Seven Key Corporate Trends in ESG & Climate for 2024 and Beyond

NORTH AMERICAN EDITION

By Professor Nikos Avlonas President of CSE (www.cse-net.org) Adjunct Professor at UIC and AUEB

The ESG landscape in the United States underwent significant transformations in 2023. Factors such as ESG investing, new SEC and IRA legislations, and the growing awareness of climate change risks have reshaped existing business models. The recent COP 28 conference marked a pivotal moment, signaling the “beginning of the end” for fossil fuels.

Identifying the pivotal trends that will shape the future in North America and globally, we draw on CSE’s research findings from over 210 companies in the United States and Canada. This research delves into the intricate correlation between profitability and ESG Strategies and Ratings across 21 sectors.

1. AI Integration for Corporate ESG and Climate Resilience Risk Decisions: Organizations are leveraging artificial intelligence to enhance ESG risk-related decisions for investments and supply chain monitoring. AI technologies offer innovative solutions and data-driven strategies, enabling businesses to make more accurate predictions and effectively address environmental impacts to their operations.
2. Carbon Neutrality through Innovative Practices, with a Focus on Scope 3 Emissions: Going beyond conventional boundaries, companies are adopting groundbreaking practices to combat climate change and achieve carbon neutrality. The emphasis is on addressing scope 3 emissions, showcasing holistic commitments to environmental stewardship through innovative solutions and practices.
3. Optimizing Sustainable Supply Chains for Resilient and Green Operations: The optimization of sustainable supply chains is becoming a cornerstone for businesses committed to eco-friendly operations. Companies are actively reshaping their supply chain processes to minimize environmental impacts, prioritize ethical sourcing, and contribute to a more resilient and environmentally conscious global economy.
4. Demanding Climate Legislation Preparedness for Future-Proofing: Organizations are proactively aligning themselves with evolving climate legislation to navigate a complex regulatory landscape. Adopting proactive measures and robust strategies ensures resilience and compliance in the face of upcoming environmental and ESG-related legislations.
5. Shift Towards Independent Reporting with ESG Frameworks: The shift from integrated reporting to independent ESG (or Sustainability Reports) referencing frameworks like GRI, SDGs, SASB, and TCFD signifies a growing emphasis on comprehensive sustainability disclosure. The trend reflects a strategic move by the most profitable companies to provide transparent and standardized information, meeting the rising demand for accountability from investors and other stakeholders. (CSE’s Research Key Findings)
6. Correlation Between Profitable Companies and High ESG Ratings: The vast majority of most profitable companies exhibit medium to high ESG scores and active participation in ESG rating systems (CDP, Sustainalytics, S&P Global combined). However, few profitable companies have lower ESG scores, often attributed to a narrow focus on short-term profits, business strategy, market conditions, and consumer behavior. (CSE’s Research Key Findings)
7. Challenges Ahead for Adopting Specific Carbon Reduction Targets: While carbon reduction discussions are prevalent, only a small percentage of companies have approved Science-Based Targets (SBTi). Hesitancy may stem from concerns about costs, complexities, or uncertainty. The lack of regulatory mandates or industry-wide standards emphasizes the need for clearer guidelines to accelerate the adoption of meaningful carbon reduction targets. (CSE’s Research Key Findings)

Based on a collective 19-plus years of experience among our leadership and advisors, extrapolating from our annual research, we at CSE know the challenges are surmountable. With awareness, education and determination – ever forward!

The Center for Sustainability and Excellence (CSE) specializes in global sustainability consulting, training and research.

CSE is committed to continue supporting businesses towards their sustainability transformation and helping them thrive. Stay tuned for our upcoming trainings in 2024 and insights, which start with the US & Canada | Certified Sustainability (ESG) Practitioner Program, Leadership Edition 2024, Digital Version with Live Zoom Sessions, Feb. 22-23 & 26, 2024. There are also special in-house corporate training programs for organizations, who recognize that investing in their human capital through education is the most important determinant for growth and excellence in Sustainability ESG. Reach us at [email protected] for more information.

CSE’s Sustainability Academy (www.sustainability-academy.org) leads the way in Certified Specialized Sustainability (ESG) Education. Its global initiative, the Sustainability Academy, aims to provide affordable, specialized online education on the issues of Sustainability and Corporate Responsibility.

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