7 ESG trends to look out for in 2024

27 December 2023.

As we step into 2024, the landscape of Environmental, Social, and Governance (ESG) trends continues to evolve, shaping the way businesses operate and investors make decisions. In this article, we'll explore the key ESG trends that are expected to gain prominence in 2024, offering insights for both businesses and investors.

1. Increased Regulatory Scrutiny and Standardization

In 2024, we anticipate a surge in regulatory measures around ESG practices. Governments worldwide are expected to introduce stricter regulations and standards to ensure that companies are genuinely committed to ESG principles and not merely engaging in greenwashing. This push for standardization will likely result in more consistent and comparable ESG reporting, aiding investors in making more informed decisions.

2. Climate Change and Carbon Footprint Reduction

The urgency of addressing climate change continues to be a central focus. In 2024, we expect to see more companies setting ambitious net-zero targets and investing in renewable energy, sustainable supply chains, and carbon offset projects. The corporate world will likely increase its efforts to reduce carbon footprints, driven both by regulatory pressures and consumer demand for environmentally responsible brands.

3. Social Responsibility and Inclusivity

Social issues, including diversity, equity, and inclusion (DEI), will become even more critical in 2024. Companies are likely to enhance their efforts in creating inclusive workplaces and addressing social inequalities through their business practices and community engagement. This focus on social responsibility may also extend to issues like mental health, fair labor practices, and employee well-being.

4. Sustainable Investing and Finance

Sustainable investing is expected to grow further in 2024. More investors will likely shift their portfolios towards companies with strong ESG credentials, and we might see a rise in ESG-themed investment products. Additionally, green finance, including green bonds and sustainability-linked loans, is poised to expand, providing businesses with capital to invest in sustainable projects.

5. Technological Integration in ESG Efforts

Technology will play a pivotal role in ESG initiatives in 2024. From AI and big data analytics for better ESG reporting and performance tracking to blockchain for transparent and secure supply chains, technological advancements will be crucial in driving ESG efforts. Companies will increasingly rely on tech solutions to meet their ESG goals efficiently and effectively.

6. Stakeholder Engagement and Transparency

Stakeholder engagement and transparency will become even more vital in 2024. Companies will need to communicate their ESG efforts and progress openly to stakeholders, including customers, employees, and investors. This trend emphasizes the importance of authenticity and accountability in ESG practices.

7. Focus on Biodiversity and Natural Capital

Biodiversity and the preservation of natural capital are likely to emerge as critical themes in 2024. Companies will be expected to not only minimize their impact on the environment but also contribute positively to the preservation and restoration of natural ecosystems.

Conclusion

The year 2024 is set to be a pivotal year for ESG, with significant advancements and shifts in how companies and investors approach these critical issues. The trends outlined above reflect a growing recognition of the importance of ESG in creating sustainable, equitable, and prosperous societies. Businesses and investors who adapt to these trends and integrate ESG principles into their core strategies will be well-positioned for success in an increasingly conscious global market.