Sustainability in a Rapidly Changing World: A 2023 Perspective
Iris Van der Veken is executive director of the Watch & Jewellery Initiative (WJI) 2030, which Cartier and Kering launched in 2021 to promote the adoption of the United Nations’ Sustainable Development Goals (SDGs).
Many of us view the year ahead through a lens of uncertainty. Ongoing geopolitical turmoil, persistent inflation and economic uncertainty continue to test and challenge the hard-won sustainability progress we have made.
On the face of it, uncertainty feels uncomfortable. How we navigate and embrace this uncertainty, though, is still entirely up to us.
Despite the headwinds from this “poly-crisis,” there appears to be continued resolve among businesses and governments to make progress on sustainability goals and tackle the effects of worsening climate change.
As a broad collective, we have learnt a lot from the work that has been done in the past few years, and these learnings will continue to accrue.
Leaders need to navigate in this landscape. In this era of the new economy of purpose, trust and inclusion, a new leadership is required. There is a clear business case: People will walk away from leaders with weak values and no purpose to society.
However, it is also time to reflect and draw upon some critical lessons to reorient and refocus our efforts. Time, as always, is of the essence. What is also essential is to make sure all voices are heard and not just the ones that are the loudest or have the most prominent platforms. Change must truly be meaningful for all and especially for those who need it the most and who are disproportionately affected by our changing planet.
Collaboration needs to be prioritized and encompass intergenerational collaboration. Climate action needs to include biodiversity preservation. Our roadmaps and prioritization frameworks need to take into account all living beings. Only then can dignity for all truly mean dignity for all.
As I am writing this, I am deeply saddened by the earthquake in Syria and Turkey. My condolences and thoughts of solidarity and healing are with the people who have been affected by this disastrous tragedy. My thoughts also go out to everyone who lives in war and conflict. Again women and children have their health and safety, their human rights, and their futures placed at unbelievable risk during conflict. Dignity for all should be our ambition to action.
I believe in this goal of “dignity for all” with the core of my being. With this value and goal in mind, I joined the Watch & Jewellery Initiative 2030 last year and am looking forward to closely working within this ecosystem of thought leaders, doers, colleagues, peers, and mentors. It has now become an annual ritual for me to reflect on the past year and share my perspective for the new year. Here, I would like to draw from discussions happening in collaborative forums across the globe, and present to you what has caught my attention.
1. CEOs redesigning organizations and supply chains to leave no one behind
To meet our sustainability goals, a shift in organizational and supply-chain design is required and is being undertaken by best-in-class players. CEOs will need to lead the way on sustainability. Sustainability is a CEO strategic topic. There is only one option to be future proof: Your business strategy needs to be a sustainable one. Suppliers are partners. We need to include the suppliers along the journey, especially with the often fragmented and complex supply-chain structures inherent in the jewelry industry. Suppliers exist on a continuum of maturity on the sustainability roadmap, and brands need to be sensitive to this. Transparency and traceability can only succeed if everyone along the value chain is connected and is accountable.
Another example here is a shift in leadership that places emphasis on building and fostering communities and economies of care, rather than a sole monochromatic focus on profitability. Talent wants to work for a company with purpose. We all applauded founder Patagonia when the founder Mr. Yvon Choiunard wrote of “reimagining capitalism,” and just donated the entire company, worth $3 billion, to fight climate change.
A shift from profits to people is also how organisations can retain the best people. I invite you to read the article from Paul Polman published recently. Employees want their companies to step up. Even in these difficult economic times, around half say they would consider resigning if the company’s values don’t align with their own. A third say they already have. All of these numbers are higher for Millennials and Gen Z — the workforce of the future. The war for talent is on.
Leaving no one behind means prioritizing human beings’ dignity and placing the progress of the most marginalized communities first — women and girls being all too often at the top of the list. It urges us to address the structural causes of inequality and marginalization that affect them. This ambitious undertaking requires a collective effort to identify and share effective strategies to operationalize this concept. In an industry where women influence 90% of consumer behaviour, we should step up. And let’s be inclusive to engage with the artisanal and small-scale mining (ASM) community. ASM provides a vital livelihood for nearly 45 million people around the world, with tens of millions more people also dependent on the sector, including family members and small business owners along the ASM supply chain. Artisanal mining is an important driver of development in communities from Africa to Asia, where there are often few other opportunities available for generating income. How can we shape the right public-private partnerships to encourage businesses to collaborate?
2. Powering data-driven sustainability in an ever-evolving regulatory framework
Guiding measurable and responsible business practices built on a bedrock of data-driven insights isn’t a new idea, but it is an idea whose time is ripe.
With the data collection, analysis via machine intelligence, and artificial intelligence (AI) tools available to us today, we are in the age of “sustainability analytics.” We can use this immense informational advantage to power sustainability goals, optimize supply chains, and reduce waste. Insights from sustainability data can power positive change while simultaneously increasing profitability. Transparency and traceability reporting on our actions and supply chains from source to consumer will become the new normal.
According to an advertisement feature by SAP on the Economist Impact website: “Difficult work lies ahead. For example, SAP research has found that 79% of companies are dissatisfied with the quality of data available to drive sustainability transformation. And the Net Zero Tracker also found that 65% of corporate emissions targets do not meet minimum procedural reporting standards, which aligns with other research findings on the lack of reliable data when it comes to sustainability.”
With over 700 unique sustainability-related regulatory instruments globally, there has been exponential growth over recent years in policy and standard-setting initiatives that mandate the disclosure of ESG information. In 2022, policy became a vehicle to reorient capital flows through multiple routes and at different levels, both international and domestic.
