Sustainability Outlook 2024

In recent years, the sustainability debate has been focused mainly on climate, and specifically on emissions of greenhouse gases. Whilst this remains as important as it ever has been, there’s a shift in narrative around sustainability, towards a more humanitarian mindset. There’s further recognition from around the world that we are facing not only a planetary crisis, but a human one that is interlinked with a wide range of issues. To encompass this, companies need to have a holistic approach to make progress.

In terms of sustainability 2023 was a year of ups and downs, both of which set the scene for the development of the topic in 2024. For example, when it comes to climate change, the world is far from tracking towards the target agreed in the Paris Agreement. In fact, 2023 was the warmest year ever recorded – the climate crisis is more of a threat than ever before. However, it was also the first time that renewable energy grew faster than the world’s power demand. And countries finally agreed on a treaty to protect the oceans of the world, with the aim to protect 30% by 2030.

The year was closed with a somewhat surprising COP 28 in Dubai. An oil nation hosting a strong enough COP event to really address the cause of climate change for the first time made a statement in its own right. In addition there were some big wins early in the event, and the final text, although far from perfect, ended up being the first one that mentioned the words ‘fossil fuels,’ finally, plainly and directly acknowledging the source of the problem.  

Entering 2024, companies are operating a challenging economic landscape where sustainability efforts and initiatives will be more heavily challenged than before. Some companies will simply stop their sustainability work. Therefore, we will probably see fewer announcements of bold targets and aspirational goals. However, there are a few topics that will come into focus in 2024 that we think all businesses will need to pay attention to for the sake of future proofing.   

Sustainability Disclosure

2024 will be the year of increased reporting regulation globally. Several frameworks for non financial disclosure are being developed across the world.  A critical one is the European Union’s Corporate Sustainability Reporting Directive (CSRD) that will come into play this year. This directive mandates companies to know, address and report on their sustainability risks and impacts to a much larger extent than before. 

In this context, the term sustainability is used in the broader meaning of the word, which means that many of the topics covered by the legislation are traditionally handled by other parts of a  company, such as HR and compliance. Up until now, sustainability reporting has been voluntary in many countries, and traditionally been handled by a small central team (often the sustainability team) with input from other departments. Therefore, CSRD is going to be a game changer both in terms of the data that affected companies will need to disclose, but also in the organisational structure needed to deliver on the new legislation. 

Now, more than ever, there is a need for cross functional leadership on reporting and increased knowledge and understanding of the topic throughout organisations. This means that companies will need to find ways to bolster their resourcing around sustainability, as well as  continuing to focus on the actual sustainability work, delivering on its goals and keep finding innovative ways to contribute to a better world. 

AI & Climate: threat, opportunity or both?

AI will definitely continue to be a hot topic in many areas, and the intersection of climate and AI is no exception. 

From an environmental perspective, one of the most obvious effects is that training and running AI models requires a lot of computing power, meaning that an increased use of AI also leads to increased use of electricity and with that, increased emissions of greenhouse gas emissions. In addition, data centres rely on water for cooling so increased water usage is another consequence to be considered. 

These effects are possible to mitigate, through use of renewable electricity, development of cooling techniques and water replenishment initiatives, and companies need to integrate these mitigation plans in their AI strategies to ensure the continued feasibility of their sustainability targets.  

There are also other, maybe less obvious, side effects of the development of AI. One of them is the risk that AI could amplify climate misinformation, as presented in a recent study. Even though misinformation and disinformation is nothing new within climate, the combination of the generative capacity of AI, social networks, recommender systems and automation could drastically increase the speed and extent of it. 

There are also ways in which AI can help accelerate climate action. Google and BCG recently released a report stating that by scaling currently available applications and technology, AI could help to mitigate 5% to 10% of global greenhouse gas emissions by 2030. For example, this can be done by optimising electricity use with help from advanced analytics, predicting wildfires through machine learning and helping speed transition from fossil fuels to renewable energy sources through better supply and demand forecasts that reduce the need for battery storage and standby power. For companies, exploring the opportunities of climate and AI should be equally important to mitigating the risks.

The Rising Importance of Nature 

Another rising topic is the focus on nature, beyond climate change. Protecting and restoring nature and stopping biodiversity loss is becoming increasingly important and that will definitely continue in 2024 and the years to come, and more attention will need to be given. For example, the development of science-based nature-related metrics and disclosure recommendations means that companies will need to identify what negative impacts they have, but also what role they can play in finding solutions for nature in the same way that they have been doing for climate.

Protecting nature, but also enabling and encouraging people to connect with it will be key in many organisations work ahead, both in terms of the impact they can have on the world, and also in terms of how they can engage their employees and customers. Nature is probably easier to relate to than the more abstract concept of climate, which could make people more inclined to get involved. 

A Humanitarian Topic 

For many people and businesses the main focus of work under the ‘climate’ umbrella has been focused solely on greenhouse gas emissions. Whilst these are still hugely relevant, 2024 brings some demands for bigger picture thinking. 

In recent years the effects of climate change have been more prominently seen in forms of floods, heatwaves and droughts, and how these crises impact everyday lives is becoming increasingly apparent.

The connection between climate change and people’s physical and mental health is becoming more and more visible, and it’s growing clearer that the climate crisis is very much a humanitarian crisis and not only a planetary one. This means that organisations that do not already think holistically about this, should shift their mindset. Communication and strategy around climate needs to reflect this, as well as acknowledging the groups most affected by climate change. 

What Does It Mean?

Simply scaling back on sustainability efforts will not prepare organisations for a future where customers, employees, investors and regulator’s expectations are continuing to rise., In this new setting, it will be increasingly important for companies to become even more strategic in their sustainability work, focus on issues that are close to their core business, and where they are uniquely positioned to drive change. 2024 will be the year where companies get much more intentional with their sustainability work.