If you missed the ESG discussion in 2023, it’s as if you missed the soundtrack of the year.

The market’s excitement around this dynamic and manual-less concept has gradually taken shape, maturing into relevant approaches. Now, as we head into 2024, the ESG agenda is more consolidated than ever, demanding more assertive decision-making.

What has changed in the ESG world?
With climate change at the forefront, more demanding consumers, and regulations clarifying what counts in sustainability efforts, we’ve achieved fundamental progress to guide players and offer clear direction for action.

Considering some of these trends are crucial drivers influencing the course of companies, how about diving headfirst into ESG for 2024?

What ESG actions are worth adopting this year?

1. Pressure on Communication and Marketing Teams

‍With rising living costs and consumers becoming more conscious of where and how they spend, companies must showcase their environmental, social, and governance (ESG) credentials.

In 2024, marketing campaigns must navigate challenging contexts in an era of low tolerance for advertising, with consumers increasingly scrutinizing companies engaged in greenwashing—false or exaggerated claims about environmental practices.

A 2023 Sustainability Sector Index study by Kantar surveyed 1,000 people in Brazil, of which 56% stopped buying products and services from companies that don’t invest in sustainability or harm the planet. Additionally, 63% said they seek brands with an active history of pro-ESG actions.

According to the study, many companies provide false information about their sustainability, and over half of respondents believe brands across sectors aren’t being honest when promoting their ESG actions.

As consumers seek new sustainable solutions, they encounter more greenwashing, highlighting systematic communication failures or the lack of strong actions behind corporate claims.

Close collaboration between sustainability, communication, and marketing teams is essential to ensure environmental messages align with new market demands.

2. Sustainable Supply Chain Management with a Focus on Scope 3 Emissions

‍Carbon neutrality goals must be pursued throughout the value chain, from raw material production to the end product’s use by consumers. For many companies, Scope 3 emissions account for over 70%, often up to 90%, of their carbon footprint.

Scope 3 emissions are indirect, linked to the company’s operations, such as purchased raw materials, business travel, employee commuting, waste disposal, and transportation. They are often the most challenging to control as they lie outside the company’s direct influence.

By 2024, companies can no longer ignore Scope 3 emissions. In fact, some financial standards and certifications require companies to report on them.

Implementing intelligent traceability and monitoring systems has become one of the most powerful tools to ensure transparency regarding product origins, raw materials, working conditions, and suppliers’ environmental practices.

3. Employee Engagement

‍Listening to employees’ voices, understanding customer expectations, and considering community needs are increasingly critical to building a solid and authentic corporate responsibility approach.

For companies unsure where to start or focus their ESG efforts, actively seeking feedback and perspectives ensures strategies align with broader interests and can foster innovation and new ideas, driving the company toward more sustainable and socially responsible practices.

Prioritizing employee well-being has become a key focus for the market, which has seen work relationships change significantly in recent years. Promoting physical and mental health and social well-being has become crucial for the sustainable development of businesses.

4. Best Corporate Practices in ESG Data Disclosure

‍In 2024, we can expect the introduction of stricter reporting regulations, requiring companies to provide more comprehensive and standardized ESG information.

The CSRD (Corporate Sustainability Reporting Directive) is one of the cornerstones of the European Green Deal, a new European Union law regulating sustainability reporting requirements. Although it has specific local action, the world is already preparing for its global implications.

Companies must not only ensure compliance with disclosure requirements but also establish internal processes capable of efficiently collecting, verifying, and presenting data—a complex challenge that can help avoid sanctions and reputational risks.

Companies excelling in ESG reporting may also gain access to more favorable financing and lower capital costs.

Standardized ESG reporting frameworks, such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB), are gaining momentum as industry benchmarks. These frameworks provide guidelines and metrics for companies to report their performance in a way that is easier to compare.

5. Integration of Finance and Sustainability

‍Sustainability, once viewed as a trend, is becoming deeply integrated into companies' core financial strategies and investment decisions. Finance and sustainability can no longer operate independently.

Companies should understand that sustainability and financial health are not mutually exclusive but are inherently intertwined. Financial leaders must work closely with sustainability teams to ensure that financial reports accurately capture the opportunities and risks associated with sustainable practices.

Traditional financial metrics are being complemented by ESG metrics, such as sustainable return on investment (SROI) and carbon cost.

Thus, sustainability metrics are being incorporated into risk assessments, asset evaluations, and other important financial decisions, creating a more holistic and robust financial perspective that reflects the complex reality of today’s corporate world.

Companies adopting this level of integration will position themselves for greater competitiveness and longevity in the market.

6. Technology and Data-Driven Approaches to ESG Analysis

‍The integration of technology and data analysis is playing a crucial role in improving ESG reporting and transparency. Smart digital platforms are increasingly being implemented to codify ESG processes, transforming them into relevant information and enabling effective data disclosure.

These solutions not only streamline the collection and analysis of ESG data but also enhance communication between companies, suppliers, and investors, fostering better engagement and collaboration among them.

Comprehensive tools also help identify patterns, trends, and insights relevant to a company’s ESG performance, making data collection and analysis more efficient while uncovering opportunities and highlighting risks.

7. Continuous ESG Risk Assessment

‍With increasingly stringent regulations and consumers’ demands for the ESG agenda, along with global market uncertainty, political instability, and the rise of climate disasters worldwide, 2024 arrives with the understanding that companies must have a deeper grasp of their impact on the world—and the world’s impact on their business.

Continuous ESG risk assessment involves constant monitoring of a company’s activities and supply chain to identify changes or new risks that may emerge over time.

Openly communicating identified risks, as well as addressing them transparently and effectively, is crucial to building trust with investors, customers, and other stakeholders, a necessity in 2024.

Not only as a response to external pressures but also as a proactive strategy for ensuring long-term company resilience and sustainability, understanding upcoming trends and projections will be essential in preparing for future scenarios.

The coming years promise to be important for the ESG agenda. A new cycle has begun, and the concept is moving toward a new era of stronger regulations, increased demand for transparency, and maturity in concrete actions, driven mainly by technology and innovation.

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