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By Professor Nikos Avlonas,
President of CSE (www.cse-net.org)
In 2024, the ESG landscape witnessed a seismic shift, marking a defining year in the global pursuit of sustainability and responsible business practices. With governments, investors, and companies doubling down on climate action, social equity, and transparent governance, the momentum for ESG integration reached unprecedented levels. Key regulatory advancements, innovative green technologies, and growing consumer demand for ethical practices collided to create an environment where ESG considerations are no longer optional—they are essential for business success.
According to CSE’s comprehensive annual research, which analyzed over 200 companies across the United States and Canada a deep dive into the complex relationship between profitability, ESG strategies, and ratings across several sectors revealed vital insights.
From this extensive research and additional information resources used, CSE identified seven critical corporate trends that are set to reshape the future—transforming business strategies.
1. Impact of the New U.S. President on Sustainable Investments and ESG Criteria
With the new U.S. president, we may see a shift toward traditional economic policies, potentially reducing focus on clean energy investments and ESG (Environmental, Social, and Governance) priorities. Fossil fuel industries and large manufacturing sectors could benefit in the short to medium term. However, global ESG investments are expected to remain strong, making up around 40% of total investments and many institutional and private investors will continue to prioritize sustainable strategies, though we might experience a short-term slowdown.
2. The Rise of Green Hydrogen
Green hydrogen, produced using renewable energy to split water into hydrogen and oxygen, will play a critical role in decarbonizing industries that are hard to electrify, such as heavy transport, steelmaking, and chemical production. This technology is set to make a significant impact on the global push for Net Zero.
3. Real-Time Sustainability Reporting
Artificial intelligence (AI) and automation are revolutionizing how companies collect, analyze, and report ESG data. Sustainability reporting is shifting towards real-time updates, moving away from annual reports. Companies will now provide ongoing updates or quarterly insights on key ESG metrics like carbon emissions and water usage.
4. ESG Reporting Across Supply Chains
Companies will soon be required to disclose ESG data for their entire value chain, not just their direct operations. This includes sustainability practices of suppliers, contractors, and partners—focusing on areas like labor practices, emissions, and resource consumption. Expect to see more detailed supplier audits to ensure compliance with ESG standards.
5. Better Data Quality and External Assurance
The demand for independent third-party audits of sustainability reports is on the rise. In Europe, this is already mandatory under the Corporate Sustainability Reporting Directive (CSRD). Companies are investing in more robust systems to track, manage, and verify their ESG data, ensuring that their reports are accurate and reliable.
6. Increased Focus on Biodiversity and Nature in ESG Ratings
As environmental concerns grow, ESG ratings are evolving to include biodiversity and natural capital. Investors and stakeholders are increasingly aware that a company’s environmental impact goes beyond carbon emissions to include issues like deforestation, land use, and biodiversity loss.
7. ESG as a Core Value: Linking to Executive Compensation
Many companies are now tying executive pay to ESG performance. This ensures that leadership is aligned with long-term sustainability goals, making top management accountable for meeting ESG targets. Additionally, sustainability reporting is shifting to reflect a company’s core purpose and values, demonstrating how sustainability is woven into all aspects of the business rather than treated as a separate initiative.
