Interested? Contact us now
In order to contact us please fill the form on the right or directly email us at the address below
sales@senecaesg.comby
Alexander Olding
- March 1, 2024
In the ever-evolving landscape of Environmental, Social, and Governance (ESG) considerations, the year 2024 is poised to mark a transformative chapter. As the global community grapples with unprecedented challenges, businesses […]
In the ever-evolving landscape of Environmental, Social, and Governance (ESG) considerations, the year 2024 is poised to mark a transformative chapter. As the global community grapples with unprecedented challenges, businesses find themselves at a crucial juncture, compelled to reassess and reshape their strategies through the lens of sustainability. The coming year promises to be a period of profound shifts, with ESG principles taking center stage and influencing corporate decisions in unprecedented ways.
ESG, once viewed as a niche concern, has now become a central tenet of corporate responsibility and investment strategy. As we delve into the intricate interplay between environmental conservation, societal impact, and effective governance, it becomes apparent that 2024 will be a year of heightened scrutiny and increased expectations for businesses worldwide.
This article explores ten key trends that are set to define the ESG landscape in 2024. From the imperative of achieving net-zero emissions to the intricate dynamics of digitalization and ESG, and from the evolving climate disclosure norms to the critical aspects of human rights and environmental due diligence, each trend holds the potential to reshape industries and redefine corporate responsibilities.
It is essential to recognize that the intertwining challenges and opportunities within these trends are not isolated; instead, they form a complex tapestry that demands a holistic approach. In an era where sustainability is no longer a mere buzzword but a strategic imperative, understanding and navigating these trends will be pivotal for organizations aiming not only to survive but to thrive in an era defined by conscious business practices.
Join us in this comprehensive exploration of the ESG landscape, where we unravel the intricacies of each trend, analyze their implications, and envision the transformative potential they carry. As we navigate through the ten pivotal trends shaping the ESG narrative in 2024, let us collectively envision a future where businesses contribute meaningfully to global sustainability while embracing innovation and resilience.
Ten Pivotal Trends
- Net zero transition
The COP28 Presidency is dedicated to encouraging a substantial number of corporate net-zero commitments and transition plans, with a particular focus on under-represented regions and sectors. Moreover, it emphasizes the crucial significance of ensuring the credibility and accountability of net-zero emissions pledges made by non-party stakeholders. [1]
The momentum on getting to net zero is likely to continue into 2024. Although we expect the main focus this year to be on implementation, there will nonetheless continue to be some new legislative, regulatory and policy developments, in particular across all aspects of the energy transition.
- Digitalisation and ESG
Digital transformation and ESG stand out as leading and top-priority subjects within the global business community. The former revolves around the integration of technology across the entire value chain to generate quicker, more intelligent, and more favorable business results. Meanwhile, the latter underscores the broader value that a business is anticipated to generate for its stakeholders, considering environmental, social, and governance aspects. These dual objectives can, and indeed should, complement each other seamlessly in today’s stakeholder-driven economy. [2]
- Climate and sustainability disclosure regimes
In 2023, notable advancements unfolded in the ESG disclosure arena, carrying significant implications into 2024:
The International Sustainability Standards Board (ISSB) marked a milestone with the release of the initial two global sustainability disclosure standards. [3]
The endorsement of the European Corporate Sustainability Directive (CSRD) and the establishment of the European Sustainability Reporting Standards (ESRS) further shaped the evolving landscape [4].
The Taskforce on Nature-related Financial Disclosures (TNFD) concluded the year by publishing its ultimate recommendations on a framework designed to recognize, address, and divulge issues related to nature. [5]
- Human rights and environmental due diligence
Several EU member states, including France, Germany, and the Netherlands, have independently formulated their national supply chain due diligence frameworks. This diversity adds an additional layer of intricacy when the EU-wide Corporate Sustainability Due Diligence Directive (CSDDD) is required to be transposed into national legislation. Furthermore, the EU has distinct due diligence regulations for specific commodities like batteries, conflict minerals, and, more recently, commodities linked to deforestation (such as cattle, cocoa, coffee, oil palm, rubber, soya, and wood, along with derived products) through the newly introduced EU Deforestation Regulation. This regulation is scheduled to commence implementation later in 2024, with potential impacts on in-scope commodities produced or harvested from June 2023. [6]
- Voluntary carbon market
The voluntary carbon market (VCM) is at a crossroads. With new integrity guidelines in place in 2024, we will be watching how VCM project developers respond and how buyers drive demand for higher-quality carbon credits, both of which will be critical to the market’s viability. [7]
- Greenwashing scrutiny and ESG litigation
In 2023, “Greenwashing” emerged as a prominent issue, prompting regulatory and activist responses across various jurisdictions. [9] Heightened concerns arose that consumers and investors faced potential deception through marketing efforts exaggerating the green or sustainability attributes of products or investments, often involving an excessive reliance on carbon offsets. Regulatory bodies in advertising, consumer protection, and finance underscored the significance of delivering well-founded and impartial information in marketing and disclosures. It was emphasized that adopting a substantiated and balanced approach is crucial, and resorting to “greenhushing” is not a viable solution.
