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The Next Economy
Why 2023 Is (Finally) The Year of the Sustainability Pivot

Four key trends are converging this year to create a permanent shift toward sustainability across industries — with implications for tech innovation, the planet and companies that have yet to start their sustainability transformation.

Despite economic uncertainty, tech industry woes and a tightening VC market, money and talent are flowing into climate technology development at an unprecedented pace. This is accelerating progress and offering hope for meeting global decarbonization targets to mitigate temperature rise. We’re also seeing renewable energy solidifying its status as the “world’s cheapest source of energy.”‌

Why is all of this happening now, after many years of underinvestment in and debate about climate mitigation? Four key trends are converging this year to create a permanent shift toward sustainability across industries — with implications for tech innovation, the planet and companies that have yet to start their sustainability transformation.

4 trends driving the sustainability pivot

Workers seeking work with purpose

The first trend is a desire to make a positive impact and find meaningful work. The pandemic gave many of us more time to consider what we're doing with our lives and with our technology. During the Great Reshuffling, as many as 90 percent of people in the labor market “changed roles in some way” in response to the pandemic. Gallup data confirms that workplace engagement plummeted and stress surged during 2021 — with most workers saying “they don't find their work meaningful, don't think their lives are going well or don't feel hopeful about their future.”

Now, as the pandemic shifts from an acute crisis to a chronic issue, people are seeking work they feel has demonstrable value in the world.

Broader acceptance and understanding of climate change

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Another trend is widespread awareness of climate impacts. With more time during the pandemic to ponder our life paths, a lot of us also had the opportunity to pay closer attention to the effects of the ongoing climate crisis — many of which we’re experiencing firsthand. For example, the wildfire proliferation in the western US decimated many lives and properties; it also made the COVID situation worse for people living in areas polluted with smoke. Elsewhere, hurricanes are becoming more powerful and causing more damage through storm surges and flooding when they reach land.

What used to feel like an academic debate in the public sphere about climate change is now a conversation about what we’re going through today — and what we can urgently do to stop or slow the processes that are driving climate change. Consumers are reacting with more conscious purchasing behaviors, a willingness to pay a premium for more sustainable products, and votes for political candidates who promise to pursue climate solutions. Companies are responding, with increasingly bold climate commitments (including those from Microsoft and Google) and more Chief Sustainability Officers being hired in 2021 than the prior five years combined.

The Inflation Reduction Act

The desire for meaningful work and the growing concern over climate change are intersecting with a third trend: A massive investment by the US in climate technologies through the Inflation Reduction Act. The tens of billions in federal loans offered through various IRA programs are projected to result in hundreds of billions of dollars’ worth of investment by the private sector.

In particular, the IRA has accelerated the rate of investment in and development of carbon-capture and -removal technologies. For example, tech giants Google, Facebook, Stripe and Shopify recently partnered to form Frontier — a $925M fund for carbon removal.

Tech layoffs

The fourth trend fueling this year’s sustainability pivot is the reversal of the big tech hiring boom. Instead of drawing in most of the talent, now the traditional tech sector is undergoing rounds of layoffs and hiring freezes. Over 130,000 workers in US-based tech companies have been laid off in mass job cuts so far in 2023 — giving emerging climate tech innovators access to the kinds of engineering and project management talent that were “once thought un-poachable” from tech giants such as Twitter and Meta.

An urgent need for more climate tech deployment

This pivot is resulting in new and expanded use cases for a variety of climate-mitigation technologies. For example, carbon capture, utilization and storage (CCUS) tech prevents carbon from escaping industrial processes into the atmosphere, transforms it, and sequesters or eliminates it. CCUS has applications across energy-intensive domains including utilities, manufacturing, food production and food-waste management. Additionally, an increasing number of companies are pursuing direct air capture (DAC) and the associated carbon-credit market through a wide range of processes — from scaling natural carbon sinks such as kelp to chemical processes to scrubbing carbon straight from the air. Other technologies can help companies improve their operational efficiency and reduce their energy usage to reduce their carbon footprint; still others are behind new forms of renewable energy production and storage, as well as the growing electrification of vehicles ranging from bikes to 18-wheelers.

Climate tech innovations are happening at legacy companies such as fossil fuel producers, as well as at small startups. That’s crucial, because the International Energy Agency estimates that in order to reach net-zero carbon emissions globally by 2050, we need to be capturing 1,286 metric tonnes of carbon dioxide per year by 2030. Currently, we’re capturing about 45 metric tonnes per year.

Beyond carbon-capture initiatives for industry, the sustainability pivot also hinges on another goal: reducing the carbon footprint of basically every product and process. There are opportunities for companies to reduce the impact of existing products by creating circular pathways such as resale, refurbishment and recycling. Products in development must also be made as sustainable as possible, considering everything from their raw materials and manufacturing to transport, use and end of life. These improvements not only address consumer preferences for sustainable products, they create other kinds of business value. For example, Forrester lists enhanced innovation, employee retention, regulatory compliance and revenue growth among the benefits of optimizing for sustainability.

Pivoting toward a sustainable future

As exciting as these developments in the climate tech space are, the pivotal changes we’re seeing this year are just the beginning of a longer-term sustainability transformation. By 2045, annual investment into CCUS technology is projected to exceed $150 billion — and that’s just one domain within the array of climate technologies now on the market and in development. For employees, investors, business and governments, this shift to a focus on sustainability offers meaning, purpose, the potential for value creation and a healthier planet; this year’s trends are bringing together the awareness, talent and capital to make it happen. As a result, there’s never been a better time for organizations to lean into their sustainability goals and accelerate their progress toward them.