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ESG: What to watch in 2024

by Prue Roberts
16 January 2024

In 2023, companies witnessed increased industry and investor attention on Environmental Social and Governance (ESG). So what’s on the horizon for 2024? Our Principal, Automic ESG Steve Morgan, shares his thoughts for the year ahead here:

1. The carrot becomes the stick – the drive for many organisations in recent years to invest in ESG has been based on proactive management of risk, access to and retention of capital and a desire to improve sustainability impact. Mandatory ESG reporting flips the script, in particular for Australian companies in 2024.

2. The gap continues to close – the timing, integration, process, data management, resourcing, and external assurance of ESG reporting within organisations starts to look a lot more like corporate financial reporting (as it should).

3. Scope 3 matters – organisations continue to realise that without meaningful action on scope 3 emissions, managing climate risk is like putting a band aid on a bullet hole. Measuring and managing scope 1 & 2 emissions is no longer enough.

4. Supply chain focus – a major trend in 2023, and linked to the focus on scope 3, suppliers will increasingly be assessed and procurement decisions made based on the impact they have on the total GHG footprint and ESG goals of their clients.

5. Quantification of climate risks and opportunities matures – investors are the primary audience for mandatory ESG disclosures. The ability to translate climate and broader ESG risks to actual or potential financial impact, is a new and important task for companies and funds.

Whilst these are some of the key themes we see up ahead, there are of course plenty of other moving parts and priorities. It will no doubt be another dynamic year across ESG, sustainability and climate.