Sustainability
The landscape of sustainability is evolving rapidly. 2024 will be a pivotal year in the fight against climate change and environmental degradation.
Companies, governments and individuals will be stepping up investments and actions to drive the transition to a climate-resilient and sustainable future. Five sustainability trends stand out and have potential to shape the approach to sustainability in 2024 and beyond.
Corporate Sustainability Reporting Directive
The acceleration of disclosure preparation, particularly considering the CSRD, is inevitable in 2024. More companies than ever are now obliged to disclose detailed sustainability information as the CSRD’s mandate expands. This includes how their businesses impact the environment and social issues as well as how they manage the associated risks and opportunities.
Companies must prepare to collect, manage and report the required data on the various dimensions of sustainability, with the increasing use of environmental, social and governance (ESG) data management, reporting tools and services to help them comply with these guidelines.
Scope 3 Emissions
Scope 3 emissions are expected to come under even greater scrutiny in 2024 as stakeholders demand more transparency and action on climate change. Investors, customers and regulators are pushing companies to not only report on their Scope 3 emissions but to actively reduce them. This trend requires robust data collection and collaboration with suppliers and partners to achieve change across the value chain.
Scope 3 are indirect emissions generated in a company’s value chain. They are often the largest source of a company’s carbon footprint. Unlike Scope 1 and 2, which the company directly controls, Scope 3 includes all other indirect emissions from activities such as business travel, procurement, waste and use of products sold.
Climate Risk Management
The increasing frequency of extreme weather events and the ongoing need to transition to a low-carbon economy pose significant risks to assets, investments and operations across the value chain. Companies that fail to prepare for these events can expect severe disruption.
In 2024, forward-looking companies are likely to integrate climate risk management into their core risk management strategies. Companies are expected to adopt more comprehensive approaches that incorporate climate change analyses and stress testing to understand the potential impact on their business under different global warming scenarios. This will reduce risk and open new opportunities for innovation and resilience.
Climate Fintech
Climate fintech combines financial technology with the principles of sustainability, creating an important funding stream for the transition to a greener economy. This rise of climate fintech is critical to channeling investment into renewable energy, carbon capture and overall environmental and social sustainability.
Climate fintech firms offer a range of green investment opportunities, such as green bonds, responsible investment funds and financial support for projects that reduce carbon emissions. The attraction of climate fintech lies in the ability to turn environmental awareness into profit. This sector is being fueled by investors and government support in the form of incentives and forward-looking policies.
Sustainable Artificial Intelligence
Artificial intelligence is a powerful tool that can be used to tackle complex sustainability problems, and the application of AI for sustainability is expected to increase significantly in 2024. AI can optimize resource use and improve energy efficiency, all of which can contribute to a significant reduction in environmental impact.
One area where AI could be especially useful is simplifying and streamlining ESG data collection and management. With increasing sustainability disclosure requirements, companies are faced with the daunting task of collecting and analyzing large amounts of ESG data.
John Lennon began writing the composition “Now and Then” in 1977, but he could not finish it because of his death in 1980. After a failed attempt to complete the production in 1995, the remaining two Beatles finally released the song in late 2023. The lyrics, “And now and then, if we must start again” unintentionally describe the numerous attempts over four decades to finally complete it.
Corporations also often need several attempts and changes in business practice on their sustainability journeys. Every now and then, they need a restart. However, the five sustainability trends for 2024 do not only represent changes in business practice but also a collective movement toward a more resilient world.
As these trends continue to unfold, organizations must understand, embrace and leverage these developments to secure their future and make a positive contribution to the global sustainability agenda.
STAY SuSTAYnable!
Apu Gosalia is a sustainability expert. He can be reached at apurva.gosalia@web.de.