Sustainability Trends to Watch in 2024
Sustainability is rapidly evolving, with 2024 poised to be an important year in the fight against climate change and environmental degradation.
Businesses, governments, and individuals are amplifying investments and actions to drive the transition towards a climate-resilient and sustainable future. Here are the key trends that will shape our approach to sustainability in the coming year.
1. Acceleration of Disclosures Preparation
The preparation of disclosures, especially with the Corporate Sustainability Reporting Directive (CSRD) in the EU and the Securities and Exchange Commission (SEC) in the U.S., will accelerate in 2024.
CSRD expands the range of companies required to disclose sustainability information, influencing sustainable strategies. The SEC’s proposed rules on climate-related disclosures will increase accountability, signaling a shift from voluntary to standardized reporting.
Businesses need to prepare for data collection and reporting using ESG data management tools and services, ensuring compliance with these directives.
2. Climate Risk Management
In 2024, climate risk management is set to be integrated into the core risk management strategies of forward-thinking organizations.
Companies will adopt comprehensive approaches, incorporating climate scenario analysis and stress testing to understand potential impacts on their businesses under different global warming scenarios.
This not only reduces risk but also unlocks new opportunities for innovation and resilience. The trend indicates an increase in the sale of insurance products tailored to climate risks.
3. Scope 3 Emissions Scrutiny
The scrutiny of Scope 3 emissions, indirect emissions in a company’s value chain, will intensify in 2024. Investors, customers, and regulatory bodies are pushing companies not only to report but actively reduce these emissions.
This trend demands extensive data collection and engagement with suppliers and partners to drive sustainability improvements across industries. The increasing demand for decarbonization across supply chains is fostering innovation in product design, logistics, and materials.
4. The Rise of Climate Fintech
Climate fintech, the fusion of financial technology with sustainability principles, is becoming a vital funding stream for transitioning to a greener economy.
This surge is important for channeling investments toward renewable energy, carbon capture, and overall environmental and social sustainability. Climate fintech firms offer eco-friendly investment opportunities such as green bonds and responsible investment funds, driven by investors and government support.
Venture capital firms are recognizing their potential, providing not just funds but critical strategic guidance. Incorporating big data and AI enhances risk assessment, ensuring more robust and future-proof investment strategies.
5. AI for Sustainability
The application of Artificial Intelligence for sustainability is expected to expand significantly in 2024. AI can optimize resource use, improve energy efficiency, and contribute to significant reductions in environmental impact.
Predictive capabilities are utilized in biodiversity conservation, aiding in predicting poaching threats and managing protected areas.
AI simplifies ESG data management, important for companies facing the daunting task of collecting and analyzing vast amounts of ESG data for compliance.
ESG Trends to Watch in 2024
ESG (Environmental, Social, and Governance) trends are important for companies aiming to implement greater sustainability. ESG factors are becoming a common way to measure a company’s efforts toward sustainability. Here are the trends to watch in 2024.
1. Multiple New Requirements
Transparency will be enhanced in 2024 with new reporting requirements and disclosures, making sustainability more common. Companies may voluntarily draft ESG reports to stay ahead of future trends, ensuring honesty and adherence to jurisdictional requirements.
2. Rapid Uptake in Mandatory Disclosures
The year 2024 will witness a rapid uptake in mandatory disclosures. Regulatory rulings and directives will force companies to meet sustainability measurement and reporting requirements. The CSRD in Europe and the SEC’s climate disclosure rule in the U.S. will bring more companies under new regulations, making ESG data collection and reporting a serious endeavour.
3. More Sustainability Reporting for Smaller Companies
Sustainability reporting will not only target large corporations but also extend to smaller businesses. New reporting requirements will require private businesses to disclose emissions and environmental impact, encouraging more companies to disclose their environmental impact.
4. Supply Chain Transparency
Supply chain transparency gains new significance in 2024, driven by updated reporting requirements like the CSRD and the California Climate Accountability Package. The focus on supply chains includes developing new frameworks by the International Sustainability Standards Board (ISSB).
5. No More Greenwashing
2024 aims to combat greenwashing more effectively. The EU has agreed to ban greenwashing, setting rules for misleading advertisements. Companies will reorganize marketing tactics to avoid greenwashing and ensure compliance.
All in All
2024 will be a defining year for sustainability and ESG, marked by mandatory disclosures, the fight against greenwashing, deeper integration with financial strategies, and an increased emphasis on supply chain transparency.
Sustainability reporting will extend beyond public enterprises, including private companies, and become an integral part of business strategy. ESG is not merely compliance; it is an opportunity to redesign business models for a more sustainable future.
As the year unfolds, businesses must embrace these trends to contribute positively to the global sustainability agenda.
