Ten Predictions For ESG And Sustainability In 2024

Ten Predictions For ESG And Sustainability In 2024

Throughout 2023, the corporate world witnessed several significant ESG and sustainability milestones. The CSRD came into force and the ISSB took over TCFD, while the SEC – and the US as a whole – could not make its mind up about climate disclosures.

As CSOs reflect on 2023 and confront geopolitical uncertainties and slow economic growth heading into 2024, Verdantix analysts have made 10 predictions covering the full spectrum of issues that we expect to influence firms’ ESG and sustainability strategies. In 2024, we predict that:

1. CSOs will align with finance teams as the CFO becomes integral to ESG compliance. With ESG responsibilities increasingly distributed across the firm, CSOs must create a common language and value proposition that resonates with all key stakeholders, especially the CFO, who has heavy involvement in achieving compliance.
   
   
2. Firms will disclose in line with sector-specific reporting frameworks, as well as the CSRD and ISSB. While the ultimate goal is to facilitate sector-specific standards under general frameworks like the ESRS and ISSB, these structures are not yet in place - and are unlikely to develop fully in 2024. Instead, we expect firms to continue using sector-specific reporting frameworks such as GRESB and the UNI PRI to meet information needs.
   
   
3. At least 10 vendors will launch dedicated starter packages to support CSRD compliance. In 2024, many firms will realize they lack the data management capabilities required to comply with the CSRD. In response, vendors will offer streamlined ‘CSRD starter packages’ targeting core CSRD reporting workflows.
   
   
4. Only 20% of firms will use GenAI for sustainability-related reporting, as questions linger. While appetite for AI is high, corporates are unlikely to adopt GenAI solutions quite so quickly, as they work to define the boundaries of the technology – with most holding off until vendors address concerns.
   
   
5. ESG assurance providers will struggle to scale up capacity, affecting ability to meet CSRD timelines. Assurance practitioners will witness a massive influx of ESG data that requires limited assurance in a tight period. An emerging skills gap and capacity challenges will squeeze the market in 2024.
   
   
6. Over a quarter of organizations will invest in product stewardship software amid growing customer and regulatory pressure. Stakeholder transparency pressure will underscore the importance of automated solutions to manage growing complexities and the increasing scope of product sustainability disclosures.
   
   
7. Firms will try to head off risks by including 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.
   
   
8. At least five of the Fortune Global 100 will face legal scrutiny for human rights abuses in supply chains. 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.
   
   
9. A handful of corporate SLB issuers will be forced to step up coupons for missing targets. This will mean more scrutiny of new sustainability-linked bond (SLB) issuance in 2024, as investors avoid holding debt in poorly performing firms.
   
   
10. At least 10 of the largest consulting service providers will build dedicated nature and biodiversity practices. Large service providers will boost their capabilities off the back of TNFD launching its final recommendations. Boutique firms will be attractive acquisition targets.

To read these predictions in more detail, please check out the Market Insight: 10 Predictions For ESG And Sustainability In 2024 And Beyond report on the Verdantix research portal. We will also be delivering a webinar on February 4th, which you can sign up for here.