As ESG practices and disclosures become crucial to a companies' public image, their investors and their overall success, 2024 looks to be a year of even further regulations and a ramping up of ESG policies.
Now, more than ever, it is important for organisations to prepare for ESG in 2024, and understand the trends we could be seeing in the future sustainability landscape.
But first, what was ESG like in 2023?
ESG in 2023
In 2023, organisations all over the world faced a turbulent landscape marked by a cost of living crisis, inflation, supply chain disruptions, and recessions fears. Amid this uncertainty, Environmental, Social and Governance practices became even more crucial for companies to undertake.
2023 was a turning point for ESG and emphasised the need for proactive ESG initiatives. ESG trends have been around for the past few years but there were some clear trends in 2023 that are important to remember going into 2024.
Sustainable Finance: Companies focusing on both financial revenue and the environment in their investments has gained momentum in the last year.
Supply Chain Resilience: There was a significant focus on supply chain resilience as an ESG trend. This was emphasised by the need to develop a supply chain that can maintain its efficiency in times of crisis, for example in a global pandemic.
Transparency and Ethical Practices: In order to steer clear of greenwashing accusations companies are putting in more effort to promote transparency and prioritise ethical business and governance practices.
The ESG landscape is continuing to evolve. With ESG maintaining its priority on the agenda, it is important for organisations to understand what is in store for the future of ESG, and what trends might be seen in 2024.
ESG Trends in 2024
Heading into 2024, there are both old and new ESG trends to be mindful of, especially for companies seeking to implement greater sustainability.
It is already shaping up to be a watermark year for ESG regulation with years of preparation finally ramping into action. This is particularly true in the EU, where the emphasis is now shifting to implementation after the introduction of numerous regulations over the last three years.
Here are the top trends to watch out for in 2024.
1. Mandatory Requirements and Transparency
The call for improved corporate transparency reached its peak in 2023, specifically in relation to environmental impact and the risks associated with the climate crisis.
Enhancing transparency has always been crucial for promoting sustainability, but in 2024, there will be a stronger push to ensure this.
This will be achieved through new reporting requirements and disclosures that will help to encourage regular ESG reporting around the globe. As a result of more mandatory regulations coming into force it is likely even those not affected by mandatory regulations will begin voluntarily reporting in order to stay one step ahead.
Some are even referring to 2024 as ‘The Year of Compliance’, emphasising the focus on greater accountability and transparency from companies in the coming year.
The CSRD, the EU’s Corporate Sustainability Reporting Directive is an example of the upcoming regulations that will impact the ESG landscape. It marks a pivotal moment in ESG reporting, as it expands the scope of reporting obligations and makes it mandatory for a broader range of companies in the long term.
This directive, an improvement and update on the previous NFRD, is designed to encourage companies to develop more responsible and transparent approaches to business. For the first time, the European Commission has defined a standardised reporting framework for non-financial data.
2. Further Focus on Greenwashing
Greenwashing refers to when organisations inaccurately market that their products and services are more sustainable than they actually are, and this will be fought harder against in 2024.
ESG teams will need to prioritise compliance and collaborate closely with communications and marketing teams to ensure that any environmental messaging aligns with regulations.
By 2026, the E.U. will have outright banned greenwashing and climate-neutral claims, meaning that for companies in 2024 there will be a lot of time spent on how to evade greenwashing moving forward.
3. Supply Chains and Scope 3 Emissions
2024 will see companies place more emphasis on their supply chains, both in Scope 3 disclosures and supply chain mapping. There will be a focus on establishing sustainable procurement policies and working with suppliers to improve environmental and social impact, as well as data collection.
Creating and maintaining a sustainable supply chain has always been a main feature in ESG trends and 2024 is no different. However, this trend will take on a new meaning with the implementation of the CSRD, which places the supply chain under further scrutiny.
Companies working to establish greater transparency and better ESG practices should evaluate their supply chain and work to reduce their overall emissions, in order to make compliance in 2024 easier.
Investors are growing more concerned with the ethical and sustainable factors of a corporation's supply chain. This includes responsibly acquiring any necessary materials, implementing fair labour policies, and reducing environmental damage throughout the entire supply chain.
4. Reporting Expanding to both Private Businesses and SMEs
In 2024, the focus of ESG trends will extend beyond just holding large public companies accountable, but will also include addressing the environmental impact of small and private businesses as well.
This is partially due to the recent CSRD framework, which mandates that private businesses disclose their emissions and environmental impact as well. As well as this, the directive will also require smaller companies to begin reporting their ESG practices, although this will come later into effect than 2024.
Still, this means that a lot of organisations should consider ESG reporting now more than ever, as no matter the size of your company, mandatory requirements are coming soon.
5. Technology and ESG Reporting Software
In recent years, the way investors assess ESG risks and opportunities has been transformed by the integration of data analytics and technology. Advanced tools and platforms are becoming available, which help investors analyse large amounts of data and enable more informed decision-making.
This technology will play a crucial role in 2024, in enhancing both ESG reporting and transparency. More and more companies are embracing digital platforms to make their ESG reporting process more efficient. These digital reporting tools not only make it easier to gather and evaluate ESG data, but also enhance communication between companies and investors.
In the coming year, there may be additional ESG trends that come to the forefront, but for now, these are the trends that are expected to receive the most attention.
It is crucial to remember that ESG trends are not just a passing thing, but rather they are practical and successful strategies that can aid in organisational growth, transparency and compliance.
How Convene Can Help You With Your ESG Reporting in 2024
Here at Convene we want to make sure you have the right software that helps manage your ESG reporting, so you can face the uncertain future of ESG with certainty.
Here at Convene we have developed our own ESG reporting tool: Convene ESG.
Our aim is to alleviate some of the challenges of ESG data gathering, performance tracking, and reporting for ESG factors so organisations can move towards global sustainability and net zero.
Convene ESG can help you report on a range of existing standards including the TCFD, GRI, SRS, amongst a range of others.
It also has a built-in comparison feature, which allows you to compare against competitors' formatting of their publicly accessible reports. This will help your organisation develop the best results possible.
Convene ESG is designed to make the reporting process as easy as possible, meaning that you can anticipate changes in current ESG legislation, be ready to face the challenges of future regulations and fully integrate ESG practices into your company culture.
You can learn more about Convene ESG, and how we can help your organisation achieve your ESG goals, here.