It was encouraging to see ESG take precedence at the 2023 World Economic Forum Annual Meeting (WEF) in Davos, Switzerland. Even if the acronym wasn’t always mentioned by name, the agenda and resulting discussions made it clear WEF’s organizers and stakeholders recognize environment, social and governance (ESG) topics are integral to any discussion about our collective future. Less than a decade ago, climate change was not a prominent agenda item at the Forum. This year, more than a third of the panel discussions on the official WEF agenda addressed this very topic.
Even against the backdrop of an increasingly complex geopolitical and macroeconomic landscape, WEF’s ESG emphasis wasn’t entirely surprising. Leading up to the January 2023 event, the Forum’s annual Global Risks Report revealed that climate change impacts, biodiversity loss and environmental challenges are poised to be the biggest risks facing decision makers over the next decade. And if delegates weren’t already focused on addressing environmental challenges, I’m sure landing in Davos to find no snow on the ground in the middle of January resonated for many of them—avid skiiers in particular.
The speed at which governments and organizations are now moving on ESG initiatives is one overriding theme that stuck with me long after WEF's guests returned to their respective countries. Watching world leaders put their heads together and commit to action around climate-related risks, carbon reduction, sustainability reporting and other ESG themes was encouraging.
As evidenced by the resolutions and commitments coming out of WEF, global decision-makers are shifting into high gear on ESG transformations, challenging leaders in all sectors to keep pace or fall critically behind.
Take the intensifying global energy transition, for example. The steady shift from fossil fuels to clean and renewable energies is occurring worldwide. And while the pursuit of clean energy solutions is central to decarbonization, it is a complex transformation that depends on planning, resources, specialized skills and new ways of operating. These elements don't fall into place on their own, and they certainly don't take shape without a strategy.
The same can be said of sustainability reporting standards. Changes are happening quickly around expectations for tracking, monitoring and communicating ESG objectives. These changes require the implementation of enterprise-wide transformation strategies that reach every dimension, from data and technology to finance and sourcing. We are also now hearing about the impending release of the first two standards by the ISSB with a recommendation for an effective date of January 2024.
Three steps at a time
In the face of global energy transformations, Net Zero target setting and mounting stakeholder expectations around ESG, organizations of all kinds are feeling the pressure to transform, possibly more quickly than anticipated. But while they are compelled to demonstrate progress on their initiatives, it’s important they do so with equal attention to all three ESG pillars.
What does this mean in practice? It means taking meaningful steps to mitigate enterprise-wide impacts on the environment (E); ensuring workforces are trained, upskilled and supported to take those steps confidently and without being left behind (S); and having the proper processes, protocols and governance structures in place (G) to keep initiatives on track.
While there’s no question we’re running out of time to respond to the real climate-related threats in our immediate path, we must remember that no one is expected to respond overnight. Effective ESG transformations require long-term strategies, investments and leadership to see them through.
Keeping pace is also about keeping watch. That means understanding what your specific stakeholders and regulators expect of you moving forward and how you can best respond. The trajectory of ESG transformation will differ for each industry, so it is beneficial to understand how your industry peers, competitors and other stakeholders are responding to the same challenges.
A case for optimism
It can be hard to stay optimistic given the enormity of the crisis. And yet, I am. I see Canadian companies responding to these challenges. There is a genuine recognition for the imperative and the need to be strategic, thoughtful and sophisticated in the approach. The fact that many organizations are already in various phases of their ESG transformations, and pursuing those phases ahead of new reporting standards and sustainability regulations, leaves me confident we will rise to the occasion.
I’m also encouraged by what I see among the up-and-coming generations. Our future leaders are well-informed about ESG. They’re passionate about promoting themes of sustainability, equality, inclusion and mutual prosperity within their own businesses and communities. They think innovatively. They are the ones who will determine if the plans and promises coming out of WEF stand the test of time.
No, ESG was not the only topic to take the spotlight at WEF, but it informed many of the discussions. Now, with organizations the world over picking up pace on its ESG priorities, there's an opportunity to continue those conversations and set changes in motion that will help them keep pace without losing their way.
Stay up to date with what matters to you
Gain access to personalized content based on your interests by signing up today