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5 ESG Topics to Watch in 2024

ESG and sustainability have been at the forefront of the business world’s attention for the last few years, and this isn’t likely to change in 2024.

The global sustainability landscape continues to develop via technological advancements, policy reforms, societal expectations, and government regulations – evolutions which will continue to shape the corporate world and investment strategies throughout 2024 and beyond.

5 ESG and sustainability topics that industry experts see gaining traction in 2024

Private firms increasingly conducting sustainability reporting

While large public corporations have been under the spotlight regarding ESG and sustainability disclosures, private companies have traditionally escaped needing to conform to the same requirements.

The likely introduction of Scope 3 emissions rules by the US Securities and Exchange Commission (SEC) changes this, requiring reporting companies to monitor all indirect emissions that occur throughout the supply chain and among third-party vendors.

Companies in the supply chain, either public or private, will now need to meet the standards and/or initiatives set by organizations legally required to report according to Scope 3 legislation.

“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.” – Thomson Reuters

A growing focus on supply chain ethics and sustainability

In its 2024 Trends to Watch paper, MSCI states that “New policies are making companies explicitly responsible for what happens all the way back to the source — and may impose a hefty penalty on those found lacking.”

Companies need to conduct proper due diligence with regards to the policies and activities of their supply chain business partners across a wide range of measures.

These include human labor standards and appropriate anti-slavery stances, the prioritization of ethical and sustainable raw materials sourcing, and a commitment to reducing and minimizing the environmental impacts incurred via business operations.

Continued attention on nature and biodiversity investment

For the second year running, experts indicate that nature investment and disclosures will be at the forefront of ESG matters over the next year. The vulnerability of earth’s biodiversity is never far from the headlines, and it seems companies and investors are taking notice.

The Task Force on Nature-related Financial Disclosures (TNFD) finalized its disclosure recommendations in September, which will assist companies, financial institutions, and other investors to integrate nature-related concerns into their financial and business decisions, as well as anticipate upcoming regulatory shifts in 2024 and beyond.

The TNFD disclosure recommendations are designed to allow for comparable reporting worldwide, improving transparency and accountability, and encouraging environmentally-friendly actions

Greenwashing under the microscope

ESG regulations, standards, and frameworks are becoming increasingly aligned and standardized with legislation on ESG-related disclosures, making it more difficult for companies to customize their disclosures and reporting to suit their own purposes, and potentially hide negative sustainability information from their investors and the public.

For example, from 2026 onward the EU will ban generic environmental claims and other misleading marketing tricks, and only sustainability labels based on approved certification schemes or established by public authorities will be allowed – a move aimed at stopping misleading ‘green’ claims and ensuring transparency.

As the fight against greenwashing ramps up via clearer legal definitions and more punitive repercussions, expect increasing numbers of businesses to begin to take their sustainability disclosures and reporting more seriously.

Companies will likely amend their processes around advertising, marketing, and sales to steer clear of potentially falling afoul of greenwashing legislation and regulations, not to mention triggering negative customer sentiment.

Regulations and standards gain prominence – and adherence

Sustainability regulations will continue to make headlines this year as the pressure for companies to comply intensifies.

The International Sustainability Standards Board (ISSB) issued its inaugural standards (IFRS S1 and IFRS S2) in mid-2023, and these have subsequently come into effect (January 2024).

Designed to usher in a new era of sustainability-related disclosures in capital markets worldwide, these standards are expected to feature prominently throughout 2024 as companies work out how to conform and adjust their disclosure and reporting activities accordingly.

In the US the delayed Securities and Exchange Commission (SEC) climate disclosure rule looks to finally pass in 2024, while north of the border, Canada is set to require eligible banks, insurance companies, and federally regulated financial institutions to publish climate-related risks and disclosures aligned with the Task Force on Climate-Related Financial Disclosures (TCFD) framework.

Canada is also addressing forced labor in Canadian supply chains via Bill S-211 An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff, in force since 1 January 2024.

Over in Europe, firms will need to continue to adapt to the European Sustainability Reporting Standards for disclosures in the EU under the Corporate Sustainability Reporting Directive (CSRD), and take into account carbon taxes such as the Carbon Border Adjustment Mechanism (CBAM).

In summary, 2024 is predicted to continue a shift towards sustainability as private firms increasingly embrace transparency via ESG reporting, and further emphasis is placed on ethical and sustainable practices within supply chains.

As sustainability regulations gain prominence and greenwashing becomes scrutinized more closely, it is imperative for organizations to improve the efficiency, accuracy, and consistency of their sustainability-related data collection, and communicate their disclosures clearly and effectively. The IsoMetrix Lumina ESG software platform enables companies to streamline their

ESG and sustainability program management and reporting accordingly. Connect with our specialists today, to learn how we can support you.

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