2023 saw several challenges on the ESG agenda from rising anti ESG sentiment, increased focus on corporate greenwashing and a stalling EGS legislative landscape. But as we look forward to 2024 it looks set to be a very busy year with macro trends around nature, climate finance, supply chains continuing to dominate the agenda.
For many businesses navigating the ESG world may feel overwhelming and this year to help our customers, we will be publishing our BayNel Steer every month. It will be a deep dive into one issue and what it means for your business.
To start the series, we have highlighted our thoughts on a range of ESG trends which may play out in the year ahead.
Sidelines to Mainstream
Since TCFD we have seen a step change in companies thinking about the effects of climate change scenarios on their financial outcomes. Sustainability and the long-term financial stability of a company should not be conflicting goals. ESG must extend beyond the ESG teams to fully intertwine with the functions of financial, procurement, HR, and corporate strategy. As we move into 2024, we will continue to see much closer integration of sustainability and these functions. Without it, sustainability will always remain as a sustainability function issue.
Voluntary to Mandatory
2024 will be the year of compliance as the era of inconsistent, voluntary disclosures give way to mandatory reporting. Whether it be the International Sustainability Standards Board or Corporate Sustainability Reporting Directive the changes will shift how companies report their emissions impact both organisationally and the products and services they deliver. This is not just about compliance but more importantly enabling stakeholders like investors to understand your exposure to risk and the long-term sustainability of your business.
Not just a big business issue
In 2023, many businesses got to grips with the new reporting requirements, legislation, and Scope 3 emissions. During the year, we began to see a real push by companies requiring their supply chains to set sustainability strategies and targets and we supported several companies on this. This year will see a further push on companies supply chains with many more businesses initiating or improving their current sustainability position.
Shift from E to S
Social issues in ESG have been living in the shadow of environment in the past couple of years but as we progress in 2024 there is increasing realisation of the interconnectedness of environment and social issues and that many of the complex challenges we face cannot be achieved without people. This includes everyone from employees, customers, suppliers, and wider communities. We will increasingly see stakeholders recognising the value of people and broad issues such as health and wellbeing, sustainable food, EDI, labour practices and community impact.
AI, Machine Learning and ESG
The transformative potential of AI and Machine Learning in ESG brings both opportunities and risks. From AI driven climate models, optimizing energy consumption through to promoting inclusivity, fairness and ethical behaviour and improving governance through automation, AI has the potential to offer significant benefits. However, the issues of ethics will intensify in 2024 with greater concerns on privacy, security, and bias.
And finally, this will be a year of politics….
The elections in the UK, US and beyond will be a closely watched affair in 2024 especially in relation to ESG policies. These elections will determine the course of ESG in the second half of this decade.
2024 sets to be an interesting year ahead with ESG dominating businesses and making the role of the ESG professional even more interesting and busy! As a specialist ESG/Sustainability consultancy operating across manufacturing, pharmaceutical, infrastructure, tourism and built environment, we help businesses of all sizes. If you would like to chat about any ESG/Sustainability support, please reach out.