In 2024, environmental sustainability will be thrust into the spotlight. Learn what's driving that change and what some of the negative fallout might be.
Sustainability is now a board-level issue in many organizations, as new regulations, economic forces and growing consumer sentiment push executives to take more impactful actions on improving their environmental track records.
Case in point: 75% of board members worldwide agreed that a coherent environmental, social and governance (ESG) strategy helps create sustainable organizational value and stronger financial outcomes, according to a 2023 survey from the Nasdaq Center for Board Excellence and WTW.
Numerous trends are driving the growing organizational interest in sustainability. Here experts highlighted 10 environmental sustainability trends for 2024 that are shaping enterprise actions.
1. More realistic sustainability goals
Many organizations are revisiting targets that they had set for themselves, said Kristin Moyer, a distinguished VP analyst in research firm Gartner's CEO and digital business leader practice. Those companies are realizing that their targets outstripped their ability to deliver and they're now going through a "trough of disillusionment."
Research from global management consulting firm Bain & Company speaks to this point. In its 2023 "The Visionary CEO's Guide to Sustainability," Bain reported that fewer than 40% of companies across sectors are on track to meet their sustainability commitments.
Fine-tuning sustainability goals has an upside.
As enterprise executives revisit their ambitions, they're becoming more specific about what they will achieve, Moyer said.
"We're going to hear more talk about ESG issues like water efficiencies, reduced packaging, DEI initiatives," Moyer said. "There will be more targeted efforts."
Additionally, she said hitting this disillusionment phase also typically inspires leaders to innovate, seeing advancements in the space as opportunities.
"Organizations that forge ahead when things are tough can sustain advantage through the next business cycle," she added.
2. CSRD and other new laws
The European Union's Corporate Sustainability Reporting Directive (CSRD) went into effect on Jan. 1, 2024. It requires EU and non-EU companies with activities in EU countries to file annual sustainability reports along with their financial statements, with these new sustainability reports prepared in accordance to the existing European Sustainability Reporting Standards.
Meanwhile, California's Voluntary Carbon Market Disclosure Act, also known as AB 1305, takes effect in 2024, too.
And the U.S. Securities and Exchange Commission is expected to issue its own climate-related requirements in 2024.
"All those regulations are around what the companies can publicly disclose about their climate journey," explained Bridgette McAdoo, chief sustainability officer at software company Genesys.
Organizations can expect more sustainability-related laws and regulations to follow in 2024 and beyond.
"This is a new era of reporting," said Miriam Wrobel, senior managing director at FTI Consulting and the firm's global leader of ESG and sustainability.
3. Increasing demand for clean energy
To help reach their sustainability objectives, organizations are transitioning away from fossil fuels in favor of clean energy, said Oday Abbosh, global sustainability leader at IBM Consulting, noting it's part of the broader trend toward power decarbonization.
"Increasingly people will have to be much more thoughtful about the energy they use, the amount of energy they use and how they report on those points," he added.
Marga Hoek, a global thought leader on sustainable business, capital and innovation as well as author of the 2023 book Tech for Good: Imagine Solving the World's Greatest Challenges, also cited this trend, calling it "the race to carbon neutrality."
"Companies are working to get to zero; it is a key differentiator now in the business landscape," she said, adding that organizations see the move as a way to save money, meet regulatory requirements and position themselves positively in a marketplace that increasingly values environmentally conscious companies.
4. Sustainability compliance without improvement
Despite the trend toward carbon neutrality, Moyer predicted that many organizations will focus on compliance with sustainability laws and not necessarily on sustainability as its own objective.
Compliance is going to be the tail that wags the dog.
Kristin MoyerDistinguished VP, analyst in Gartner's CEO and digital business leader practice
She said compliance efforts in some cases will divert attention away from creating more holistic sustainability plans, with executives becoming more concerned with meeting the letter of the law rather than the spirit of sustainability as an enterprise value.
"Compliance is going to be the tail that wags the dog," Moyer added. "Huge amounts of attention will shift to complying with regulations, but compliance should be the outcome, not the thing."
