PwC: Five ESG trends and developments to watch in 2023

18 April 2023 Consultancy.com.au 3 min. read
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In 2023, stakeholders of all sorts – consumers, shareholders, investors, employees, and more – will continue to raise the bar for ESG performance. In a new report, experts from PwC outline five ESG trends that will take centre stage this year.

1) Focus on ethics and integrity

ESG performance is under ever-increasing scrutiny, meaning that ambitious targets must be matched by quality actions. In addition, many more legal and regulatory actions relating to ESG claims and performance in Australia are expected to be seen worldwide and in Australia.

Greenwashing is increasingly costly to organisations and stakeholders are more sceptical than ever when it comes to dishonest or exaggerated claims of sustainability and accountability. Investors and their stakeholders will increasingly demand transparency on ESG data.

PwC: Five ESG trends and developments to watch in 2023

2) Security, resilience, and transparency of supply chains

The delicacy and vulnerability of supply chains has been clearly demonstrated in recent years with the effects of geopolitics and the Covid-19 pandemic. Supply chains can cause operational and reputational risk, but they can also present fresh opportunity for efficiency, innovation, and ESG advancements.

Extreme care when it comes to supply chains will be in the spotlight this year as the public demands to know more about the provenance of products. Companies should reign in their carbon footprint and must focus on make the associated data available.

Resilience against future geopolitical and environmental shocks will also become a main focus in 2023. That will include cybersecurity, with digital transformations creating more openings for cyber threats.

3) Transitioning workforce

More workers, new skills, and training will be needed to deliver and power the clean energy transition. The transition must not exclude workforces and communities that can be negatively affected by big shifts in industry.

Organisational structure and culture must be taken into account for any organisation to make a meaningful transition to sustainability. Going forward, organisations can expect that strong ESG credentials will help to attract new talent as well as retain existing talent.

4) First Nations inclusion and empowerment

Through employment, purchasing, and new ownership structures, First Nations should play a significant role in the local economy. There will be more public expectations for organisations to take into account and be conscious of the value produced through collaboration and stakeholder engagement with Indigenous people.

Only 33% of Australian ASX 200 businesses have enacted a Reconciliation Action Plan (RAP). More needs to be done to better respect First Nations people and business should play just as much a role in ensuring equality and rights as the government does.

Further reading: PwC outlines progress on Indigenous reconciliation action plan.

5) Dynamic political and regulatory landscape

Global crises have spurred governments to respond, but there is a risk of a race for green subsidies – with implications for Australian industries. More regulatory changes in 2023 will mean adapting and staying dynamic.

Going forward, standardised ESG reporting will become the norm. The International Sustainability Standards Board (ISSB) is forging ahead with finalising international standards for sustainability and climate reporting. Early preparation will make adjustment quicker and easier when new requirements come into force.