26 January 2024
In the upcoming year, disclosure, accountability, nature, and climate adaptation take center stage in the business landscape. The rapid transformation of sustainability is driven by a unique amalgamation of global environmental and political crises coupled with regulatory shifts. As COP28 marked a historic departure from fossil fuels for energy, 2024 is poised to be a pivotal year, setting the tone for a sustainable future. Recent insights gathered from leading experts shed light on trends shaping sustainability in the coming year.
At the forefront of concerns is climate disclosure, with the advent of new sustainability standards in effect from supervisory bodies and standard setters. Key standards include the EU’s Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive(CSDDD), and forthcoming directives from the US Securities and Exchange Commission. While European businesses predominantly focus on compliance with CSRD, experts emphasise the need for a shift from mere compliance to utilising disclosure as a tool for informed decision-making and tangible change.
Renowned figures, such as Peter Bakker, President of the World Business Council for Sustainable Development (WBCSD), advocate for rewarding companies based on progressrather than just reporting. Aligning business needs with financial market models can accelerate the transition, currently deemed insufficient.
Tom Beagent of PwC’s sustainability business anticipates that disclosure requirements will elevate the focus on quality. For instance, corporate climate transition plans must outline time-bound actions aligning assets, operations, and business models with current climate science. The scrutiny of net-zero plans by the CDP revealed that only 7% had credible strategies for achievement.
Similarly, green claims face increased scrutiny. New laws and regulations, such as the EU’s “Green Claims Directive”and the Corporate Sustainability Reporting Directive (CSRD), impose higher standards for reporting and substantiating claims. Similar regulations are emerging in the United States, with California leading the way. These regulatory frameworks aim to enhance transparency, accountability, and clarity for investors, consumers, and stakeholders.
Artificial Intelligence to Power Sustainability:
Navigating complex regulations and supply chains demands advanced technology. In 2024, emerging technologies, particularly carbon management software platforms powered by artificial intelligence, are set to revolutionise sustainability efforts. These platforms provide data-driven insights, helping businesses enhance energy efficiency, transition to lower-emission alternatives, and optimise supply chains. AI’s potential extends beyond supply chain management, with applications in agriculture, where precision farming practices can contribute to more sustainable agricultural practices.
However, AI models have a substantial environmental impact, as they consume considerable amounts of electricity and water, leading to significant greenhouse gas emissions. To address this, businesses should consider investing in efficient semiconductor architectures and advanced cooling methods for their AI systems. Companies must quickly align their technology aspirations with their net-zero targets if they aim to deploy AI on a large scale.
Given the trends for greater transparency, more measurable and validated proof points for carbon reduction and the need for increased accuracy and detailed measurement, we believe that the most market-savvy organisations will look to sustainability as a key differentiator. They will increasingly move away from proxy metrics such as spend-based and more towards carbon calculation at the manufactured asset level, whether a car, an iPhone or a piece of office furniture, to demonstrate an enhanced commitment to their clients, shareholders, and employees.
In conclusion, 2024 begins with businesses facing significant challenges across all aspects of sustainability. Building capacity and skills to navigate these challenges becomes imperative as regulations tighten, reflecting the need for accelerated action.
Setting and delivering sustainability goals is paramount as we step into the new year. So, what are your 2024 sustainability goals, and how do you plan to achieve them?
Unsure? Look out for the February edition of our Newsletter, where we delve deeper into the essential actions required to drive your sustainability agenda.
In the meantime, to find out more about how we can help you deliver on your sustainability goals, reach out to a member of the COzPro team.