10 Sustainability Trends to Watch in 2022
Our picks and predictions for key themes in sustainability and ESG this year
Hi everyone, happy new year and welcome to our first Week in Sustainability of 2022. For this piece we wanted to look at some important, relevant sustainability trends we’ve been tracking. So without further ado, here’s our top ten sustainability trends to watch or take action on this year:
1. We arrive at the electric vehicle (EV) tipping point
2022 looks to be the year that car manufacturers accept and embrace the inevitability of our impending electric car future. Europe is phasing out combusion-engine cars and car sales across the EU by 2035, and worldwide EV’s have now passed 10% of the global new car market. Nearly a million EVs (935,000) were sold in Asia just in the 3rd quarter of 2021.
While the US domestic EV market’s lagged behind global sales, Ford recently noted that “[EV] demand is certainly there” and seems to be picking up. As a result, Ford will double manufacturing of its new F-150 Lightning electric pickup truck from 80,000 to 150,000 trucks a year.
One feature more new EVs are coming to market with is bidirectional battery charging. This means you can charge the car battery (one direction), but also send stored charge from the battery to another source — like a 2nd car, or potentially your house.
Making car batteries bidirectional makes them a lot more useful, and also significantly expands the potential infrastructure for charging EVs, a critical aspect of adoption, usability, and overall customer experience. Consumers who don't buy EVs today often cite a lack of charging infrastructure as one of the biggest hurdles. Gas stations are simply more common—roughly 3X more than charging stations.
However, bidirectional EVs flips that equation. If suddenly we can charge our car from any EV car dealership (or car) — in addition to charging stations — nationwide EV charging capacity becomes multiples greater than gas station availability. That’s a big win for customers and a major drop in the potential friction around buying them.
Look for 2022 to be the year a comprehensive, consumer-friendly US EV ecosystem finally starts to develop beyond Tesla.
2. Climate investment continues to scale and broaden
2021 was a frustrating year for climate policy, but a record year for climate tech investment as the private sector attempts to bridge some of the gap. Consistent with trend #1, EV manufacturers were the top recipient, including $5.2 billion to US EV manufacturer Rivian, $2.8 billion to Northvolt, a Swedish EV battery manufacturer, and $1.6 billion to Svolt, a Chinese EV battery maker. Other major fundings included GoodLeap, a marketplace for sustainable home upgrades, and Israeli sustainable food startup Future Meat Technologies. 2021 was also a record year for green bond investments, as well as fund flows into institutional ESG strategies.
As the need to battle and adapt to climate change becomes more acute, we expect continued strong investment in this space, as well as a widening in investor focus and diversity beyond traditional mainstay categories like EVs and sources of capital. “Extreme weather resilience” is a particularly active — and needed — macro category, which includes products like drought-resistant plant seeds, intelligent, predictive extreme weather and fire monitoring, and extreme weather-resistant materials.
3. Climate compliance becomes law and standard regulatory practice
2022 will be a landmark year for global climate regulation and oversight. In the U.S., the SEC will finally release its long-awaited mandatory climate reporting framework for publicly-listed companies, which will regulate, monitor, review and guide climate-related disclosures from public companies to police green-washing and false statements. It will likely also require publicly listed companies to disclose specific mandatory ESG-related information, although exactly what information is not yet known. SEC Chair Gary Gensler has even asked SEC staff to consider whether the climate disclosures should be filed in the Form 10-K “living alongside other information that investors use to make their investment decisions.”
We expect the SEC’s framework will likely mirror and take inspiration from the Task Force for Climate Related Financial Disclosure (TCFD) framework, which focuses on four pillars of climate-related risk assessment and disclosure.
