In 2021, economic, social and governance (ESG) issues took centre stage. Post COP-26, challenges for businesses are emerging at a rapid pace across the globe.

Simply stating, “we are a responsible business making a real impact to do better and protect the planet and the lives of our communities”, is no longer enough. Green Public Procurement (GPP) European laws mean that businesses that prioritise ESG considerations are more likely to be awarded public tenders in the future, whilst in the UK, Sustainability Disclosure Requirements (SDR) proposed in 2021 will mean large businesses must report on sustainability risks, opportunities and their impacts.

Moreover, the Task Force on Climate-Related Financial Disclosures (TCFD) aims to ensure transparency around climate impacts, ensuring that markets channel investment in to resilient businesses that are working in a responsible manner to reduce climate risk.

All in all, one thing is clear – ESG reporting is here, and it’s here to stay.

As the ball continues to roll in 2022, we’ve covered 7 things you may want to look out for in the year ahead, keeping you informed and in the loop about all matters sustainability and ESG.

1. Greenwashing be gone.

The Green Claims Code announced in 2021 by the CMA aims to ultimately eliminate greenwashing by requiring organisations with "green claims" to have data to support. As part of the code checklist, organisations must be able to support the credibility of green claims with evidence and that evidence must be publicly accessible in an easy to understand, communicable manner.

Not having data on hand to support claims could result in court action from the CMA, which could cost your business, and heavily damage your reputation.

2. Net Zero? Prove it.

The United Nations' (UN) Science Based Targets Initiative (SBTi) will place pressure on businesses to provide data across scopes 1, 2 & 3 in relation to their Net-Zero goals.

By setting best practice standards and guidelines, the SBTi aim to assist organisations by providing science-based targets to work toward to eliminate greenhouse gas (GHG) emissions.

Measuring against those targets however and providing consistent data will be key to achieving Net-Zero.

Expect increased pressure from the SBTi to encourage organisations to start data capture across scopes 1, 2 and 3, and ensure they are proving their commitments toward Net Zero, not just making empty promises.

3. Be Ready for Regulation

The new EU Corporate Sustainability Reporting Directive (CSRD) will be adopted from October 2022, with increased requirement for non-financial reporting required from 49,600 organisations across the Europe area.

For any listed organisations, banks, insurance and other national authorities across Europe, from early 2023, it will be a requirement to report on a huge scope of ESG issues, including environmental impact, social matters, diversity and human rights.

Compliance is non-negotiable – if you’re trading in Europe, now is the time to prepare.

4. Building Back Better

By 2050, nearly 70% of the worlds population will be living in cities or urban areas. For the construction industry, this presents a real environmental and sustainability challenge, as in order to accommodate more people, we must build bigger cities.

Globally, construction accounts for 38% of the worlds’ CO2 emissions. As we begin to expand our cities, understanding emissions, tracking them and working toward Net Zero in our built environment will be essential in years to come.

5. Data, data, data and more data.

By now, its quite clear data has a huge part to play in monitoring our impacts and staying compliant, but from a commercial perspective, it’s also quite important.

Expect stakeholders, auditors, regulators and investors to be all over ESG data in years to come. Have your CO2 reduction plan on hand with accompanying dashboards and your waste management plans ready to go.

Data will be a powerful tool in winning over stakeholders and taking attention away from your competitors.

6. Commercial Crunch-time

Links between green credentials and commercial success will be stronger than ever in 2022. With EU Climate Policy impact investor and tender decisions across the globe, expect it to really be commercial crunch-time.

Inability to keep up with ESG and sustainability demands will put you behind the curve, with competitors winning tenders and really crippling organisational success. Investing in ESG in 2022 is one of the strongest commercial decisions you could make.

7. Investors are watching

With the introduction of the UK’s SDR regulation, the EU’s CSRD, EU Climate Policy, Green Claims Act and general consumer demand for ethical business – investors are well and truly watching.

Expect investment in ESG to increase in the year ahead, and the market to really emerge and grow at a rapid pace. Just make sure you don’t miss the bandwagon.

Truly, 2022 is the year of ESG. It’s time to get serious, get sustainable, and get commercial. At SustainIQ, we provide real-time software solutions to help measure, monitor and report on your ESG position, providing you with accurate data to drive the success of your strategy. Learn more about our solution to your ESG challenges today on our website here.