As we enter a new year, it is always interesting to read the various trends, across industries, which thought leaders expect to dominate in the coming year. Based on the latest developments in sustainability – as well as the focus areas of our clients, the GCX team has proposed the following 12 trends to be prevalent in terms of sustainability in 2012

1.Appointment of sustainability executives on a strategic level

In 2011 the South African Government announced that the Green Economy will be a key driver for the country, with over 300 000 new green jobs envisioned by 2017, and more than 462 000 by 2025. The growth that is anticipated in this sector in 2012 carries a great deal of weight.

Increasingly, companies are opting to appoint internal sustainability executives in addition to outsourcing for specific expertise. Whether it’s deploying new technology to slash power usage at a data center, or reengineering a manufacturing process to use raw materials more efficiently, sustainability executives often have to accomplish their goals through other department heads. It is often the role of a sustainability executive to leverage other departments’ budgets, and therefore they generally require a great deal of ‘influence’.

Business models are adapting to the new landscape created by the pressures of climate change – and many companies are likely to embrace this new trend in 2012, which is also likely to see a proliferation in the green job market, recruitment and corporate sustainability executive level.

2.Carbon as a key driver

Carbon remains a starting point in the sustainability journey of most companies. As more companies start to measure and manage their carbon footprints, the growth of this sector is likely to continue. Furthermore, the proliferation of carbon consultancies over recent years also points to this phenomenon.

Pike Research says global expenditure for carbon accounting software and carbon management services is expected to grow from U.S. $705 million in 2010 to U.S. $5.7 billion by 2017. This incremental growth is driven by increased awareness, investor pressure as well as the realization for many companies that great efficiencies and cost savings can be realized by implementing carbon reduction strategies – apart from it being ‘the right thing to do’.

The carbon landscape is however likely to change as it converges with other trends; such as transparency, data integrity and consistency – and the pending carbon taxation legislation. The consultancies offering these services will increasingly need to differentiate themselves as the market matures, technology progresses and companies demand more insight and interpretation of impacts and reduction strategies.

3.Investment in energy management for cost reduction

Companies continue to face sustainability pressures across the board, but energy management is gaining priority because of its solid ROI. Focus is likely to remain on energy efficiencies for all buildings/machinary which immediately save money. Interest in renewable energy remains high, however, in many cases is still too costly. Technology will continue to evolve to allow more affordable options.

4.Transparency

This trend is relevant not only within companies to ensure informed decision making; but also likely to become more prevalent on an industry and global level, especially as investors increasingly demand more advanced corporate disclosure on sustainability. Cost concerns will drive a need for greater visibility. It is likely that transparency achieved through reporting and disclosure, in particular, will be focus areas. Companies are realizing that there are great advantages to transparency; from an investor, employee and planning point of view.
More and more companies are adopting sustainability management solutions, and the growing numbers willing to publicly disclose their sustainability metrics to organizations like the CDP and the Global Reporting Initiative speak for themselves.

5.Data integrity

Recognized management guru Peter Drucker said, “You can’t manage what you don’t measure”. The volume of enterprise data is increasing incrementally and companies are realizing that this flood of information can help them operate more efficiently and sustainably. It is likely that companies will increasingly be deploying sophisticated software as a key component of their sustainability strategy, Groom Energy predicts the market will increase 300% in 2012.

The integrity of the data will be key – and applications that harness large amounts of data by integrating with existing business systems will be a crucial focus area. Enterprises must also recognize the importance of viewing sustainability data in context and then integrating it with operational data from financial management, enterprise resource planning, supply chain management, and other core business applications.

Integrating sustainability data with other core systems achieves two purposes: it helps companies to understand their own operations better, including cause-and-effect relationships between different systems, and it prepares them to meet growing demands for integrated financial sustainability from regulators and other stakeholders.

6.Global consistency

According to international financial advisory companies, ‘a lack of consistent and comparable standards for defining and measuring sustainability’ is one of the key challenges of our time. It is likely that more industries, locally – and bodies, globally – will place a greater emphasis on the development of standards, which provide benchmarks for performance.

Green-washing, in particular, was cited regularly in 2011. 2012 is therefore likely to see a call for more third party standards and certifications that clearly specify criteria.

7.Increase in indirect emissions management and disclosure

In 2011 the Carbon Disclosure Project reported a 20 percentage point increase in indirect emissions reporting at leading companies (these indirect emissions comprise upwards of 80% of a typical company's environmental impact). Corporate sustainability efforts have traditionally focused on an organization's direct impacts -- the carbon footprints of company-owned buildings and vehicles. But signs point to 2012 as the breakthrough year for indirect "scope 3" impacts being included, such as; the sustainability of corporate supply chains, business travel, waste, and procurement. In 2011 the Carbon Disclosure Project reported a 20 percentage point increase in indirect emissions reporting at leading companies (these indirect emissions comprise upwards of 80% of a typical company's environmental impact).

