Even dyed-in-the-wool skeptics about climate change and the need for sustainability are waking up to reality as 2022 looms. Massive disaster events, catastrophic wildfires, giant hurricanes, and catastrophic flooding proves the undisputed fact that our earth is facing massive consequences of climate change. More frequent and intense disaster events will happen in 2022, which will result in more opportunities to mitigate these risks.
For the business world, it means that ESG is no longer just an option or marketing scheme. It’s a necessity, and most importantly, a corporate value creation opportunity. ESG, of course, stands for “environmental, social and governmental.” In general, it refers to a business approach that makes sustainability a core value. While industry analysts agree that ESG will continue to make significant strides forward in 2022, widespread pessimism also abounds.
For example, the founder and chairman of GreenBiz Group called the ESG landscape “treacherous and unforgiving.” Joel Makower said the corporate ESG data is “uneven and incomplete” while also “lacking consistency” across all sectors.
Many companies continue to hide their risks. Banks are failing to align their investment focus with the sustainability ventures they loudly talk about in public. When push comes to shove, banks and investors are eager to go for fast profits, such as in the fossil fuel sector.
Sustainability also has an unfortunate political component. It has arisen as a toxic wedge issue that political parties can latch onto for scoring cheap points and, frankly, to flat-out fearmonger. Many political leaders in plumb positions to affect change don’t dare to do so for fear of backlash from their political opponents and constituents.
The news is not all dire, however. Overall, it is going to be public demand that drives ESG policy forward. The year 2022 will see a continued uptick in consumers who are increasingly checking the sustainability bona fides of the companies they choose to support with their spending money.
Most major companies recognize the rise in eco-consciousness in their market sectors. Ignoring it is done at their own peril, if not for the next four quarters of the business cycle, but over the next ten years.
The bottom line for 2022 is that ESG will continue to lurch forward. The question is, will it be too little too late – or will it gain the significant momentum it needs to save the planet?