While the European Union continues to drive ESG-related policymaking through flagship regulations such as SFDR, the EU Taxonomy, CSRD and the Human Rights Supply Chain Due Diligence Law, international efforts are quickly catching up. In the US in 2022, the SEC released the Proposed Rule to Enhance and Standardize Climate-Related Disclosures for Investors, as well as a proposed ESG Fund Labelling Rule. In the UK, the Financial Conduct Authority (FCA) climate-related disclosure regime came into effect in 2022, introducing climate-related reporting requirements in line with the Taskforce on Climate-Related Financial Disclosures (TCFD). And in Asia Pacific, the Securities and Exchange Board of India (SEBI) published draft rules to regulate ESG ratings providers in 2022, building upon IOSCO recommendations.
As ESG regulations continue to evolve rapidly across multiple jurisdictions, corporates are navigating increasingly complex challenges around reporting. As such, the role of data technology will become more and more important in meeting complex reporting requirements. ESG Book, a global leader in sustainability data and technology, is helping the Watch & Jewellery Initiative 2030 to master these challenges. Covering today over 50,000 companies, ESG Book’s SaaS data management and disclosure platform provides access to over 135,000 corporate disclosures, enabling companies to disclose to stakeholders in real-time against multiple frameworks. A challenging and exciting journey ahead.
3. Preserving Biodiversity as a Key Climate Goal
According to this UN report, biodiversity is our strongest natural defense against climate change. The report goes on to say that biodiversity “forms the web of life that we depend on for so many things — food, water, medicine, a stable climate, economic growth, among others. Over half of global GDP is dependent on nature. More than 1 billion people rely on forests for their livelihoods. And land and the ocean absorb more than half of all carbon emissions.”
“An ambitious and effective post-2020 global biodiversity framework, with clear targets and benchmarks, can put nature and people back on track,” the UN Secretary-General has said, adding that “this framework should work in synergy with the Paris Agreement on climate change and other multilateral agreements on forests, desertification and oceans.”
Such an agreement was reached in Montreal in December. Called the Kunming-Montreal Global Biodiversity Framework, it is being hailed by many as the “Paris momentfor nature.” And much like the Paris accords, the biodiversity framework could have far-reaching implications for business. Not only does the framework explicitly call for integration of biodiversity and climate strategies, but also for the first time a UN biodiversity agreement includes sections on how businesses will report on their impacts and dependencies and how they will act on them. The framework also highlights the role of business in providing finance and other support for the implementation of ambitious targets to protect and restore the land, waters and oceans. Through 2023 and into 2024, we will learn more about how this will be implemented, and how business can contribute to a nature-positive future.
4. Leveraging innovation for sustainability goals
According to an IMD report, at any given time, we have at least one million green start-ups exploring new energy solutions. Also, we already have 47 climate unicorns worth more than $1bn.
As per this WEF report, “thanks to continual improvements in technology over the past decade, the cost of solar and wind power have fallen drastically, making renewables cheaper than fossil fuels. According to some estimates, the switch from fossil fuels to renewable energy will help economies save $12 trillion globally by 2050.”
In the jewelry industry, we know how technology disruption in areas such as blockchain and AI has now become crucial to fostering ethical sourcing practices, sustainable supply chains, and transparency. Examples of this abound: the Aura Blockchain Consortium, a collaboration between LVMH, Richemont and the Prada Group, the technology company Everledger, and Tracr from De Beers Group being just a few notable ones.
5. Collaboration to build momentum on circular economies
Multi-stakeholder partnerships between the public and private sectors are paramount in accelerating progress towards the building of circular economies. However, for collaboration to be truly effective, it needs to break past the constraints of power. An example here is intergenerational collaboration. The youth and children of today are the biggest “climate stakeholders” in that they will inherit the challenges and the risks, and hopefully the solutions, that past generations have created and set in motion. Their voices need to be heard, even when (and especially when) they seem unconventional or new to the powers that be. This includes giving young people power over decisions that impact their futures.
The World Economic Forum (WEF) Annual Meeting, which took place in Davos, Switzerland, from 16 to 20 January 2023, had the theme “Cooperation in a Fragmented World” — emphasizing the importance of a global conversation where no one is left behind.
2023 will be a crucial year for testing the solidity of collaborations. One example here is building on the agreement by 175 countries in 2022 to establish a legally binding treaty to end plastic pollution. The Intergovernmental Negotiating Committee (INC) will hold workshops over the course of 2023, with the aim of adopting the treaty in 2024. Another is the EU taxonomy on sustainable activities, which will start to include the circular economy for the first time from January 1, 2023, thus accelerating the incorporation of circularity in the investment community’s scrutiny of corporate activities.
6. Increasing focus on climate adaptation
One of the other themes emerging out of Davos this year was the need to increase focus on climate adaptation. This was also a dominant topic at the COP27 meetings last year. The thesis here is that even if we meet current goals, a significant portion of the changes in climate cycles that lead to changing weather patterns and extreme weather events are irreversible and, in essence, baked in. Also, the goal to keep global warming at less than 1.5 degrees Celsius above pre-industrial levels seems increasingly out of reach.
Hence, governments and businesses need to invest in their preparedness for these extreme events and natural disasters. These investments, or the lack thereof, have longstanding implications on business, politics, and natural ecosystems. This is especially the case in developing countries, which bear a disproportionate brunt of climate risk. It needs to be said that there are both synergies and trade-offs between climate-change mitigation and climate adaptation, the former being essential to achieving longer-term goals.
This is a position backed by WEF’s latest Global Risks Report, which highlights failed climate adaptation second only to failed emissions reduction as the biggest global risk when looking ten years out.
In the words of Nelson Mandela: “It is in your hands to make a better world for all who live in it.”
With that, I invite you to embrace, even amid uncertainty, hope, a collaborative spirit, and a renewed focus on the goals we have set for ourselves and for the planet to create a better world for all.
Image: Iris Van der Veken.