Sustainability is now on the board of directors of many organizations, with new regulations, economic forces, and rising consumer sentiment requiring executives to take more influential actions towards improving environmental performance. This is a level challenge.
Case in point: According to a 2023 study by the Nasdaq Center for Board Excellence and WTW, 75% of board members worldwide believe that a consistent environmental, social, and governance (ESG) strategy leads to sustainable organizational value and stronger financials. I agreed that it would help create results.
A variety of trends are increasing organizational interest in sustainability. Here the expert highlighted his 10 environmental sustainability trends for 2024 that will shape corporate behavior.
1. More realistic sustainability goals
Kristin Moyer, CEO and distinguished VP analyst for Gartner's Digital Business Leaders practice, said many organizations are reexamining the goals they have set for themselves. These companies are currently experiencing a “trough of disillusionment'' as they realize that their goals are outpacing their ability to achieve them.
The results of a survey by Bain & Company, a global management consulting firm, illustrate this point. In his 2023 Visionary CEO's Sustainability Guide, Bain says less than 40% of companies across the sector are on track with their sustainability efforts. I reported it.
There are also benefits to fine-tuning your sustainability goals.
Moyer said business leaders are rethinking their ambitions and becoming more specific about what they want to achieve.
“We're going to see a lot more talk about ESG issues, like water efficiency, packaging reduction, and DEI initiatives,” Moyer said. “There will be more targeted efforts.”
Additionally, this stage of disillusionment typically prompts leaders to see advances in the field as an opportunity and innovate, she said.
“Organizations that step forward when times are tough can maintain their advantage through the next economic cycle,” she added.
2. CSRD and other new laws
The European Union's Corporate Sustainability Reporting Directive (CSRD) came into force on January 1, 2024. The Directive requires EU and non-EU companies operating in EU member states to submit annual sustainability reports together with their financial statements, and these new sustainability reports are not being produced. Masu. We follow existing European sustainability reporting standards.
Meanwhile, California's Voluntary Carbon Market Disclosure Act, also known as AB 1305, will also take effect in 2024.
And the U.S. Securities and Exchange Commission is expected to issue its own climate-related requirements in 2024.
“All of these regulations are based on what companies can publicly disclose about their efforts to tackle climate change,” said Bridget McAdoo, chief sustainability officer at software company Genesis.
Organizations can expect to see more sustainability laws and regulations in 2024 and beyond.
“This is a new era in reporting,” said Miriam Lobel, senior managing director at FTI Consulting and the firm's global leader for ESG and sustainability.
3. Increasing demand for clean energy
Odey Abosh, Global Sustainability Leader at IBM Consulting, said that to meet sustainability goals, organizations are transitioning from fossil fuels to clean energy, which is geared toward decarbonizing electricity. This is part of a broader trend.
“Increasingly, people will need to be more careful about the energy they use, how much energy they use and how they report on those things,” he added.
Marga Hook, global thought leader on sustainable business, capital and innovation and author of the 2023 book Tech for Good: Imagine solving the world's biggest challengescites this trend and calls it the “race to carbon neutrality.”
“Companies are working to achieve zero, which is a key differentiator in the business environment,” she said, adding that organizations are using this move to save costs, meet regulatory requirements and increasingly value value. He added that he sees this as a way to take a proactive position in a market where demand is increasing. An environmentally conscious company.
4. Sustainability compliance without improvement
Despite the trend toward carbon neutrality, Moyer predicted that many organizations will focus on complying with sustainability laws and not necessarily make sustainability their own objective.
Compliance will be the tail that wags the dog.
Christine MoyerGartner CEO and Distinguished Vice President, Analyst, Digital Business Leaders Practice
He notes that compliance efforts in some cases distract attention from creating a more comprehensive sustainability plan, with management teams more concerned with meeting the letter of the law than with the spirit of sustainability as a corporate value. He said that he will have a
“Compliance is going to be the tail that wags the dog,” Moyer added. “There will be a huge focus on regulatory compliance, but compliance should be an outcome, not the thing.”
