Reports > Management

Top 10 ESG Trends in 2023

2023.01.25 Hyeon-ju Yoo

Hyeon-ju Yoo

#Hashtag

#climate change #ESG #forecast #greenwashing #risk management #trend
The public opinion on ESG has experienced ups and downs in recent years. ESG gained rapid prominence following the Business Roundtable’s statement on stakeholder capitalism in 2019 and the annual letter from the BlackRock CEO in 2020. However, doubts about its effectiveness and feasibility were raised with Russia’s invasion on Ukraine in 2022. Nevertheless, ESG has evolved under the direction of 'thorough integration with business and substantial change.' In the same vein, recent policies, regulations, and initiatives from major countries, investors, and industries also indicate a broader and more stringent demand for ESG compliance.
Based on recent ESG trends, this report aims to provide insights into how companies should respond to the advent of the 'era of substantive ESG' by predicting top 10 ESG trends in 2023.
Table of Contents

  • 1. Introduction

  • 2. Preparedness for Global ESG Disclosure Standardization

  • 3. Managing ESG Risks in Supply Chains

  • 4. Identifying the Environmental Friendliness of Business

  • 5. Boundaries of ESG-related Disputes

  • 6. Strengthening Monitoring of ESG-washing

  • 7. Emphasizing the Substantial Role and Responsibility of the Boards of Directors

  • 8. Pursuing Corporate Benefits through ESG Innovation

  • 9. Attention to Loss & Damage from Climate Change

  • 10. Introduction of Next Carbon Issues

  • 11. Rising Importance of 'Social'

  • 12. Conclusion and Insights

Executive Summary

  • As ESG-related regulations accelerate in 2023, facilitated by governments and investors, it is expected to become easier to objectively identify and evaluate corporate ESG levels.

    • (Preparedness for Global ESG Disclosure Standardization) It is anticipated to manage the process of ESG implementation systems and application logic, as well as relative performance management considering peer group levels.

    • (Managing ESG Risks in Supply Chains) Managing the characteristics of suppliers and relationship-specific exposure to ESG risks, along with sustainability throughout the entire product life cycle, will become increasingly important.

    • (Identifying the Environmental Friendliness of Business) The full-fledged implementation of the EU taxonomy disclosure will promote the integration of business portfolios and ESG.

    • (Boundaries of ESG-related Disputes) The increasing participation of litigation funding firms in ESG-related lawsuits and the accumulation of ESG-friendly court precedents suggest a plaintiff-favorable environment in ESG disputes.

  • Moreover, as stakeholders’ interest in the creation of substantial ESG performance grows, securing the substance of ESG will be recognized as business competitiveness.

    • (Strengthening Monitoring of ESG Washing) The scope of greenwashing is expected to expand from 'energy' to 'consumer behavior-related information,' and discussions on ESG washing will spread with a focus on specific cases.

    • (Emphasizing the Substantial Role and Responsibility of the Boards of Directors) With increasing interest and monitoring by stakeholders of the effectiveness of ESG committees, there is a trend towards emphasizing the substantial role and responsibility of the boards of directors.

    • (Pursuing Corporate Benefits through ESG Innovation) As market interest in ESG-based technology companies grows, ESG-based technology is gaining attention as a new growth momentum.

  • The landscape of ESG management is also expected to expand from a carbon-centric approach to addressing next carbon issues, social issues, and responses to physical risks.

    • (Attention to Loss & Damage from Climate Change) As climate change intensifies, it appears crucial for companies to develop measures to address physical risks, including preparations for corporate asset losses and facility damage.

    • (Introduction of Next Carbon Issues) Business responses and adaptation to biodiversity risks, water risk management, and other non-carbon environmental issues are gaining prominence.

    • (Rising Importance of 'Social') Responsible investment in the environmental domain is expanding to the social domain, and the importance of business-related social issues is being highlighted.

  • The year 2023 is expected to be a turning point for ESG, with many changes anticipated. Companies need to systematically prepare and respond, focusing on long-term capabilities rather than short-term scores.

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