🌱 ESG Trends 2024: The landscape of environmental, social, and governance criteria is constantly evolving. This year, we're seeing a significant shift towards digitalisation, increased regulatory requirements, urgent climate action, sustainable supply chains and social equity and inclusion. What does this mean for businesses in Australia? Let's dive into the trends.
Top #ESG (Environmental, Social, and Governance) trends for 2024, based on the ongoing developments and shifts in priorities within the global and Australian contexts. These trends reflect the evolving landscape of sustainability practices, regulatory pressures, investor expectations, and societal demands.
1. Increased Regulatory Scrutiny and Reporting Standards
In 2024, expect more stringent regulatory requirements for ESG reporting across the globe, including Australia. The push towards standardisation and transparency in ESG disclosures is likely to intensify, with frameworks such as the Task Force on Climate-related Financial Disclosures (TCFD) becoming more widely adopted and potentially mandatory.
2. Climate Action Urgency
Organisations are expected to ramp up their climate action initiatives, with a significant focus on reducing carbon footprints, investing in renewable energy, and setting science-based targets. Net-zero commitments are becoming more common, and companies will likely be under greater pressure to deliver on these promises with concrete, actionable plans.
3. Biodiversity and Natural Capital
Biodiversity loss and the degradation of ecosystems are increasingly seen as critical risks. In response, businesses may integrate natural capital considerations into their decision-making processes, focusing on conservation, restoration, and sustainable use of biological resources.
4. Social Equity and Inclusion
The "S" in ESG will gain even more prominence, with companies expected to tackle issues such as diversity, equity, inclusion (DEI), human rights, and labour practices more vigorously. This trend reflects a broader societal demand for fairness, justice, and equal opportunities in the workplace and beyond.
5. Sustainable Finance and Investment
Sustainable finance is set to grow, with more green bonds, sustainability-linked loans, and ESG-focused investment products entering the market. Investors will increasingly use ESG criteria to assess risk and guide their investment decisions, pushing companies to improve their ESG performance.
6. Supply Chain Sustainability
The sustainability of supply chains will remain a critical focus, driven by the need to mitigate risks related to climate change, labour practices, and resource scarcity. Companies will work towards greater transparency and resilience in their supply chains, adopting more sustainable procurement practices.
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7. Circular Economy and Resource Efficiency
The shift towards circular economic models will accelerate, as businesses seek to reduce waste, improve resource efficiency, and create value through the recovery and recycling of materials. This trend is in response to growing environmental concerns and resource constraints.
8. Digitalisation for Sustainability
Digital technologies, including AI, IoT, and blockchain, will play a key role in advancing ESG goals. These technologies can help in monitoring and reducing emissions, enhancing energy efficiency, and improving transparency in supply chains and ESG reporting.
9. Stakeholder Capitalism
There will be a continued move towards stakeholder capitalism, where companies consider the interests of all stakeholders—including employees, communities, customers, and the environment—rather than focusing solely on shareholder returns. This approach aligns business strategies with broader societal goals.
10. Adaptation and Resilience to Climate Change
As the impacts of climate change become more pronounced, businesses will prioritise adaptation and resilience measures to protect assets, operations, and communities. This includes investing in infrastructure to withstand extreme weather events and developing strategies to manage climate-related risks.
These trends indicate a comprehensive approach to ESG, integrating environmental stewardship, social responsibility, and governance excellence into the core of business operations. Staying ahead of these trends will require proactive engagement, strategic planning, and a commitment to continuous improvement.
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Author
Geoff Gourley is a leading Global Social Innovator, Entrepreneur, Impact Investor and in 2017 acknowledged in the Top 100 Social Entrepreneurs & Innovators around the world.
He has 30 years’ experience in design, property, construction, and all things Environmental, Social, Governance and Impact and is a former Board Director of the United Nations Association Australia.
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