Sustainability trends to watch out for in 2022

 

By EDWARD MUNGAI
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Sustainability will continue to be the new normal for companies in 2022 focusing on doing good as good business.

Sustainability will shape how business will be conducted and lead to new trends. Here are some sustainability trends for boards and C-suites to watch out for in 2022.

For executives and investors, understanding the link between these 2022 trends and the connection to their business model will be essential to making sound decisions about how to allocate capital and other resources for value creation.

Globally, climate action will make headlines, and the average consumption of renewable energy, as an example, will be on the rise.

I expect more companies to be more sensitive to their consumption and production in Kenya, leading to more sustainable ways.

More companies will own captive power, engage in circular economy and create more sustainable supply chains. Solar and wind energies will become the two most resilient energy that companies and even households will bank on in 2022.

The shift to sustainable consumption and production is expected to continue, as reducing carbon emissions remains a priority for companies, consumers, investors and governments.

As an example, moving from a linear to a circular economy is a way to decouple economic growth from the use of resources and avoid unnecessary waste, and a powerful tool to reduce emissions and combat climate change.

Climate action in Africa will accelerate because the 27th session of the Conference of the Parties (COP 27) to the UNFCCC will take place in the continent, according to Sharm El-Sheikh, Egypt in November 2022.

This will focus on the continent’s action to climate change. I therefore, expect to see more governments and companies walking the talk on climate action.

Increased stakeholders’ influence

Mass awareness about sustainability is on an upswing. Recently, I carried out a study covering east Africa and focused on the stakeholder’s pressure on companies regarding sustainable behaviors.

It is clear that not just investors, even customers, employees and job seekers are subjecting companies to the lens of sustainability.

Companies will have to become stakeholder-sensitive when implementing their sustainability strategies from being only shareholder centric. More companies will acquire sustainability labels, change their production and servicing processes to match a sustainable delivery of products and services.

On the regulatory matters and regulators as stakeholders, I expect that there will be more stringent regulations on matters sustainability. I hope that emission reduction regulation and ambitions will keep getting tighter, reporting and compliance will be enforced strictly as we go forward.

In 2021, we saw the Central Bank of Kenya introduce a guideline on climate related financial risks for banks to regulate climate change in the financial sector. Regulators engaging in the talk on sustainability will have to walk the talk towards more climate actions.

Going beyond net- zero commitments

’Net-zero' pledges have been made globally over the past few years, committing organisations to produce no greenhouse gases. In 2021, more companies and governments committed themselves to becoming net-zero before 2050.

The aim of the commitments is to fight climate change. Governments and companies see the net-zero targets as a critical tool to fight climate change. On the other hand, stakeholders are looking to companies that are committing to net-zero targets.

This trend will continue in 2022 with more companies going beyond net-zero to climate-positive. Companies committing to net-zero or climate neutrality will sooner or later set the climate-positive or carbon-negative goals.

While cutting down on emissions and removing carbon dioxide is expected to check global warming, climate positivity is needed to enrich the environment to reverse degradation.

I expect that companies will not only declare that they will be net-zero at some point in the distant future, but also establish realistic, science-based targets that will be achievable. They will require experts to help them set targets that are clear, transparent and communicated to all stakeholders.

Rise in demand for carbon offsetting

In the just concluded COP26, article 6 of carbon trading was a focal point of discussion. It has rekindled the conversation on climate actions and carbon offsetting. Carbon offsetting is about the replacement or reduction of carbon emissions.

High-emission companies will fund projects that either prevent or remove GHGs. These projects can range from planting trees to deploying technology to capture carbon emissions. With the rising need for a better world and sustainable development, companies will be expected to tap into the carbon offset market to make up for the increased emissions.

The low emitters will also take advantage of this to expand more towards reducing the emission of GHGs. Companies will need to go to the drawing board to establish ways to reduce emissions and looking for the carbon trading opportunities within their operations.