Midway through the year, CarbonQuota Co-Founder, Nathan Tiller, reflects on 2024 ESG predictions.
I recently re-read Thomson Reuters’ article, Six predictions for ESG in 2024*, and thought – this is great, many of the predictions are coming true! But then a hint of pessimism crept in about the state of the world, and how these six trends are simply an outcome of not enough people caring about their environmental impact. Cue the feeling to have a good old rant.
You have no idea how many times I have been reprimanded by colleagues for focussing on the negatives, so I thought I’d try applying the ‘outrage and optimism’ approach to these six trends. In other words balancing the reality of the world remaining on a sustainability knife-edge against so many people – from lawmakers to volunteers – trying really hard to reduce the impact our species has on the planet.
1. Sustainability becoming deeply embedded in the financial foundations of companies.
My outrage on this point is that implies that every day teams of people have been unable to implement sustainable practises in their businesses – so now the bean counters have to take over! Aren’t they just going to conclude that sustainability is at odds with commercial growth? But then I look on the optimistic side. Here at CarbonQuota, we have recently changed our banking arrangements. Out with the old bank that still uses our bank deposits to continue to dabble in oil and gas and make money. In with the new bank that still gives us a reasonable interest rate on our cash reserves while not investing in the most damaging human activities. For sure this is a niche example but it shows sustainability can co-exist with financial interests in a way that even the hardest CFO can’t dispute.
2. Firms of all sizes will need to initiate or improve their greenhouse gas accounting methods.
I remain outraged that not enough people and companies are taking their carbon footprint seriously. Have they not been listening?! And for that matter, why are the media so quiet about climate change? Sometimes I really feel part of a silent minority thinking no-one is taking action on their environmental impact. But then I have just come back from a trade event where, more than any time in the last five years, the sentiment really was “we’re going to have to do this, aren’t we?”. “Yes, you are!” I am happy to reply. That’s definitely a win for the optimists.
3. Politicized environment around ESG will remain. I’ll start with the optimistic view this time.
I love the EU (yes, I am part of that half of Brits). They are pushing through regulations such as CSRD and EUDR, which will change everything (jargon-busting is for another article). Even in the US I am encouraged that there seems to be cross-party support for environmental regulations (let’s see, hey?). But there is still pessimism running around in my head. I’ve been following sustainability since the 1990s, and have always been an advocate for the movement that “good thoughts, good words and good deeds” will make us sustainable. Voluntary frameworks haven’t worked and regulatory conditions are all that’s left to sort this out. But if that’s the way it is then thank you, law-makers.
4. Biodiversity will emerge as a mainstream ESG topic.
This is where I really feel outrage. If enough people are only just getting their heads around climate change, then the collapse of nature that will follow will hit them even harder. There will be millions of migrants – probably billions – due to sea level rises, heatwaves, forest fires and farmland turning to desert as a result of climate change. But what are we going to eat if in many places nature itself has collapsed, and how will we recover ecosystems on such a massive scale? Scientists are busy warning about this like they did about climate change in the 1990s – but it’s a pretty tough topic to discuss without sounding like a crazed alarmist. But optimistically, regulations such as the EU’s CSRD is making biodiversity a topic that boards will have to discuss and we can skip a generation of learning this time. So let’s just get talking about how if you don’t take your impact on nature seriously, you’re going to find the regulators making it hard for you to carry on business as usual.
Supply chains are where the intersection of environmental and social concerns are taking shape. In the last 6-12 months, I’ve become more and more optimistic about how corporate procurement teams – who have seen that they are the key to unlocking Scope 3 reductions – are taking up the challenge and working with their suppliers. But should we also be outraged? It has bothered me for a long time that companies remained happy to only focus on their ‘Scope 1 and 2’ emissions, basically their own buildings and vehicles when in reality typically more than 85% of emissions are Scope 3 (from supply chain). This takes up right back to point 1. We need the finance teams to collaborate with their procurement and purchasing colleagues and embed sustainability in every corner of every organisation.
5. The notion of greenwashing is expected to be more clearly defined legally and carry weightier repercussions.
The hope that people would simply behave responsibly when making claims was naïve wishful thinking. Stand aside and let the lawyers do their thing and feel good about a day in the office!
I’ll let you judge whether I should be scolded by my colleagues for daring to be outraged that commercial interests are too often put ahead of the environment. But if these six trends carry on, they won’t be in business any longer. In the end let’s hope it’s a win for the optimists who keep on pushing.
