5 predictions for ESG in 2024: The year ESG emerged from fad to essential business

 

In 2024, businesses are expected to embrace ESG criteria not just for compliance or risk management, but as a chance to fundamentally transform their business models with the full understanding and acceptance of the need to account for increasingly complex external risks that may be occurring simultaneously.

1. ESG gets f(in)ancy

The amalgamation of sustainability, finance, and business strategy reflects growing recognition that sustainability and financial stability are not opposing goals but are fundamentally intertwined. As a result, closer integration of finances and sustainability will grow as a priority in the domain of CFOs, financial controllers, and corporate finance and accounting professionals.

2. ESG goes private

Sustainability reporting will expand to include private firms because of Scope 3 rules, which require reporting companies to monitor all indirect emissions that occur throughout the supply chain and among third-party vendors, particularly as the result of California and European Union regulations. This means that regardless of public disclosure, private firms of all sizes that supply to major public or private corporations will probably need to initiate or improve their greenhouse gas accounting methods.

4. Biodiversity will emerge as a mainstream ESG topic

While the topic of biodiversity loss was gaining steam last year, that trend continues. Indeed, nature and land use were included as a 2030 global deforestation goal at the global environmental conference Cop28 in December. In addition, investment funds that focus on biodiversity and nature are rapidly increasing in number and assets, as evidenced by a four-fold growth in assets under management in European funds dedicated to biodiversity.

5. Supply chains at the center of the “E” and “S”

In the coming year, we are likely to see the integration of environmental and social parts of ESG — the E and the S — converge on how company supply chains can impact both water and nature because of TNFD’s inclusion of nature-related reporting in relation to both upstream and downstream supply chains.

6. Increase sophistication of greenwashing claims

Moving forward into 2024 and beyond, the notion of greenwashing — a term frequently employed to call out insufficient or misleading sustainability efforts and disclosures by corporations — is expected to be more clearly defined legally and carry weightier repercussions.

Conclusion

This shift will make mainstream a thorough revision of design processes, procurement strategies, financial management, and marketing and communication practices across a number of ESG-related issues, but opponents will remain vocal. While at the same time, ESG will transition from being a peripheral element to a central component of overall corporate business strategies.

 

(Source : https://www.thomsonreuters.com/en-us/posts/esg/esg-predictions-2024/ )