2023 – all bad?
Last year I devoted my annual review to good news. I think that was quite uplifting, but I do recall that it felt a little awkward. Even more so this year, with heat records, floodings, fires and storms, the terrorist attacks in Israel and the bombings of Gaza, the protracted war in Ukraine, inflation and economic slowdown, to mention some examples.
Then we have the challenges that are not linked to specific or unique events, such as crossing planetary boundaries: 6 out of 9 boundaries are, according to Stockholm Environmental Institute, already transgressed; or the authoritarian and populist tendencies that seem to be gaining momentum on all continents. According to the well-known Freedom House, political rights and civil liberties in the world have now been declining for 17 consecutive years.
Well, some good things came out of this year as well!
So, in many ways 2023 has been a dark year. At the same time, it is important to keep in mind that the long-term trends have been fairly positive regarding, for example, global public health, education, access to energy, work-related rights, income-poverty and so forth. This link (in Swedish) gives some good examples of such developments. Even when it comes to nature related crises, humanity has managed to change. Remember the hole in the ozone layer? In 1987, the Montreal treaty was signed and the ozone layer is now on track to recover, a UN backed panel of experts declared earlier this year (read more).
Or how carbon tax in for example Sweden, which was introduced in 1991, has managed to successfully price externalities, contributing to a decrease of green house gas emissions in Sweden with approximately 30% since 1990. Interestingly enough, the tax is not only effective, it also seems to be easy to implement and administer (read more).
Let me now turn to four events, or developments, that occurred during 2023 that I think have the potential of contributing to more sustainable businesses in the coming years.
Some interesting developments: COP 28, social sustainability, biodiversity and CSRD
1. Climate and COP 28
In some ways it is a mystery that we cannot do better than this and that it has taken us so long to talk clearly about fossil fuels. But getting everyone to agree in a world with so much division is not an easy task. This COP was the first “global stock take” on how we are doing in relation to the Paris agreement and though the results of how countries are performing are largely disappointing, some interesting things also came out of COP28. In the last hours of the meeting in Dubai earlier this month, the countries of the world – including oil-producing nations – agreed to “transition away from fossil fuels”. In addition, the loss and damage fund, designed to support climate-vulnerable developing countries, was inaugurated. Furthermore, some 117 countries agreed to triple their renewable energy capacity by 2030; and there were some new and renewed demands and discussions on emissions in relation to food-systems. It was also evident that the private sector not only wants to be part of the solution; many companies are in fact leading the way. Read more about COP28 here (from the World Economic forum with slightly more of a private sector perspective) and here. (from the UN)
On a slightly different note; China may not be at the forefront when it comes to advocating for carbon neutrality, but in fact China is doing quite a lot to reduce its emissions and may peak its emissions already 2025 rather than its 2030-goal (read more here). Very promising!
2. Biodiversity
In late 2022, the Convention on Biological Diversity, the so-called Kunming-Montreal Global Biodiversity Framework, was adopted after years of negotiations. In 2023, implementation has started. My experience is that a growing number of companies have stepped up their ambitions and are doing more to reduce their negative impact on the environment.
In September 2023, the Task Force on Nature Related Disclosures (TNFD), launched its recommendations which is expected to help companies in some of their endeavours. TNDF is an initiative aimed at providing decision makers in business and capital markets with better quality information through corporate reporting on nature, so that financial flows can flow towards nature positive outcomes.
The discussion has now matured so much that some real conflicting interests are being debated in board rooms as well as amongst legislators. One such example is the use of PFAS; harmful to humans and nature but at the same time an important substance in many pharmaceuticals.
3.Social Sustainability
In my own business I have noted a growing interest from companies and public institutions relating to the need for a Just Green Transition. For example, I was involved in an initiative where some Swedish embassies, the Swedish International Development Cooperation Agency as well as other public institutions and private companies asked themselves what and how the necessary transition away from fossil fuels and harmful use of natural resources, can – must – be built on a sense of fairness where people who often lack power and resources also feel that they are included. This was also a recurring theme at COP 28 (read more here) and certainly something that will continue to be discussed the coming years.
Recognizing the interconnectedness of sustainability goals and challenges is also at the core of Agenda 2030.
Another approach is to look at social sustainability “in its own right”, ie not only as a prerequisite for a green transition. That is the background to the CSR-discourse and documents such as the UN Guiding Principles on Business and Human Rights. During 2023 due diligence has been a concern of many companies, thanks to new OECD-guidelines, new EU legislation (CSDDD) but also national legislation relating to due diligence in, for example, Norway (I have written more about this in several Newsletters, e.g. here).
In the EU, the Social Taxonomy (a new piece of legislation that has been discussed for some years) does not seem to be in the immediate pipeline but there is a draft proposal, and the discussion is not dead. It is also evident, in my experience, that many companies are placing a greater emphasis on their social footprint and, more importantly, their social impact. The focus is no longer solely on avoiding doing harm in ones own business or value chain (through accepting work related rights etc) but also to actually have a positive impact on people and society.
In my own business I have worked together with three companies (Chiesi Nordic, Tobii Dynavox and Spoon) to develop a model on how companies can manage towards greater social impact. The model is called “The Triangle of Impact” and includes some disclosures in accordance with the Corporate Sustainability Reporting Directvie (ESRS S1-S4) but then tries to emphasise direct and indirect impact. I hope to be able to soon share more details for those who are interested.
4.Legislation: CSRD and ESRS
With the coming into force of the new Corporate Sustainability Reporting Directive (CSRD), EU countries will adapt their national legislation in accordance with the new directive. The directive comes together with European Sustainability Reporting Standards, detailing how and what to report. Companies of a certain size will have to start reporting from 2024. This is in many ways a revolution, at least from a reporting perspective, and has certainly managed to raise sustainability issues on to the agenda of most companies active in Europe.
Though many observers, including myself, fear that the directive may shift some attention away from action and business models towards data and reporting, it is difficult not to see this as a major breakthrough when it comes to sustainable business. Many other countries and regional blocks are now looking at developing similar legislation!
Time to leave 2023 behind. To move on.
For We-ness 2023 has been a good year. I have, together with partners, been fortunate to engage with both new and old clients and the assignments have been very rewarding. They have included several materiality (and double materiality) analysis, developing sustainability plans and strategies, lectures, trainings and workshops on sustainability, leadership coaching, reviewing business models and much more. In total We-ness have worked with 11 clients and some 15 assignments during 2023 and though it may be early to talk about impact, outcomes have, from my point of view, been great!
This will probably be the last regular newsletter for now. I will continue to write but I’m not sure about the format yet. Perhaps a little more analysis and slightly less news. In any case: thank you so much for reading and please don’t hesitate to get in touch if you have any suggestions on what I should write about moving forward.
Thank you for reading – and Happy New Year!