Governance – The organization’s governance around climate-related risks and opportunities
Strategy – The actual and potential impacts of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning
Risk Management – The processes used by the organization to identify, assess, and manage climate-related risks
Metrics and Targets – The metrics and targets used to assess and manage relevant climate-related risks and opportunities
In the UK, listed companies are already required to issue a TCFD disclosure (or explain why they won’t or can’t) for reporting years starting from January 1, 2021. Proposals are also in process in the UK to mandate TCFD disclosure by all large companies from in 2022.
The EU’s Corporate Sustainability Reporting Directive and new Taxonomy for Sustainable Activities are also likely to be codified into further law(s) this year, supporting the EU’s ambitious “Fit for 55” (F55) plan, which aims to cut the bloc’s greenhouse gas emissions 55% from 1990 levels by 2030.
In Asia, Singapore unveiled a roadmap for climate-related disclosures to be made compulsory in sustainability reports, while Japanese regulators are considering mandatory climate risk disclosure requirements starting April 2022. Australia may also follow suit later this year.
Overall, 2022 will be a year when global organizations need to tighten the rigor and accuracy of their climate-related communications, disclosure, and risk practices, as carbon accounting continues to converge with financial reporting.
4. The cost of climate inaction keeps rising - but so does the cost of climate action
Only a few days into 2022 we’ve already seen the continuation of devastating, climate-driven extreme weather events, including destructive wildfires throughout northern Colorado (mid-winter). As unpredictable extreme weather events become the norm in many parts of the world, the need — and cost — for climate adaption, resilience, and rebuilding will continue to rise.
From an economic perspective the International Renewable Energy Agency (IREA) now estimates global climate adaption will require nearly $131 trillion dollars in investment by 2050 — spanning governments, companies, investment funds, and consumer purchasing.
To put that in context, 2020 global GDP was approximately $85 trillion, meaning we collectively need to divert about 5% of global economic activity per year into climate solutions, adaption, and mitigation. Truly, we are trying to shift the entire world economy over the next few decades.
5. Governments and politicians follow through on their climate pledges with action — or get voted out
COP26, the 26th annual UN Climate Conference held last year in Glasgow, was a showcase of climate pledges from around the world. The U.S. rejoined the Paris agreement, India made its first public emissions reduction pledge, and dozens of nations signed on the pledges to reduce methane emissions, end global deforestation, and invest in front-line climate resilience.
From a pledge perspective, if all these actors follow through on their pledges, its puts us all on a viable path to meet the Paris agreement target of limiting mean global warming to 1.5° — not a great outcome for many in the global south, but certainly a “could be much worse” outcome.
The problem, as we’ve written before, is we’re not fulfilling enough of these pledges. We’re not following through on the words with actions and concrete results. Coming out of COP26, global emissions under current policies are projected by Climate Action Tracker to take us to 2.7° - 3.1° C of warming — double the threshold target of the Paris Agreement. At that rate, by 2070, scientists suggest nearly 3 billion people will have to get by — or relocate, if possible — against “unlivable” weather conditions.
2022 is a year politicians need to deliver on climate action — or their political prospects will be just as precarious as our environment.
6. Forward-thinking brands will shift from donating to change to contributing to systems change
Philanthropy and giving are important aspects of many companies and foundations’ social impact strategy, and there are countless wonderful non-profits and programs working for change in so many different spaces. However, as several CSR and foundation leaders we’ve spoken with in recent months have suggested, there are donation strategies that don’t build capacity and equity, versus donation and investment strategies that potentially do.
For example, maybe we’re trying to improve youth literacy and education in a low-income area. A traditional giving approach might donate to existing literacy programs serving that community — and that might be the right or most impactful approach in some cases. But a different mindset might ask a question like: what if we invested in local, minority entrepreneurs starting book stores and arts infrastructure in the neighborhood? Could we sustainably create jobs, economic development, and community wealth, while also contributing on a long-term horizon to our impact objectives?
An example Glossier $1M grant program split its giving 50-50 between racial equity movement organizations and Black-owned beauty businesses
We’re seeing more of this thinking come to life, from micro-investments in under-served Black, BIPOC, and women founders to urban farm cultivation to improve inner-city nutrition and health outcomes. There are many ways to contribute to positive change, both more traditional giving approaches and more novel or creative equity strategies.
