Throughout 2023, the corporate world witnessed several significant ESG and sustainability milestones – and businesses had to shift to remain compliant and financially resilient. Significant standards evolved, as the CSRD came into force and the ISSB took over TCFD, while uncertainty prevailed in the US as the SEC could not make its mind up about climate disclosures.
As CSOs develop their ESG and sustainability strategies for 2024, confronting geopolitical uncertainties and slow economic growth, they should seek to understand and incorporate the following five trends:
- CFOs becoming integral to ESG compliance, so CSOs will need to align with finance teams. With ESG responsibilities increasingly distributed across the firm, CSOs must create a common language and value proposition that resonates with all key stakeholders. This is especially true of the CFO, who will have increasingly heavy involvement in achieving compliance as integrated reporting moves from voluntary to mandatory.
- Disclosing in line with sector-specific reporting frameworks, as well as the CSRD and ISSB. A longer-term trend will be reporting to sector-specific standards under general frameworks like the ESRS and ISSB, but these structures are not yet in place – and are unlikely to develop fully in 2024. Instead, expect to report under sector-specific frameworks, such as GRESB and the PRI, to meet information needs, alongside wider mandated regulations.
- Utilizing product stewardship software to deal with stakeholder expectations. Pressure to be transparent in ESG practices will only grow in 2024, as too will the scope of product sustainability disclosures. In the face of these increasing complexities, automated solutions will provide a way to effectively measure, manage and disclose product-level sustainability information. Verdantix predicts that over a quarter of organizations will invest in product stewardship software amid growing customer and regulatory pressure.
- Greater integration of ESG considerations into decisions across the supply chain. As compliance and reputational risks mount, decision-makers will need to include ESG in procurement processes and supplier engagement. Regulations targeting supply chain transparency will push firms to invest in digital tools for data-sharing and supplier education.
- Growing risk of litigation on social issues. The crackdown on human rights abuses in supply chains will garner more momentum in 2024, and we will see major lawsuits against firms in Canada, the UK and the US. By the end of the year, at least five of the Fortune Global 100 will face legal scrutiny for human rights abuses in supply chains. To mitigate this risk, CSOs should investigate how software solutions can be leveraged to manage supply chain information.
For more considerations to inform ESG and sustainability strategies in 2024, please read Market Insight: 10 Predictions For ESG And Sustainability In 2024 And Beyond.
