2022 was the year when carbon neutrality entered the everyday lexicon. Regardless of where you lived in the world, chances are you witnessed unseasonal temperatures, droughts, floods or super-storms. A key implication was that customers, especially influencer millennials began to choose products from companies with visible sustainable mindsets, or those with sustainability-led marketing. Conscious-consumption became fashionable and regulators across the globe – from the SEC in the US, to the EU’s Sustainability Reporting Directive, and the SEBI’s BRSR initiative in India, made sustainability reporting by companies more stringent. A key implication is that today, across industries, companies are forced to rethink their sustainability strategies, minimise ‘greenwashing’ and purchase credible, standardised carbon offsets. Amongst publicly traded, and large global firms, there is a real awareness of how to measure, analyse and reduce carbon emissions. Corporate strategies now articulate how fast a company will move towards net zero emissions. In N. America, EU and China carbon exchanges, both sovereign and voluntary, saw huge trading to monetize carbon offsets.
In 2023 as the planet warms up further, we expect the momentum around sustainability to gain speed, with the larger companies focusing on sustainability by design, instead of viewing it only a compliance function and starting to monetize carbon credits via carbon certification. Carbon footprinting will become the starting point for businesses to begin their sustainability journeys, especially for small and medium-sized companies. With climate finance challenges and a continued concern about the corporate costs of sustainability compliance and reporting, we anticipate carbon management technology platforms will play a key role in reducing cost of ESG compliance. These carbon management platforms will be needed to capture carbon-related data from a variety of disparate energy sources across the global enterprise, collate it, and provide deeper on-demand analytics to analyse hotspots. Corporate decision-making will be based not only on the financial ledger, but on the company’s carbon ledger, offsets, and carbon predictions. Regulations will require data-verifiable reporting on Scope 3, requiring data from suppliers, vendors, and partner ecosystems. This will require companies to make critical investments in data-driven technology platforms and make standardised carbon-based certification a core competency.