Today’s corporations must embrace sustainability in order to succeed. Sustainable methods, in addition to assisting in the creation of a more environmentally friendly future, pay off.
According to McKinsey research, firms with top ESG ratings outperform the market average in both medium and long terms.
But what are businesses doing to become more sustainable in the years ahead? Here are five major sustainable business trends to look out for in 2022.
1. Data will play a key role
For companies, measuring the impact of sustainability endeavours is a headache. In the future, data analytics methods may be employed to guarantee that organizations get results from their ESG initiatives.
“There is a need for data-driven decision makers who consider social impact while making commercial decisions,” adds associate dean of MBA programs at HKUST Business School Tai-Yuan Chen (below).
“It’s not enough for executives to understand the notion of long-term viability; they must also put their plans into action based on fact.”
Several businesses, such as the Italian tire company Pirelli, are already doing so. The firm gathers usage data from sensors in its tires to help it make more efficient decisions about what inventory to keep track of, reducing waste.
Tai-Yuan and his team at HKUST ensure that this data-driven approach is incorporated into MBA education. Big data analytics modules teach students how to analyze data in order to make a decision.
2. Sustainable Investing goes fast.
According to Deloitte, sustainability is—or will soon be—central to the organizational priorities of 53% of financial services companies.
With $5.1 billion in equity investments expected for 2020 alone, the trend is set to continue, leading to the development of new career paths for business executives with a passion for sustainability.
Eason Tang, a current MBA student at HKUST (below), intends to do exactly this after he graduates. Eason has been interested in environmental issues since high school and began his professional life in the renewable energy sector.
Although he liked his job, he recognized that gaining a deeper understanding of business would allow him to make a bigger difference. He decided to pursue an MBA in order to pivot into long-term investing, and the school’s top rating and proactive approach to sustainability made it an obvious choice.
He adds, “I’m already learning a lot in five weeks of ESG investing classes. “
“I’m really enthusiastic about applying these ideas to a real company,” he adds.
3. From shareholders to stakeholders
Awareness of sustainability concerns is on the rise. According to one BCG research, 70% of people are more aware of climate issues today than they were prior to the COVID-19 outbreak, and 40% intend to change their behavior in order to be more sustainable.
This means that clients, investors, and job applicants are more closely examining a firm’s sustainability efforts before interacting with it.
“We used to think of businesses as shareholder-centric: that is, they try to optimize profits for their investors.” Tai-Yuan continues.
However, with an increased concern for environmental issues, the desire to satisfy shareholders must be balanced against the demands of stakeholders such as employees, customers, and the local community. This is a mentality that HKUST students are attempting to acquire.
“Rather of focusing on short-term gains, we hope HKUST MBA students can use their talents to benefit all societal components and future generations,” he adds.
4.The government has set ambitious goals for renewable energy usage.
In 2022, the move toward renewable energy will have an impact on companies.
The reason, she adds, is that energy corporations are seeking to “reduce energy waste during peak rates.”
Renewable energy generation is expanding—by 7% in 2020 and 8% in 2021, according to an International Energy Agency (IEA) study. This development isn’t enough, however, to keep up with global demand, and businesses may have trouble being more energy efficient.
HKUST has a ‘Green Team,’ that work to make the campus more sustainable © HKUST via Facebook
5. Increasing transparency
Business openness is another developing trend.
Without this final step, many organizations would be unaware that their waste is not being recycled. Under the Resource Conservation and Recovery Act (RCRA), EPA has been issuing requirements for nearly a decade. In fact, it was at least ten years ago when RCRA was originally passed into law by Congress in 1984. RCRA provides guidelines on how to assess
There will be additional pressure for disclosure in the run-up to the UN’s 2021 Climate Conference in November, which may prompt more transparency efforts in 2019.
Eason believes that the most significant issue for businesses will be to navigate the many varied methods of ESG reporting.
“There are a lot of various standards for the same or comparable things, which makes it difficult to integrate into real business,” he adds.
Because of this, Eason has had the opportunity to learn about several standards during his stay at HKUST thus far.
After that, he’ll learn more about the wider realm of sustainable business at
“Students take a capstone project before graduation to ensure that they consider sustainability as part of their final project,” Tai-Yuan adds.
Professionalism in a business environment is essential in the future. Most MBAs will need to find a way to combine their degree with other skills, such as leadership and strategy. This will be important for them after they finish their MBA program.