Moreover, we’re seeing a lot more organizations assessing equity across their entire organization, including but not limited to areas like product strategy, hiring, employee engagement, partnerships, and where they invest.
7. Sustainability isn’t a department, it’s an organization and stakeholder ecosystem
Similar to trend #2, we’re seeing a lot more energy, org design, and critical inquiry going into breaking down internal silos, elevating sustainability, and creating a more comprehensive firm-wide approach to sustainability, CSR, ESG, and stakeholder engagement.
By forming and empowering more cross-functional committees, hiring, training, and embedding sustainability experts across the business, improving and highlighting sustainability across internal communications, learning, and development, and centralizing ESG data collection and reporting infrastructure, forward-thinking companies are centering their brand and business around environmental action, purpose, and concrete proof of positive outcomes.
8. Companies get more granular on lifecycle assessments (LCAs)
From LEDs to lunch foods, we’re seeing more organizations really digging into their materials, ingredients, sourcing, supply chain, packing, shipping, waste, and product environmental footprints in increasingly comprehensive and data-driven ways.
As sustainability gains more attention from customers, investors, regulators, and other stakeholders, companies will take additional steps to more closely map, understand, forecast, and reduce their environmental footprint across their product portfolio and supply chain. Vendors will be surveyed, audited, and held more accountable, as companies develop broader and deeper understandings of the human rights and environmental issues, impacts, and priorities across their supply chain.
By conducting more data-driven, real-time, and holistic LCAs, companies can put sustainability KPIs and targets at the center of their operations, enabling them to assess environmental impact at every stage of the product life cycle. It also lends itself to more intelligent scenario planning — what product(s) should we focus on? who do we need to partner with? how do we compare to our competitors? what if we switch this component from steel to recycled aluminum? which of our suppliers are highest-risk from an environmental perspective?
These are the types of questions sustainable companies are asking, answering, and taking action on.
And, as we saw in 2021 with widespread supply chain delays and resource availability disruption, sustainability sometimes informs — and sometimes sits at odds — with short-term organizational risks and needs. In 2022 better balance is critical.
9. We’ll continue working together
As facts and global developments consistently show: we’re better when we collaborate and work together compared to going it alone. This couldn’t be more true in sustainability, an arena that needs thoughtful, holistic cooperation to reach our goals for a just, low-carbon future.
In 2021 we saw major growth in the B Corp community, the launch of BASCS (the Business Alliance to Scale Climate Solutions), and more cross-industry coalitions like Transform to Net Zero develop cross-industry roadmaps for decarbonization. As we mentioned in Trend #8, many companies continue to work on increasing visibility and collaboration among their supply chain partners.
To solve the climate crisis, we need even more public-private partnerships, multi-stakeholder partnerships, and collaborative innovation to really drive positive results, scale and share best practices, and move the needle.
10. We’ll (re)turn to nature-based solutions and innovations
Natural cycles and sustainable indigenous practices will also gain more attention in 2022, as we recognize many of the best ways to restore the Earth’s balance is by using its own balancing resources.
Kelp farming has potential to not only capture carbon, but also provide raw materials for bio-fuels and bio-products. Seaweed can even help reduce methane emissions from livestock farming. Drones will help monitor and tend to algae and seagrass beds to create sustainable food ecosystems around super-foods like spirulina. And natural habitat restoration initiatives will help to convert less agriculturally productive land into carbon-capture zones and forests.
In our work to reduce the harms and impacts of the climate crisis, nature offers us many power tools — we need to continue to be more thoughtful (and sustainable) about how we work with them to safeguard our future.
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p.s. Any other important sustainability trend(s) you think we’ve missed? We’ve opened up the comments section for your thoughts, replies and suggestions. Drop us a note or share your insights!