5 sustainability trends to follow in 2024

January 11, 2024
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The landscape of sustainability is rapidly evolving, with 2024 poised to be a pivotal year in the fight against climate change and environmental degradation.

Businesses, governments, and individuals are amplifying investments and actions to drive the transition towards a climate-resilient and sustainable future.

Five particular trends in climate fintech, reporting, scope 3 emissions, climate risk management, and AI for sustainability are worth noting, as they stand out for their potential to shape our approach to sustainability in the coming years.

1. The Rise of Climate Fintech

Climate fintech blends financial technology with the principles of sustainability, creating a vital funding stream for the transition to a greener economy.

This surge in climate fintech is essential for channelling investments toward renewable energy, carbon capture, and overall environmental and social sustainability.

Climate fintech firms are introducing an array of eco-friendly investment opportunities such as green bonds, responsible investment funds, and financial backing for projects that cut down carbon emissions.

The appeal of climate fintech lies in its ability to turn eco-consciousness into economic gains, and this sector is gaining momentum, driven by investors and government support in the form of incentives and forward-thinking policies.

Venture capital (VC) firms are increasingly recognising the immense potential of these companies, not just funnelling money into these ventures but also offering critical strategic guidance, enabling these innovative startups to expand their influence and operational scope at an accelerated pace.

Additionally, firms in this space are getting smarter by incorporating big data and AI. These technologies are improving risk assessment by factoring in climate-related risks, paving the way for more robust and future-proof investment strategies.

2. The Acceleration of Disclosures Preparation

As we transition into 2024, the acceleration of disclosure preparation, especially with regard to the Corporate Sustainability Reporting Directive (CSRD) in the EU and the Securities and Exchange Commission (SEC) in the U.S., is unavoidable.

CSRD is expanding the range of companies required to disclose sustainability information. Thousands of additional companies in Europe will be obliged to disclose detailed information on how their operations affect the environment, social matters, and how they manage related risks and opportunities, thus influencing them to rethink their sustainable strategies.

Similarly, the SEC's proposed rules on climate-related disclosures are expected to increase accountability and encourage more sustainable business practices.

These regulations signal a paradigm shift where sustainability reporting moves from being a voluntary, often inconsistent effort, to a standardised and enforceable requirement.

Companies thus need to prepare to collect, manage, and report requisite data on different dimensions of sustainability, with an increase in the usage of ESG (Environmental, Social and Governance) data management as well as reporting tools and services designed to help businesses comply with these directives.

3. Scope 3 Emissions Scrutiny

Scope 3 emissions, the indirect emissions that occur in a company’s value chain, are often the largest source of a company’s carbon footprint.

Unlike Scope 1 and 2 emissions, which are directly controlled by the company, scope 3 includes all other indirect emissions from activities such as business travel, procurement, waste, and use of sold products.

In 2024, the scrutiny of Scope 3 emissions is expected to intensify as stakeholders seek greater transparency and actions on climate change.

Investors, customers, and regulatory bodies are pushing companies to not only report but also actively reduce their Scope 3 emissions.

This trend requires robust data collection and engagement with suppliers and partners to implement changes across the value chain. It's a complex task, but the increasing demand for decarbonisation across supply chains is driving innovation in product design, logistics, and materials, leading to a ripple effect of sustainability improvements across industries.

4. Climate Risk Management

The increasing frequency of extreme weather events, coupled with the persistent need for transitioning to a low-carbon economy, poses significant risks to assets, investments, and operations across a company’s value chain.

Companies that fail to prepare for these events face severe disruptions, as evident from extreme weather events witnessed across the world in 2023.

By 2024, climate risk management is likely to be integrated into the core risk management strategies of forward-thinking organisations.

Companies are expected to adopt more comprehensive approaches, incorporate climate scenario analysis and stress testing to understand potential impacts on their businesses under different global warming scenarios.

This will not only reduce the risk but also potentially unlock new opportunities for innovation and resilience. The trend also indicates an increase in the sale of insurance products tailored to climate risks.

5. AI for Sustainability

Artificial Intelligence (AI) is a powerful tool that can be leveraged to address complex sustainability challenges.

In 2024, the application of AI for sustainability is anticipated to expand significantly. AI can optimise resource use, and improve energy efficiency, all of which can contribute to significant reductions in environmental impact.

AI's predictive capabilities are being utilised in biodiversity conservation, where machine learning models help in predicting poaching threats and management of protected areas. AI also helps analysing big data for environmental science, thereby enhancing our understanding of ecological systems and the impacts of climate change.

As the trend continues, one particular area where AI is expected to significantly simplify the processes is ESG data management.

With the increase in mandatory sustainability disclosures, companies face the daunting task of collecting and analysing vast amounts of ESG data. AI-powered ESG data management software can streamline this process, ensuring accuracy, efficiency, and compliance.

At Apiday, we strive to embody this future of AI for sustainability, offering an all-encompassing ESG data management solution that transforms complexity into simplicity.

Our platform leverages cutting-edge tools to automate your reporting process and help you manage and gather data, to empower your organisation to go beyond meeting sustainability targets to championing them.

Choosing Apiday means enjoying swift compliance with regulations, elevated data precision, and discerning insights that drive enduring sustainable results!

In conclusion…

These sustainability trends for 2024 represent more than just shifts in business practices; they signify a collective movement towards a more resilient world.

As these trends continue to unfold, organisations must understand, embrace, and leverage these developments to secure their future and contribute positively to the global sustainability agenda.

5 sustainability trends to follow in 2024
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