ESG Trends In 2022

Published on 25 Feb 2022

ESG trends

If 2020 and 2021 weren't difficult enough for businesses attempting to negotiate the new normal, the year 2022 would be much more difficult as businesses return to the office and redefine their company strategy to be more sensitive to unanticipated global events.

Likewise, when investors, activists, and other concerned stakeholders raise their expectations and demand more progress on a number of environmental, social, and governance challenges, ESG strategies will evolve to take on new features.

Here are a few forecasts for four environmental, social, and governance (ESG) topics that will become more important in 2022:

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DEI Is Renamed DEIA

Diversity, equality, and inclusion have emerged as essential components of practically every company's environmental, social, and governance strategy in the past year or two. Following the murder of George Floyd, many businesses understood that they needed to devote more time and resources to issues of diversity, equality, and inclusion among their workers, customers, and members of the local community. As of 2022, antiracism will be recognized as an additional key component of this problem.

There is an approach to decision making for businesses and their employees to play a more active part in the conflict against structural and institutional racism, in addition to focusing on the construction and preservation of a diverse group of workers, as well as ensuring that those workers feel included as well as equally compensated.

Being antiracist demands being actively cognizant of race and racism and making efforts to eliminate racial imbalances in our institutions, laws, practices, and organizational structures, among other requirements. In the future, corporate stakeholders will want their organizations to be more proactive in altering any processes or activities that may have an inherent bias in their information systems.

Carbon Neutrality Is Transformed Into Carbon Net-Zero

Many businesses have made significant progress in decreasing their carbon footprints and employing carbon offsets to attain carbon neutrality. Still, scientists and environmentalists are increasingly convinced that these efforts will not be enough to prevent a climate catastrophe in the near future.

In order to reverse the quantity of carbon dioxide in the atmosphere or lower it to the lowest level achievable, further efforts are required. Companies who commit to carbon net-zero will be required to make significant steps in genuine carbon reductions (or eliminations) in their operations and their supply chains, with offsets used only as a last resort as the last option.

Accountability is the next step after transparency. In recent years, the concept of firms being transparent with their stakeholders has gained significant support, as consumers, community leaders, and regulators have expressed a desire to learn more about how companies function and what methods they intend to adopt in the future. They no longer have the ability to hide behind walls of silence as activists of all shades seek more information in order to hold companies responsible for their commitments to the environment.

So transparency is merely the beginning of the process; accountability is the ultimate goal. Consequently, an increasing number of stakeholders demand that firms reveal real outcomes rather than simply making statements. Companies will continue to be subjected to greater demands for accountability, and the number and relevance of third-party verifiers will continue to grow.

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Tax Compliance Is Being Replaced With Tax Fairness

There are many firms today that hire teams of specialists to guarantee that they not only comply with the tax regulations of every country in which they operate but that they also spend no more in taxes than is needed of them by the law. However, despite this strategy being fully legal, activist stakeholders increasingly call on corporations to pay their "fair share" regardless of what the law enables them to do.

Tax fairness proponents call for eliminating all tax loopholes. At the same time, some merely support a minimum corporate tax or say that what firms pay in taxes should be determined by the needs of the communities in which they operate. This discussion will gather momentum during the next months and years as stakeholders call for more corporate accountability in tax contributions and other forms of community assistance.

Increasingly Difficult To Engage In Political Engagement

The Conference Board with the National Association of Business Political Action Committees conducted a recent survey. They found that 87 percent of corporate government relations executives believe that corporate political activity will be at least as difficult in 2022 and that 42 percent believe it will be more difficult.

Companies are bracing to continue "hot button" issues in this midterm election year, particularly at the state level. According to 77% of respondents, one of the key causes of this dilemma is the frequent appearance of social and political topics on which businesses are compelled to take a stance. In addition, the Federal Elections Commission and the Biden Administration are expected to impose limitations on corporate political involvement during this election year, according to sources.


Corporations' ability to modify their environmental, social, and governance policies in response to these increased difficulties will decide whether companies are deemed leaders in this industry rather than followers or laggards. Companies will be required to continue to improve rather than rely on previous pledges and commitments as the bar is moved higher and higher with every passing year. In order to propel their organizations ahead in the new normal, the leaders of these institutions will need to develop their own thinking constantly.


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