be more efficient with energy use.
- Increasing transparency
Another growing trend is business transparency.
5 Sustainable Business Trends To Watch In 2022 (Business Because)