2022 saw a perfect storm for sustainability21 Jan 2023
A new year is always a good time to look back at the year past and reflect on the year to come. We’ve rounded up some of the most consequential sustainability related events that defined 2022. In our next post, we will look at what 2023 will bring.
Sustainability made waves in 2022. Climate change went mainstream; the seriousness of climate change seemed to finally ‘click’ for the collective consciousness – and biodiversity and ecosystem loss also burst on the scene.
A slew of significant regulations and policies related to climate were announced throughout the year culminating in COP27, along with the launching of high-profile climate and nature standards.
We can’t fit it everything that transpired in the 2022 climate space, so here’s a snapshot:
A 2022 summary wouldn’t be complete without mentioning the weather
- Climate change has caused extreme weather events to increase in severity and frequency. In 2022, much of the globe suffered through heatwaves, droughts, or floods.
- 2022 was the hottest year on record since 1884 and the hottest year ever for ocean temperatures.
- Western US experienced the worst drought in 12 centuries, and Europe had its hottest summer ever, with temperatures increasing by more than 2x the global average over the past 30 years.
Europe was the sustainability powerhouse, with more stringent regulations coming into play
- EU taxonomy, restrictions on imported products that contributed to deforestation, the CSRD passed, and ESRS, the European Sustainability Reporting Standards, were updated and approved – “sustainability reporting is now on equal footing with financial reporting.”
- UK’s FCA (Financial Conduct Authority) set out to address greenwashing with their SDR proposal for financial products.
- On climate risk, the European Central Bank’s first climate stress test showed banks face a potential €70 billion hit from climate-related events. ECB indicated that 60% of banks do not have a climate stress test framework and most lenders do not include climate risk in their credit-risk models.
The US got on board
- Over in the US the SEC proposal on climate disclosure requirements created a stir, as did the Inflation Reduction Act which, in part, strives to reduce carbon emissions by 40% by 2030.
- Less stirring, but very important, the US announced it is finally playing catch-up to the UK and EU by announcing a new draft National Strategy to account for natural resources in economic decisions through natural capital accounting.
- The US government also announced a proposed rule requiring major Federal contractors to publicly disclose their greenhouse gas emissions and climate-related financial risks and set science-based emissions reduction targets.
There was a lot of movement in the standards and disclosures space
- ISSB released exposure drafts related to sustainability IFRS S1 – General Requirements and IFRS S2 – Climate-related Disclosures.
- ISO released net-zero guidance.
- The GHG Protocol released Land Sector and Removals Guidance.
- SBTi released Forest, Land and Agriculture (FLAG) guidance for land-intensive sectors.
- GRI released the first global Biodiversity Standard.
Say no to Greenwashing, embrace climate accountability
- Both carbon offsets and net-zero had a lot of criticism directed at them. The efficacy of offsets was called into question, with critics pointing to projects that have little to zero impact.
- Net-zero was criticized, in part, because many companies set net zero targets without adequately reducing their emissions, relying on offsets to reduce their carbon footprint. Hence the standard setter, ISO, launching net-zero guidelines.
Become nature positive
- Nature was a big deal for climate in 2022. Discussions on the inextricable relationship between climate and nature seemed to explode on the climate stage during the latter part of the year.
- The Climate COP27 had a tremendous focus on nature and was followed a few weeks later by the Biodiversity COP15.
- At the Climate COP27, ‘Nature-based solutions’ (NBS) saw a lot of play
- At COP15, a global framework to reverse nature loss was agreed upon. Negotiations were intense, but the framework aims to protect 30% of the earth’s ecosystems by 2030.
Disclose nature-related risk
- On the nature and biodiversity disclosure/standards front, the Taskforce on Nature-related Financial Disclosures (TNFD) released three versions of its beta framework on nature risk.
- GRI released an updated Biodiversity Standard.
- ISSB announced biodiversity will be incorporated into their upcoming climate reporting rule.
- CDP included biodiversity related questions in its 2022 questionnaire and announced it is looking at covering and expanded range of issues including oceans, land use, food production and waste.
- Science-Based Targets Network sought public comment on its draft V1 guidance for companies to set science-based targets for nature in advance of guidance set to be released in 2023.
Can the focus hold? In our next post, we’ll look at what 2023 has in store for sustainability.
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