- Diversity, equity and inclusion (DEI)
Diversity, equity, and inclusion (DEI) remain prominent within the social dimension of ESG. However, for multinational employers, adapting to the dynamic evolution of the diversity landscape can prove challenging. Striving to formulate comprehensive global strategies that align with business objectives, comply with local laws, and account for distinct regional priorities presents a complex task. On a local scale, regulations overseeing DEI may struggle to keep pace with swiftly evolving societal and cultural expectations. The global pace of change is not uniform across all regions, further complicating the pursuit of meaningful and harmonized approaches. [10]
- Plastic circular economy
A global treaty to end plastic pollution is set to be finalized by the end of 2024 with implications for the full life cycle of plastics, including production, design and disposal. [11] Past initiatives, such as the New Plastics Economy Global Commitment, have attempted to rein in plastic pollution. But the treaty, if ratified, would mark the first legally binding international effort. [12]
- Biodiversity
The role of data and technology underpins many of the trends we are watching in 2024. The 16th meeting of the Conference of the Parties (COP) to the Convention on Biological Diversity (CBD) will convene in October – November 2024. The 11th Meeting of the Conference of the Parties serving as the Meeting of the Parties (MOP) to the Cartagena Protocol on Biosafety (CP-MOP-11) and the fifth MOP to the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of the Benefits Arising from their Utilization (NP-MOP-5) will also convene.[13]
- Politicized environment around ESG
In 2019, the Business Roundtable, comprising CEOs of major U.S. companies, redefined the corporate purpose through a public statement endorsed by 181 CEOs. The declaration emphasized the commitment of corporate leaders to operate their companies in a manner that serves the interests of all stakeholders. This includes customers, employees, suppliers, local communities, and shareholders.[14] ESG will remain a partisan topic this coming year. Companies will need to remain cautious about how they discuss sustainability externally amid presidential and congressional elections and expectations for an increase in pro- and anti-ESG legislation in the United States, and in the wake of 50 countries and regional bodies experiencing elections in 2024.
2024 and beyond
Contemporary expectations on businesses are escalating, with sustainability becoming central to corporate decision-making. In 2024, the ESG landscape exhibits multiple dynamic trends that not only shape the business environment but also propel the global sustainable development agenda. As more companies adopt proactive sustainable practices, we witness the rise of a business world more focused on environmental, social, and corporate governance considerations.
Firstly, achieving net-zero transition has become an increasingly urgent task for companies, and the integration of digitization with ESG unveils new business opportunities. The enhancement of transparency and disclosure requirements has led to the maturation of climate and sustainability reporting standards. Simultaneously, human rights and environmental due diligence have become standard business practices, emphasizing corporate responsibility within global supply chains. The emergence of voluntary carbon markets provides additional avenues for companies to achieve net-zero goals.
However, these efforts entail companies facing the risks of “greenwashing” scrutiny and ESG litigation. Diversity, equity, and inclusion (DEI) remain at the forefront of the social aspect of ESG. For global employers, keeping pace with the evolving diversity landscape can be challenging as they strive to develop meaningful global strategies aligned with business objectives while complying with local laws and addressing regional variations in focus.
References:
[1] https://www.cop28.com/en/net-zero-accountability-charter
[2] https://www.weforum.org/agenda/2023/01/digital-transformation-new-it-esg-davos-23/
[3] https://www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/
[4] https://watershed.com/platform/climate-disclosures/
[6] https://sustainablefutures.linklaters.com/post/102ivak/eu-political-agreement-reached-on-the-csddd
[7] https://carboncredits.com/what-is-the-voluntary-carbon-market/
[12] https://www.unep.org/new-plastics-economy-global-commitment
[13] https://sdg.iisd.org/events/un-biodiversity-conference-cbd-cop-16/
Start Using The Seneca ESG Toolkit Today
Monitor ESG performance in portfolios, create your own ESG frameworks, and make better informed business decisions.
