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The ESG Trends to Watch in 2024
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ESG has been growing the past few years alongside the rising awareness of climate change, but heading into 2024 – there are even more new ESG trends for everyone to remain mindful of, especially for companies seeking to implement greater sustainability.
ESG, referring to environmental, social, and governance criteria – has become an essential concept as we move towards more sustainable business practices and work to reduce our environmental impact around the world.
In this article, we’ll review what ESG trends are, why they are important, previous ESG trends, and which ESG trends your company should look out for in 2024.
What are ESG trends?
ESG trends refer to the current movements being implemented to accelerate the importance of implementing ESG practices into your business model.
“ Think of fashion trends and how one style of hat or shoe suddenly rises to prominence with everyone paying attention to it – the same goes for ESG trends, except they will often create more long-lasting movements as opposed to a short lived fashion trend. ”
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ESG trends are important seeing as they help to further develop the practices and priorities of a business business when it comes to ESG factors and potential ESG investments. Even more so, ESG factors are becoming a common way to measure a company’s efforts towards sustainability – meaning that paying attention to ESG trends is important for businesses who want to find long-term success.
Here are just a few previous ESG trends:
- Diversity, Equity, and Inclusion (DEI)
- Carbon Neutrality
- Stakeholder Engagement
- ESG Reporting
- Sustainable Supply Chains
- Ethical Investments
👉 Just as fashion trends can serve as building blocks for the innovation of new clothing or accessories in the future, ESG trends can help to inspire new movements to implement more sustainable tactics and further encourage the implementation of ESG trends in the future.
Why are ESG trends important?
ESG trends are important because they can inspire companies to implement sustainable actions that they otherwise wouldn’t have.
“ Think about a food or fashion trend that you heard about so many times, that eventually – you were compelled enough to try it yourself. It’s possible that even if you were unaware of the trend beforehand, that after trying it – you ended up liking the trend and started making it a part of your daily routine. The same goes for ESG trends – having popular ideas to implement greater sustainable practices can help serve as the push companies need to jump start their ecological journey. ”
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In reality, ESG trends aren’t becoming an optional or trivial excursion – but directors of companies that fail to acknowledge the importance of ESG trends are bound to face various consequences. This could include falling subject to greenwashing, failing to comply with environmental regulations, or losing out on potential partnerships that could expand your business.
👉 Especially seeing as younger generations value sustainability, it will be important for businesses to follow ESG trends to ensure that they are meeting the desires and needs of future customers and investors – many of which who are likely to belong to Gen Z.
Some more reasons why ESG trends are important include:
- Attracting & Keeping Employees – Your business can’t run without competent and motivated employees, and odds are – your company will seem more appealing to work at if you can demonstrate your commitment to ESG trends and values. This is especially important for younger generations entering the workforce as sustainability is a priority for them.
- Financial & Creative Opportunities – ESG trends aren’t only good for attracting talent, but can open new doors for businesses to receive funding or develop ideas to create new sustainable products and services that can further combat climate change. For example, a sustainable makeup brand is likely to benefit from ESG trends as their customers are bound to have recommendations and ideas for new cosmetics.
- Reduce Operational Costs – Oftentimes, following ESG trends means implementing greater sustainability wherever you can – which could include making use of renewable energy sources or more energy efficient technology. As a result, your business could reap the benefits with lower utility bills and end up saving money.
- Customers & Investors Want Sustainability – More people want to buy sustainable products, and more investors want to invest in companies that can demonstrate their commitment to ESG trends – therefore, it’s a win-win situation for businesses who hop on board with ESG trends to come in 2024.
What have been some ESG trends in 2023?
ESG trends have been around for the past few years, but to refresh your memory – here were some of the most popular ESG trends in 2023:
- Sustainable Finance – Businesses that seek investments garnered not only towards financial revenue, but also work to help the environment has been gaining momentum – seeing as sustainable and ESG investments can kill two birds with one stone.
- Supply Chain Resilience – The process from start to finish of creating and delivering your product or service is often extensive, meaning ensuring your supply chain remains sustainable and durable in the midst of climate change is imperative. Supply chain resilience was a big ESG trend in 2023 as it highlighted the importance of cultivating a supply chain that can remain effective even in times of crisis – such as during a natural disaster or a global pandemic.
