ESG and Climate Trends to Watch for 2023

Discover what trends may shape the environment for investors and companies in the year ahead.

Introduction

We’re heading into the new year against a backdrop of a major war in Europe, inflation, cost-ofliving crises, energy markets in turmoil, rising interest rates, pandemic fatigue, political uncertainty and what feels like an unending stream of climate-induced disasters.

At the same time, ESG itself is being put under the spotlight. Regulators around the world are upping the ante on everything from greenwashed fund names to stricter climate target disclosures, while the very idea of ESG investing is increasingly politicized.

Which is to say: There’s a lot going on around the world. And it is shaping both the investment environment and the challenges and opportunities facing companies.

Now, if you’re a longtime fan of our annual ESG trends research, you’ll notice things look a little different this time. The large-scale trends shaping the ESG-investing world are well-known at this point: climate change risk and the road to net-zero, the growing existential threat of biodiversity loss, social inequalities, regulation and, lately, debate and controversy over what exactly ESG should be.

So this year, we’ve gone back to basics and asked the experts on our research team: With everything that is happening around us, what specifically will you be watching in 2023, and why? 

The following pages contain a selection of the answers to that question. Not surprisingly, many touch on climate change across a variety of angles: from carbon credit funds to insured emissions, and from scrutiny of net-zero targets to decarbonizing industrial real estate.

Regulation is now top of mind not just in the EU, but increasingly in the U.S. and APAC markets: from requirements for financial institutions to conduct climate stress tests, to deforestation-free market-access rules, to investors getting ahead of potentially mandatory requirements to report on the SFDR’s Principle Adverse Impact indicators.

Our team also has their eyes on supply chain issues, including the prospects for lab-grown commodities, tracking goods through blockchain technology and the mining of e-waste to reshape the dynamics of controversial raw material sourcing.

And to round it off, we’ve got a host of issues affecting everyday lives in what seem to be increasingly difficult times: striking rail workers (we’re looking at you, U.K.), poor air quality, new ground rules for internet companies and more.

We hope you’ll dive in, make yourself at home and come away with some fresh, and in-depth, perspectives. What will you be watching in 2023?