„Among the most important trends for 2022 are those connected to sustainable business models, climate actions and the impact of the Great Resignation on global productivity”, says Ciprian Stanescu.
From his point of view, the opportunities in the ESG (Environmental, Social and Governance) are are similar in Romania as compared to other European countries.
„We are talking about a huge market, around 3,500 billion dollars that are directed towards sustainability investments”, says Ciprian.
Environmental, social, and governance (ESG) criteria are an increasingly popular way for investors to evaluate companies in which they might want to invest.
ESG standards are made up of 3 pillars: Environmental criteria , that may include a company’s energy use, waste, pollution, natural resource conservation, and treatment of animals; Social criteria looks at the company’s relationship with its stakeholders; Corporate Governance refers to the fact that a company uses accurate and transparent accounting methods and that stockholders are allowed to vote on important issues.
ESG investments is one of the trends that the Social Innovation Solutions team identified for this year.
According to the document they published, in 2021, almost $120 billion have run through ESG exchange-traded funds, and 2022 is expected to be driven by ESG. Biodiversity is the new 'climate change' in 2022, next to carbon offsetting.
More than 50% of global GDP depends on nature and, according to the World Economic Forum, 'preventing a mass extinction of species may increasingly become a necessary concern for investors'.
In the opinion of the Social Innovation Solutions team, pay equity, diversity and inclusion programs or reverse mentoring are more likely to be under the spotlight in 2022.
Ciprian tells us that the European Union passed a directive that will be directed at companies that have between 250 and 500 employees. These kinds of companies will have to do their own ESG reporting starting with the year 2024.
„There are a lot of companies that are already learning how to measure these kinds of standards and what they are. We have almost 400 sustainability standards only on climate reporting. It’s a difficult job to do if you’re not used to it. Besides contracting companies that know how to create these reports, I think that we will need to create more awareness”, is Ciprian’s opinion.
50.000 large EU companies with more than more than 250 employees or 40 million+ in revenue will use 2022 as their year of sustainable reporting and, more importantly, significant transformations in the way they operate. The CO2 footprint management systems will become mandatory starting January 23, 2023 under the new Corporate Sustainability Reporting Directive (CSRD). The companies will have to publish their sustainability reports in January 2024 with data from 2023.
Another trend identified in the Social Innovation Solutions report is centered on corporate climate action.
A new global BCG survey, cited in the report, shows that 85% of companies are concerned about reducing their greenhouse gas emissions, and 96% have clear targets to reduce them. At the same time, only 11% have managed to cut their emissions in line with their ambitions over the past 5 years.
Ciprian Stanescu mentions the fact that in 2022, sustainability actions will be centered on 3 main pillars.
We are talking about clients, the individuals that will choose more and more to buy products or services from companies that are sustainable.
Secondly, about the supply chain and the B2B segment – more companies depend on and sell directly to corporations that in return demand more sustainable actions (whether its environmental, financial, for their workforce).
And the third pillar ist that of the investors that will predominantly begin to look towards supporting companies that have a low risk of being unsustainable.
This is also suggested by a latest piece of information from the Bucharest Stock Exchange, that says that on a global level, funds dedicated to ESG investments have a total value of over 2,200 billion dollars.
”I don’t think that 2022 will be a spectacular year concerning progress, but I think that it will be the best year of the last 5 concerning awareness actions. I think that there will be a greater amount of information and opportunities available for companies so that they can understand how to be more sustainable and what investment resources they have at hand to achieve this”, says in conclusion Ciprian Stanescu.