The World Resources Institute, the de facto authority on corporate sustainability reporting standards, recently released its first new corporate standard in years detailing guidelines for scope 3 supply chain carbon reporting. This new standard signals greater consensus on indirect emissions accounting, and coupled with the sheer magnitude of indirect emissions, paves the way for more widespread management of impacts.

Today, more companies are asking their suppliers for sustainability-related data; in the future, they will need to integrate both supplier and distributor information into automated tracking systems to achieve greater visibility across their products' entire lifecycles.

8.Increased employee engagement, education and awareness

We have often done articles on how sustainability efforts can increase employee morale and loyalty – and 2012 is likely to see this trend gaining increasing momentum. Employee engagement best practices and industry metrics will unleash people power to deliver change in sustainability performance in 2012.

The idea that enlisting staff in sustainability efforts is effective in achieving environmental and social goals as well as improving recruitment, retention, and the bottom line isn't new. A recent sustainability study by Green Research found that 80% of major corporations are planning to invest significantly in employee engagement in terms of sustainability 2012. Brighter Planet's survey report revealed that as engagement programs proliferate, the most successful take a data-driven approach, focus on emerging environmental issues, and make heavy use of social media.

Education and training remains a key priority for companies – with an increasing amount of companies opting to train larger segments of their staff compliment; such as executive teams or an entire department, on general awareness; rather than just a select few. The influence is therefore shifted by having a larger scale impact on an organisation, rather than only empowering a few key members. Education is likely to gain great momentum in 2012– especially as technology evolves and makes training more accessible through online applications.

9.Green PR, internal and external sustainability communication

The number of companies offering green PR, communication and events expertise increased dramatically in 2011. So too, green media has become a popular theme – with many new sustainability platforms and publications launching in recent years. It is likely that social media will continue to play a pivotal role for companies in 2012 – especially when it comes to reputation management and mounting consumer pressure for ethical products and services.

In addition, company Sustainability Reports and Annual Reports are increasingly incorporating GRI reporting – and using these analyses for brand building and as a differentiator in the marketplace. 2012 is likely to see more high profile campaigns such as that of Nedbank, announcing that it had become carbon neutral. Watch this space, as internal and external sustainability communication becomes a strategic business imperative.

10.Water and waste management gaining momentum

To date – water and waste management have lagged behind energy as a utility to focus on from a sustainability point of view. This past year, two of the most prominent organizations at the center of corporate climate change action did something that at the surface might seem counter-intuitive. Ceres and Carbon Disclosure Project both independently expanded their carbon emissions platforms to include water impacts. While water initiatives have long been associated with population growth and environmental contamination, this move by climate-focused organizations signals a tectonic shift in the corporate sustainability world from prevention toward adaptation.

The material risks associated with increased droughts and flooding will be among the most poignant effects of climate change. The challenge will be to attract businesses that use water intensively but return the water in the same or better condition than when it was extracted.

11. Public & private collaboration

Large-scale social change requires broad cross-sector coordination among all organizations involved in solving today’s social issues. It is likely that this year will see more collaborations between the public and private sector to foster more public-private relationships to achieve success. One such example is The Better Buildings Challenge, a $4 billion energy retrofit commitment announced in December by the U.S. federal government and 60 CEOs, mayors, university presidents, and labor leaders, is a clear example of the private/public nexus. The eight-year initiative includes $2 billion in energy upgrades of federal buildings and another $2 billion of private capital to improve energy by 20 percent in buildings totaling 1.5 billion square feet.

In South Africa, this trend is likely to see a great revival; especially considering the Government’s White paper on Climate Change, which calls for a direct private-public involvement in tackling climate change.

12. Environmental legislation

The South African government’s clear intent to place sustainability in the spotlight, is likely to force more companies to focus on their environmental impacts. Although the legislation is not yet in place in South Africa, the Climate Change White Paper and Carbon Taxation discussion document are key indicators that a new law is imminent. Europe and Australia have already implemented such legislation – and the South African government is likely to make this a priority over the next two years. Many of the large emitters will be required to offset their impacts – whilst smaller emitters are likely to be incentivised to do the same.

Sustainability management in general, despite the pending legislation, will however remain an important corporate priority in 2012 due to high energy prices, climate change and related carbon regulations, and louder demands from more stakeholders. The same pressures will also prompt a sharper focus on initiatives that deliver the quickest, surest return on investment and reduce the overhead associated with managing businesses more sustainably.

Companies should embrace these trends, recognize that managing for sustainability is good
business. It is about reducing costs, waste, regulatory risk, and risk of supply disruption; whilst with the global sustainability solution adoption rate at approximately 10%, prompt action will likely yield an additional benefit in strategic advantage over slower-moving competitors.

At Global Carbon Exchange, we have ensured that our strategy, services and training solutions can leverage each of these trends to ensure optimum value for our clients.