5. Scope 3 and enterprisewide sustainability awareness
On the other hand, a growing number of companies will move away from sustainability as a siloed exercise that looks at narrow goals function by function to an overarching objective that becomes integrated throughout the organization and its operations, Wrobel said.
For example, more organizations will look beyond their own emissions when calculating their carbon footprints and instead will also count carbon-producing activities throughout their supply chain in their calculations, she said.
"The market has been focused on goal-setting and reporting but now stakeholders are asking about how they're doing on those goals, what steps they're taking, what their Scope 3 figures look like and whether they can move to smart supply chains," Wrobel explained.
Scope 3 refers to those emissions that result from assets not owned or controlled by the organization itself but rather emanating from its value chain.
6. More transparent enterprise sustainability
Organizations that do not deliver on their sustainability claims or cannot demonstrate that they're doing as well as they say are being called out for greenwashing -- that is, obscuring the lower quality of their sustainability state -- or purpose-washing – which is unjustifiably using sustainability efforts to promote themselves.
Such accusations and the mere chance of being called out for such actions are pushing organizations to be more transparent about their sustainability efforts, their objectives and their actual achievements, Wrobel said. And they're forcing organizations to be more thoughtful and specific about their claims.
"They're doublechecking their sustainability messages to make sure that they are backed up by data. They're making sure statements align with actions," she explained. "There is a lot of pressure now to make sure that the statements a company makes, even if they're in passing, synchs with the company's actual practices."
McAdoo said she sees the trend, too, saying that not only are regulators paying more attention to whether organizations can back up claims, consumers are, too.
Bain's research confirms that, with its "Consumer Lab ESG Survey" from June 2023 showing that 64% of consumers worldwide reported high levels of concern about sustainability.
As organizations seek to meet new legal reporting requirements and validate their ESG claims, Hoek said they're also turning to their IT and data teams to create the infrastructure needed to collect data on their efforts.
But most companies don't want to stop there, she said, explaining that executives are looking to use data along with analytics tools and artificial intelligence to identify opportunities for ESG improvement within their operations and craft plans to pursue such opportunities.
8. Technology for sustainability
In addition to their growing need for and reliance on data programs to support their sustainability initiatives, executives also are exploring how technology can help them do better by the environment -- as well as improve their social and governance records, too.
Abbosh said he sees more business leaders using artificial intelligence, generative AI and other technologies to help develop and support their efforts to address the climate crisis and related issues.
At the same time, those same executives -- and particularly CIOs -- are looking at how to green their technology stack, Moyer said. For example, they're selecting cloud providers working to reduce their data centers' environmental impact and they're designing software and systems in ways that have lower energy requirements.
As sustainability efforts grow in IT, leaders will need to become more educated and nuanced about how they approach their use of technology to minimize the negative environmental impact.
9. A broader approach to sustainability
More organizations are broadening their sustainability programs, moving beyond tracking a few high-profile issues such as carbon emissions to addressing the multiple ways they may be impacting the environment, Moyer said. As a result, executives are devising plans not only to cut carbon but all greenhouse gas emissions. They're looking at water consumption and their physical plants' impact on the biodiversity of their locations.
10. Sustainability as a market force
Sustainability will continue its evolution into a market force in 2024, Hoek said.
"Until recently, sustainability and P&L were two separate things. Now they're going to be synergized," she said.
Leading companies already recognize that sustainability presents money-making as well as cost-saving opportunities, she said. Concepts such as the circular economy and tools for health, well-being, smart cities and other ESG-related areas "are huge growth markets."
Hoek, who serves as a board member on companies throughout Europe and also authored The Trillion Dollar Shift, pointed to research that has estimated that sustainability will unlock $12 trillion in market value through 2030.
Wrobel similarly said she sees sustainability and ESG overall as an economic factor, noting that business valuations increasingly consider a company's sustainability and ESG positions in those calculations.
As the climate emergency grows worse and stakeholders demand action, organizations can no longer afford to ignore sustainability issues.
Mary K. Pratt is an award-winning freelance journalist with a focus on covering enterprise IT and cybersecurity management and strategy.
