The 2024 Sustainability Playbook: How to turn sustainability challenges into business opportunities

2024 is shaping up to be a year like no other. 

From the tightening grip of regulatory frameworks to the transformative potential of artificial intelligence, we are entering a whole new landscape for corporate ESG that will offer up both obstacles to progress and possibilities of exponential value.

In this changing environment, we've compiled a short playbook, drawing insights from our team of experts. Consider it your compass through the intricate maze of sustainability practices. Get ready to delve into the depths of what it truly means to be sustainable in 2024 – where every decision, every innovation, and every commitment can leave a lasting impact on our world. 

2024 brings a definitive shift in the sustainability landscape, particularly in the realm of mandatory Environmental, Social, and Governance (ESG) reporting. The consolidation under the International Sustainability Standards Board (ISSB) provides a clearer framework for businesses, emphasising the need for preparedness and strategic positioning. 

Key developments include: 

• The EU's Corporate Sustainability Reporting Directive (CSRD), effective since January 2023. It forces certain companies that do business in Europe to publish information on environmental and social matters.  
• The Australian Federal Government's 2023 consultation paper on Mandatory Climate-related Financial Disclosure, following New Zealand's lead. This would mean very large entities will be impacted as soon as 2024/2025, with reporting requirements extending to progressively smaller entities over a two-year period. 
• California's SB 253 and 261 laws, requiring comprehensive emissions and climate risk disclosures from 2026. 

These changes signal the start of a broader, more rigorous approach to both voluntary and mandatory disclosures in Australia and New Zealand, aligning with a global trend towards integrating financial and non-financial business performance metrics. Initial focus on climate-related risks will soon expand to encompass the full ESG spectrum, covering aspects like biodiversity, gender equality, modern slavery, and social justice.

Tips for Preparedness: 

• Evaluate Current Reporting: Assess your organisation's existing capabilities and pinpoint areas for improvement. 
• Develop a Compliance Roadmap: Create a strategic plan addressing upcoming mandatory disclosure norms. 
• Build Internal Capacity: Enhance understanding of evolving risks and opportunities. 
• Anticipate Future Requirements: Stay ahead by considering potential areas for future mandatory disclosures, including environmental and social aspects. 
• Set New Standards: Embrace transparent and comprehensive sustainability disclosures to lead in corporate responsibility. 
• Download our ESG Disclosure Discussion Paper: How to Thrive in the New Era of ESG Disclosure

Despite facing backlash, like Ron DeSantis' anti-ESG legislation in Florida, ESG considerations are a steadfast component of modern business practices. Companies must gear up for data-driven action, course correction, and transparent reporting. 

Globally, ESG integration has become a strategic imperative, ensuring that sustainability and ethical considerations shape business decisions and governance. 

Although 69 percent of companies report fully integrating ESG for value creation, a notable 68 percent of CEOs express concerns about their ESG strategies under close examination. 

In 2024, the emphasis is on improving ESG data quality and disclosure, spurred by regulatory demands for transparent corporate reporting. Trends indicate a shift towards automated software for greenhouse gas management, addressing the increasing need for reliable data and adherence to third-party verification standards. 

Companies are anticipated to invest more in robust ESG data strategies, including the establishment of centralised data management teams, enhancing data quality, and integrating it into performance metrics. This approach aims not just at compliance, but at utilising ESG data for tangible value creation and effective carbon footprint reduction. This year marks a pivotal moment in the evolution of ESG data standards.

Tips for Navigating ESG Challenges: 

• Regularly Review ESG Regulations: Stay updated on regulatory changes and their implications for your company’s strategy and reporting. 
• Assess Anti-ESG Risks: Understand potential regulatory and stakeholder pressures and their impact on your organization. 
• Establish a Centralized ESG Data Team: Consider digital solutions for data management to improve collection and disclosure processes, integrating these systems with your company’s performance management. 
• Continuously Refine Your ESG Strategy: Treat sustainability not as a static goal, but as an evolving journey. 2024 might be the ideal year for a comprehensive ESG strategy reassessment, ensuring your approach remains robust and responsive to the dynamic business environment.   

The landscape of ESG practices is increasingly complex, particularly in the U.S. where it intertwines with socio-political debates and financial considerations. Recent years have seen a surge in greenwashing incidents, a trend most notable in Europe and North America, but also in Australia and New Zealand.  

This rise highlights the risks associated with companies making misleading claims about their environmental practices. Both greenwashing, the act of falsely promoting environmental practices, and greenhushing, the underplaying of sustainability goals, have become prevalent and heavily criticised.  

High-profile cases, such as Energy Australia’s misleading carbon offset claims, underscore the issue's severity. Furthermore, companies find themselves in a dilemma, balancing ESG values against potential consumer backlash. 

A notable example is the Bud Light campaign featuring transgender influencer Dylan Mulvaney, which was perceived by some as an ESG-driven decision, leading to significant consumer retribution and a reported 17% decline in Bud Light's U.S. sales in Q3 2023. 

Tips for Navigating Greenwashing Challenges: 

• Leverage Opportunities for Authentic Communication: There’s a burgeoning space for organisations that can confidently communicate their sustainability efforts, grounded in a solid foundation of science, strategy, and storytelling. 
• Be Proactive in ESG Claim Verification: Regularly scrutinize your company’s ESG and sustainability claims to mitigate risks of greenwashing. Authenticity in your environmental practices is key to maintaining credibility and trust with your stakeholders. 
• Check out our Sustainability Communications Checklist for the New Era of Disclosure
• Download our Greenwashing Handbook.

