A Quick Look At The Good In 2022
Now we are comfortably into the new year, it’s the perfect opportunity to reflect on what happened with and around ESG over the past year. 2022 is being classified as a tumultuous year for various reasons. As companies are working on the ESG front, humanity and businesses saw various challenges along the way.
Challenges like inflation, supply chain mismanagement, and the first war in Europe after 80 years are notable. All of this on top of new diseases, celebrities being arrested for human trafficking, and systemic environmental concerns across the globe.
There is a lot to unpack in 2022, but amongst all of the devastation and little progress made, there are still some significant victories that we can take from last year. Here is a short list.
Democracy, Elections, And Policies Matter A Lot
The Brazilian election was one of the biggest for several reasons. With the MAGA movement happening in America, the low approval rating of Justin Trudeau, and other conservative movements taking root all across the world, conservatism has gone down the route of keeping the status quo and rejecting any change.
This is a problem for ESG because we are aware fossil fuel dependence is destroying the planet, there are many marginalised groups suffering from current systems, and governments can currently be bought by business influence.
All of these elements were echoed in the Brazilian election where the former president, Jair Bolsonaro, was using similar tactics to former US president Donald Trump in 2016. All the while, the country pursued aggressive deforestation, threatening to cripple one of the largest forests in the world that captures a good portion of global CO2.
Thankfully, Luiz Inácio Lula da Silva was re-elected, and through that climate change can potentially be addressed, and ideally slowed down, as Lula commits to protecting the Amazon rainforest. A pro-Bolsonaro ‘insurrection’ moment only underlined the desperation of anti-democratic impulses, and further cemented Lula’s position.
Beyond that, the US’s senate midterms were refreshing to see. Historically, the opposing party tends to gain control of the house and senate during the mid-terms, but this is the first time in decades where that didn’t happen. Republicans gained a slim majority in the house and don’t control the senate.
There are several reasons why this has happened but overall, it’s clear that people people in democracies pay attention to what people with power are doing or want to do, and have certain limits in terms of accepting unsubstantiated claims, apolitical agendas, and a political ‘culture’ predicated purely on infighting and personal gain. People need policies that help.
The War Had Some Silver Lining
Even though the invasion of Ukraine is still ongoing, there is perhaps a silver lining on a large scale. The war accelerated short-term investments into alternative fossil fuels and spurred the EU to start working on transitioning to cleaner energy.
And because consumers want companies to be more transparent and personable, the overall movement inspired businesses to make more direct business decisions. Due to Russia’s intentional invasion of Ukraine, many big brands were faced with the decision to continue dealing with Russia or to pull out.
Even though most Russian citizens have nothing to do with the war, businesses that made corporate sustainability initiatives or plans had to prematurely stop dealing with Russia. McDonald’s is a good example as it pulled out and immediately cut 7% of its total revenue.
Cleaner Tech, EVs, And E-Bikes
According to a BloombergNEF report, 87 countries reached a clean energy tipping point. Overall people are now used to new technologies and as we roll into 2023, that trend is expected to continue. Car companies know this already and have been massively shifting to electric vehicle design and production strategies, as well as planning the cessation of combustion engine manufacturing in the coming years.
There are still some complications on their part, but looking ahead, combustion engines will be a relic of the past in 10 to 20 years. For now, we can be happy to see the slow transition in vehicles and other technology that will be using cleaner energy as more demand will be generated.
ESG Is Political
For a long time, people who talked about ESG focussed on the environmental aspects. It makes sense considering the numerous environmental concerns and the direct, visible impact it has on people. But as ESG is being politicised - especially in the US with senators stirring up an “anti-woke” movement - we are noticing the other elements of ESG that revolve around cultivating respect and equality for people in the workplace and beyond.
We’re also being more rigorous over “greenwashing” attempts from banks and other financial institutions. Beyond that, investors are getting more involved and pushing companies to uphold particular values. A good example is a group of investors pushing Sainsbury’s - a UK retail store - to pay living wages for staff.
More Companies Are Setting And Tracking Initiatives
After COP27, many businesses have gone out and made some work on driving sustainability and net zero targets. JetBlue is buying more sustainable air fuel for its fleet, and LG Chem, a tech competitor of SK Inc., announced in February 2022 that it will reach net zero by 2050. We’re seeing many examples of these across various industries and companies across the globe.
All in all, many are taking this slow, aiming for net zero goals by 2050. However, a growing list of companies is aiming for sustainability sooner - with some as early as 2030. This has forced governments and companies alike to act quicker on certain projects and initiatives, tracking more nuanced targets as carbon emissions have been ramping up.
Innovations And Other Fun Ideas
Beyond these developments, there are several other small moments that might’ve gone unnoticed, although they are still commendable in their own way and reinforce ESG values. Some things you might not have missed:
CVS dropped prices on tampons to reduce the “pink tax” impact. This is a unique tax on women’s products.
Walmart has removed a lot of its filler chemicals that were toxic to people. The move resulted in 37 million pounds of toxic waste being removed.
Overall ESG is still making progress, but looking over 2022, there is still a lot of work that needs to be done. The key takeaway is that ‘ESG’ as a concept is filtering through to all areas of society, embodying the need to both accept the climate emergency and work on systemic solutions to address it.
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