- Creating Jobs for a Clean Energy Economy – Many countries such as the United States and the United Kingdom have made extensive efforts to release new jobs geared towards the transition to a clean energy economy, such as with the U.K.’s Ten Point Plan and Biden’s American Climate Corps Program.
- New Environmental Regulations & Reporting Requirements – More stringent environmental regulations and reporting requirements were put into motion during 2023, such as with the SEC Climate Disclosure Rule and the European Union’s updated CSRD – both of which will require companies to report their emissions, climate risks, and more.
- More Ethical Practices – With companies trying to avoid the deleterious consequences of greenwashing, more businesses began to work harder on establishing greater transparency and a genuine commitment to ethical business practices – such as cultivating a more diverse office culture and seeking to ethically source their products.
What are some ESG trends to look out for in 2024?
In 2024, ESG trends are continuing to take the world by storm – with new incentives being introduced and being put into place to encourage greater sustainability.
Here are just a few of the ESG trends expected to take place in 2024:
Multiple New Requirements
Transparency has always been a key factor to cultivating sustainability, but in 2024 – efforts to encourage honesty will be kicked up a notch.
This will be done with new reporting requirements and disclosures that will help to make sustainability even more common than it is already becoming. As a result of these mandatory reporting requirements, it is likely that many companies will begin voluntarily drafting ESG reports in order to stay one step ahead of future ESG trends.
“ Some are even referring 2024 to be, ‘The Year of Compliance’ – foreshadowing that all companies will begin to practice greater transparency and accountability. ”
👉 Some of the many requirements that will become mandatory in 2024 include the CSRD, California Senate Bill 253 and 261, and the new SEC Climate Disclosure Rule.
More Sustainability Reporting for Smaller Companies
ESG trends in 2024 aren’t just looking to tackle the businesses responsible for the largest carbon footprints – but the small businesses that might create an environmental impact, too.
This is because some of the new sustainability reporting expected to come into force in 2024 will require private businesses to also disclose their emissions and their environmental impact. As a result, this ESG trend in 2024 to emerge could ultimately encourage more companies to disclose their environmental impact.
“ New incentives which will require even small companies to measure and subsequently encourage them to reduce their scope 3 emissions are likely to take full force as an ESG trend in 2024. ”
Supply Chain Transparency
Curating a sustainable supply chain has made the list of annual ESG trends for a while, but in 2024 – this ESG trend will take on new meaning in the midst of updated reporting requirements such as the CSRD and the California Climate Accountability Package.
This is because supply chains are often where companies can discover the culprits of their excess scope 3 emissions, otherwise known as the miscellaneous emissions that often result in a larger carbon footprint than desired.
“ Companies working to establish greater transparency and better communication within their supply chain will be able to reduce their overall emissions, and in turn – make complying with upcoming reporting requirements in 2024 easier. ”
Examples of ESG trends to come in 2024 in regards to supply chain transparency include new frameworks being developed by the International Sustainability Standards Board (ISSB).
No More Greenwashing
Greenwashing, which refers to when companies inadequately market their products to seem more sustainable than they actually are – will be fought harder against in 2024 to ensure customers and investors no longer become victims of greenwashing.
In fact, the E.U. has banned greenwashing and climate-neutral claims by 2026, meaning that much of 2024 is likely to be spent focusing on how to evade greenwashing moving forward.
As a result of this ESG trend, many companies are likely to re-organize their marketing tactics to ensure they don’t fall subject to greenwashing themselves – as the consequences of doing so could mean a loss of customers, investors, and a good brand image.
👉 Ultimately, ESG trends in 2024 will focus on transparency, accountability, and working to engage more companies in taking action to disclose and reduce their emissions and current environmental impact.
Ultimately, there may be more ESG trends that emerge as we enter 2024 – but these are the trends likely to take the spotlight for the interim as the year begins. It’s important to remember that ESG trends are not only a fad, but viable and effective business tactics that could help to expand your business and efforts towards sustainability.
What about Greenly?
If reading this article on the top ESG trends to look out for in 2024 has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
It can be difficult to understand how ESG trends in 2024 can have an impact on your business, but don’t worry – Greenly is here to help! Click here to book a demo and get personalized expertise on how various environmental regulations and laws will have an impact on your own emission reductions and efforts to decrease your environmental impact.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.
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