Advanced technologies like AI, blockchain, and IoT are revolutionising sustainability. They're key to optimising resource use, enhancing supply chain transparency, and enabling efficient material recycling. These technologies are creating efficient, zero-waste systems vital for environmental health. 

The rise of AI, comparable to the personal computer and smartphone revolutions, poses both opportunities and challenges. It's predicted to significantly impact the global economy, but also raises concerns about job displacement and economic stability. In response, regulatory measures like the EU's AI Act are being implemented. 

AI's role in sustainability is multifaceted, from improving satellite imagery for climate action monitoring to integrating into corporate sustainability strategies for better data analysis and reporting. 

Tips for Harnessing Technology in Sustainability: 

• Balance Technology and Ethics: Address ethical and environmental risks associated with AI. 
• Stay Informed on Regulations: Keep up with regulatory changes impacting technology in sustainability. 
• Implement Robust Data Systems: Use advanced data management for accurate sustainability performance monitoring. 

The imperative for decarbonisation echoes profound industrial transformations of the past, necessitating a radical overhaul of energy usage, resource management, and our interactions with nature. 

In this critical era, embracing the principles of the circular economy, especially regeneration, is key to reverse the trend of degrading the very eco-systems that sustain life and our way of living. 

This approach forms a vital framework for reducing emissions, minimising waste, and enhancing the restoration of natural systems. Organisations committed to net-zero emissions by 2050, pivoting towards renewable energy sources and sustainable practices, are not just tackling the climate crisis; they're spearheading a transition towards a regenerative, circular economy. 

Tips for Responsible Climate Action: 

• Reassess Carbon Offsetting Strategies: Carbon offsetting is a contentious issue, with instances of severe mismanagement by carbon project developers and misleading claims about offset validity and credibility. There's a growing shift away from using carbon neutrality through offsetting as a viable strategy. In 2024, it's crucial for organisations to critically evaluate their use of carbon offsets, ensuring their climate action strategies are both credible and effective. 
• Check out Navigating Climate Governance: What Every Board Member Should Know and How to Reignite Your Decarbonisation and Circular Economy Strategy 

The urgency of addressing nature-related issues is now on par with climate action, offering businesses significant opportunities to manage risks and positively impact both nature and society. 

However, many companies, investors, and lenders still struggle to adequately incorporate nature-related risks and opportunities into their decision-making processes. This gap is where the Taskforce on Nature Related Financial Disclosures (TNFD) becomes crucial. 

The TNFD framework provides a structured approach for businesses to identify, assess, and disclose nature-related issues, promoting early action across all sectors.  

This framework aims to integrate nature-related disclosures similarly to how the Taskforce on Climate-related Financial Disclosures (TCFD) revolutionised climate-related reporting. 

The TNFD also advises companies to align with the Science-Based Targets for Nature (SBTN) for setting targets on nature impacts. However, the interaction between these two frameworks can be complex. 

Tips for Embracing Nature-Focused Frameworks: 

• Tailor Your Approach: As new frameworks emerge, remember there's no universal solution. Develop a strategy that aligns with the frameworks most relevant to your business context. 
• Check out TNFD is here: What does it mean for your business, how do you get started, and how does this relate to SBTN.

Embracing a circular economy, where producers fully commit to zero waste, closed-loop systems, and net-zero greenhouse gas emissions, is rapidly shifting from a lofty goal to standard business practice. 

Today's businesses are not only expected to bolster resilience against climate change but also to actively participate in resource loop closure and the regeneration of natural systems. 

Integrating circular economy principles into core business strategies offers a multitude of benefits. This approach paves the way for innovation, significantly reduces waste and operating costs, and enhances brand reputation. Companies' adept in this area are redefining their market presence, much like early adopters in the digital economy who transformed their sectors through groundbreaking innovation and strategic foresight. 

Notable examples include firms that have developed innovative, sustainable products or services, thereby achieving market differentiation and growth. These pioneers are setting benchmarks in sustainable practices, mirroring the transformative impact seen during the digital revolution. 

Tips for Embracing Circular Economy Practices: 

• Life Cycle Assessment: Conduct a thorough Life Cycle Assessment (LCA) to pinpoint potential improvements in sustainability, embodied carbon and circularity. 
• Verify Sustainability Claims: Strengthen credibility through ISO14025 and/or EN15804 compliant Environmental Product Declarations (EPD), Type 1 eco-labels, or independent third-party reviews. 
• Innovate in Product/Service Design: Focus on creating products and services that are reusable, refurbishable, repurposable, and, as a last resort, recyclable, to contribute meaningfully to the circular economy. 
• Check out How and why organisations should measure their level of circularity 

The pandemic's profound impact on work dynamics has underscored the critical role of human capital. Companies that focus on employee well-being and development are leading the way in creating resilient, inclusive, and innovative workplaces, crucial for meeting today's sustainability challenges. 

Businesses investing in their workforce - through well-being initiatives, flexibility, and inclusivity - are fostering an environment ripe for innovation, increased productivity, and top talent attraction. This investment cultivates a resilient and agile workforce, reminiscent of the cultures seen in leading tech companies, and can lead to sustained growth and market leadership. 

Conversely, organisations that neglect evolving work norms may face high turnover, reduced morale and productivity, and recruitment challenges, echoing those companies that were slow to embrace remote work and subsequently struggled to stay competitive and innovative. 

Tip for Fostering a Sustainable Workforce: 

• Promote Flexible Work and Mental Health Support: Adapt to modern work practices with flexible arrangements and mental health initiatives. 
• Cultivate Continuous Learning: Encourage ongoing employee development, particularly in sustainability-related areas. 
• Reward Innovation and Sustainability Efforts: Recognise and incentivise employee contributions to sustainability and innovation.