5. Scope 3 and company-wide sustainability awareness
Meanwhile, more companies will move away from sustainability as a siled effort that considers narrow goals by function to an overarching goal that is integrated across the organization and its operations, Lobel said. .
For example, she said, more organizations will not only account for their own emissions when calculating their carbon footprint, but also carbon-generating activities throughout their supply chain.
“The market has focused on goal setting and reporting, but now stakeholders are asking how those goals are being achieved, what actions are being taken, and what are the scope 3 numbers? We're asking if we can move to a smart supply chain,” Lobel explained.
Scope 3 refers to emissions resulting from assets that are not owned or controlled by the organization itself, but that originate from its value chain.
6. More transparent corporate sustainability
Organizations that don't live up to their sustainability claims or can't prove they're delivering on their promises are in demand. green washing — that is, masking the poor quality of the sustainability state — or Purpose cleaning – Unfairly exploiting sustainability efforts to promote themselves.
These accusations, and the possibility of being called upon to do so, are prompting organizations to be more transparent about their sustainability efforts, objectives, and actual results, Lobel said. Stated. And it forces organizations to be more thoughtful and specific about their advocacy.
“They're revisiting their sustainability messages to make sure they're backed up by data. They're making sure their statements are aligned with their actions,” she explained. “There is now a lot of pressure to make sure that a company's announcements, even if temporary, are consistent with the company's actual practices.”
McAdoo said he sees this trend, not only that regulators are paying more attention to whether organizations can back up their claims, but that consumers are paying attention as well.
Bain research confirms this, with the June 2023 Consumer Lab ESG Survey showing that 64% of consumers worldwide report high levels of concern about sustainability. Masu.
7. Better data collection and analysis
The need to understand ESG data collection processes is a key business sustainability trend in 2024.
As organizations look to meet new legal reporting requirements and verify ESG claims, they're also turning to their IT and data teams to build the infrastructure needed to collect data on their efforts. Hook said.
But most companies don't want to stop there, he said, and executives are leveraging data, along with analytical tools and artificial intelligence, to identify and pursue opportunities for ESG improvement within their operations. He explained that he was considering making plans to do so.
8. Technology for sustainability
In addition to the growing need for and reliance on data programs to support sustainability efforts, business owners are becoming more aware of how technology can improve their companies' environmental performance. We are exploring what we can do and how we can help improve our social and governance record.
Abosh said more business leaders will use artificial intelligence, generative AI and other technologies to help develop and support efforts to address the climate crisis and related issues.
At the same time, those same executives, especially CIOs, are looking at ways to green their companies' technology stacks, Moyer said. For example, cloud providers working to reduce the environmental impact of their data centers are choosing their providers and designing their software and systems in a way that has lower energy requirements.
As sustainability efforts advance in the IT sector, leaders will become more knowledgeable and nuanced in how to approach the use of technology to minimize negative impacts on the environment. There will be a need.
9. A broader approach to sustainability
Moyer said more organizations are expanding their sustainability programs, going beyond just tracking some hot-button issues such as carbon emissions. There are multiple ways to deal with it. As a result, management is developing plans to reduce all greenhouse gas emissions, not just carbon. They investigate water consumption and the impact of physical vegetation on the biodiversity of the site.
10. Sustainability as a market force
Hook said sustainability will continue to evolve into a market driver in 2024.
“Until recently, sustainability and profit and loss were separate. Now they will work synergistically,” she said.
He said major companies already recognized that sustainability not only brings cost savings but also money-making opportunities. Concepts such as the circular economy and tools for health, welfare, smart cities and other ESG-related areas are “huge growth markets”.
Mr. Hoek serves on the boards of companies throughout Europe and is the author of several books. $1 trillion shiftpointed to a study that estimated that sustainability would unlock $12 trillion in market value by 2030.
Robel similarly said that he views sustainability and ESG as a whole as an economic factor, noting that business valuations are increasingly taking a company's sustainability and ESG position into account in their calculations. did.
As the climate emergency deepens and stakeholders demand action, organizations can no longer afford to ignore sustainability issues.
Mary K. Pratt is an award-winning freelance journalist focused on covering corporate IT and cybersecurity management and strategy.
