ESG and Sustainability in 2023 - what you need to know
2023 is shaping up to be a year where organisations continue the evolution of their Environmental Social and Governance (ESG) and sustainability priorities. For some, it’s business as usual; for others, it’ll be a year of change and disruption.
Regardless of where you’re at on your ESG journey, there are five key areas to keep a watch on this year:
- An increasing focus on ethics and integrity
- Prioritising supply chain security, resilience and transparency
- Transitioning workforces
- First Nations inclusion and empowerment
- A dynamic political landscape with expanding regulatory changes
PwC Australia’s ESG experts have explored these themes in detail, providing insights that may shape or affirm your ESG focus this year.
1. An increasing focus on ethics and integrity
2023 is highlighting that businesses need to do as well as say, and be cautious of rhetoric.
ESG ambition and targets are growing, but ambition needs to be translated into quality actions.
Consumers, investors and employees and regulators are increasingly on the lookout for false or misleading ESG claims.
The consequences of greenwashing are rising – in terms of reputation, business performance and legal penalties.
Transparency builds trust, so accurate disclosure is key.
2. Prioritising supply chain security, resilience and transparency
Nothing has exposed our dependencies on global supply chains quite like COVID-19 and the war in Ukraine – and these factors will still be with us throughout 2023 and beyond.
Geopolitics and COVID-19 have upended the status quo for supply chains and spurred a shift to sovereign manufacturing.
Supply chains can be a source of operational and reputational risk, but can also offer new opportunities for efficiencies, innovation and ESG improvements.
Scrutiny on supply chains will continue to grow in 2023 as the public seeks more understanding of the full product journey.
Expectations are growing for reporting and reducing scope 3 emissions - so it’s time to get started.
3. Transitioning workforces
2023 is seeing continued evolution of workforce based on global ambitions to reach net zero by 2050.
More workers, new skills and training pathways will be needed to deliver and power the clean energy transition.
The transition to net zero must be a ‘just transition’ for workforces and communities affected by major industrial shifts.
Strong ESG credentials will help attract and retain talent.
Any true shift to be a sustainable organisation will require consideration of organisational structure as well as culture and behaviours.
4. First nations inclusion and empowerment
A critical part of any organisation’s ESG performance should be its relationships with diverse First Nations communities.
- There is a great opportunity for First Nations participation in the booming clean energy sector through employment, procurement and new ownership models (including co-investment/co-ownership from First Nations groups).
- Businesses should consider stepping up their efforts in applying a First Nations lens to commercial activity.
- Expectations are rising for organisations to consider these issues as a part of business as usual, and to be mindful of the social value that can be generated with key stakeholders as a result.
5. A dynamic political and regulatory landscape
When it comes to ESG and sustainability, we can be certain of ongoing political and regulatory change – and this year will be no exception.
Global crises have spurred governments to respond, but there’s a risk of a race for green subsidies - with implications for Australian industries.
We’ve seen government and regulatory interventions in the energy sector in 2022 and there’s a lot more we can expect ahead.
With recent changes to the safeguard mechanism, high emitters should be on the hunt for greater emissions reductions.
It’s time to get ready for ESG reporting in line with international standards.
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