image source: vectorjuice via freepik
Businesses worldwide have spent almost two years scrambling to adapt to the extraordinary challenges brought by COVID-19 and pave a way to recovery. Maintaining agility while ensuring sustainability has been becoming key to business survival for the coming years. According to McKinsey, companies with high ESG ratings (environmental, social, and governance) exceed the market returns in both medium and long-term revenues. As organizations envision heading towards a greener culture, the business trend of sustainability will continue to be enforced in the future.
Here are 5 business trends to anticipate in 2022.
1 . Data is Becoming More Fundamental
Along with rapid digital transformation, data analytics will be more prominent in all sectors. Data analytics approaches might be employed even more in 2022 to ensure that businesses obtain outcomes from their ESG initiatives. Businesses must go beyond the concept of sustainability; they need to realize their ideas based on data. Tai-Yuan Chen, an associate dean of MBA programs at HKUST Business School, added that data-driven decision-makers who take into account social effects when making corporate decisions are in high demand. Several companies, like the Italian tire manufacturer Pirelli, are already embracing this approach. The company uses data collected by sensors in its tires in order to make more effective recommendations about what inventory to keep and reduce waste.
2 . Rising of Sustainable Investing
Research from Deloitte suggested that 53 percent of financial services companies consider sustainability to be ‘essential’ to their operations. With ESG funds earning $5.1 billion in investment alone in 2020, the trend is expected to continue, opening up new career opportunities for company executives with a desire for sustainability.
- Inclusion of Stakeholders
There is a rising concern about sustainability globally. According to one BCG survey, 70% of individuals are more aware of climate concerns now than they were before the COVID-19 pandemic, and 40% want to adopt more sustainable practices. This trend indicates that consumers, investors, and job seekers are closely examining a company’s sustainability initiatives before connecting with them. This encourages the inclusion of stakeholders more than ever. As people become more conscious of environmental concerns, the urge to impress shareholders must be weighed against the demands of stakeholders like employees, consumers, and the local community.
4 . Renewable Energy
In 2022, companies will be impacted by the shift to renewable energy. According to an International Energy Agency (IEA) estimate, renewable energy output would increase by 7% in 2020 and 8% in 2021. However, this growth is insufficient to meet global demand, and the shortfall may drive companies to become more energy efficient. Recently, manufacturers in China have been pushed to limit their consumption of power in order to achieve China’s National Energy Administration’s renewable energy objectives and emissions goals.
5 . Growing Business Transparency
There will be an increased push for transparency in the run-up to the United Nations’ 2021 Climate Conference in November, which might stimulate more transparency measures in the next year. Corporations of a particular scale are already required by UN standards to report on environmental statistics, allowing stakeholders across the board to monitor what efforts are being made and hold companies responsible.
Changing dynamics of the world does not mean businesses need to migrate to more profitable industries. Nevertheless, this is a call to action for businesses to start implementing the up and running concept of sustainability throughout their business operation. All industries are able to maintain a decent level of sustainability while keeping transparency to all stakeholders; not merely shareholders.