ESG Trends for 2022: Are Your Investments As Green As They Could Be?

Are your investments as green as they could be? Heading into 2022, here are what the experts are saying about ESG trends for the upcoming year.


Are Companies Achieving ESG Targets?

With mounting pressure on companies to set realistic, achievable ESG targets, the question remains on whether they are being met. For ESG to take off, companies need to use AI and Data science. Junta Nakai, VP and Global Industry Leader of Financial Services and Sustainability at Databricks gives his thoughts on what we can expect in 2022.

The best way to look at sustainability is through the prism of data and AI. Without data, there is no ESG, and without AI there is going to be no sustainability. In order for companies to do good as well as look good, lots of data, people and AI is required to do things such as curb carbon emissions, create a more ethical company or increase diversity and inclusion. Decarbonisation will be the single biggest use-case for data and AI over the next decade. The groundwork for this will be set in 2022. While this is not widely considered today, forward-thinking incumbents and start-ups will start laying out that vision and capitalising on being the first movers in 2022.

Data is the glue to embed sustainable thinking into the culture of an organisation. Sustainability is often a C-level led initiative, but if you go down to a plant manager and you say ‘what are you doing today to solve the issue?’ you’ll probably get a blank look. There is a gap that exists between the senior leaders and site leaders, and the only way to bridge that is through data and technology. If you can imagine a situation where the Chief Sustainability Officer of a company comes into the office in London for example, and, sees that the nitrogen consumption in a plant in Vietnam is three standard deviations higher than the normal, then he or she can go and affect change without being physically present at the site. That is a really practical example of how data can really cut emissions at the source, regardless of where that is.


Openness & Simplicity

For financial firms to fully harness the power of data and AI, they must embrace “Openness” and “Simplicity”. By embracing open source software, for example, organisations can achieve both. They then equip themselves with the best of what modern technology has to offer. The open banking movement will be a pivotal moment in this regard. This shift will mean more rapid acceleration of innovation, faster launches of new business models and the creation of massive value for disruptors and adapters. It will likely bring the same dynamism of the software industry to financial services.


More generally, we’re likely to see the ‘Tesla-fication’ of Financial Services. This is when one newcomer/disruptor quickly becomes bigger than all other established financial services firms. Who this game changing company will be, will start to become evident in 2022.