Top 5 U.S. ESG Trends for 2024

The corporate Environmental, Social, and Governance (ESG) movement has grown exponentially in the past decade. The concepts of conscious capitalism and businesses as a force for good have been around for a while, but companies are taking more steps to measure and quantify their impact now than ever before.

As with any new movement, ESG has continued to morph every year, and we predict 2024 will be no different. We’ve compiled a list of the top 5 ESG trends we’re seeing for 2024 and beyond. Read on to learn more!

1. Increasing Transparency

The ESG movement in the corporate realm pushes for transparency regarding corporate filings and the reporting of non-financial data. We have already seen a drastic increase in corporate reporting of EEO-1 data, supply chain transparency, and net zero goals in the last decade, with a huge uptick just in the last few years. In 2024, we expect this transparency to continue to increase, with more voluntary EEO-1, supply chain, and emissions reporting.

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2. Increasing Regulation

This March, the SEC adopted long-awaited rules to enhance and standardize public companies’ climate-related disclosures. While these new rules have been stayed among legal challenges, California’s new climate laws SB 253 and SB 261 will still apply very similar reporting regulations to many large public companies operating in the US. And in 2022, the US saw the largest piece of climate legislation in the nation’s history in the form of the Inflation Reduction Act.

And beyond North America, climate legislation such as the European Union’s Corporate Sustainability Reporting Directive (CSRD) are increasing ESG regulation in other regions of the globe. For example, the European Sustainability Reporting Standards adopted last year that came into effect in January will have worldwide implications on many large companies headquartered in the U.S. but still operating within the European Union.

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3. Increasing Standardization

Regardless of the future of the SEC’s Climate-Related Disclosures Rules, one of the goals of the recent climate legislation is to increase standardization among climate reporting. There are dozens of frameworks and standards that companies currently use to report against. Many report the same information in several different ways to satisfy the requirements of each. However, in the last few years we’ve seen a consolidation to just a few different reporting frameworks, and we expect to see even more standardization, both voluntary and legislated, this year.

4.Interdisciplinary Focuses on Biodiversity and Health

The last UN climate change conference COP28 at the end of 2023 saw many firsts, but one that was unique was the first-ever Health Day on December 3rd. This came on the heels of one of the UN’s first water conferences in several decades and more reporting on waste and biodiversity on behalf of public companies. Moving into 2024, we expect to see more acknowledgment of the many sectors and industries that climate change touches, and just how ubiquitous and interdisciplinary ESG is.

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5. ESG Objectivism Over Anti-ESG Sentiment

There has been a growing emphasis on the objectivity and integrity underlying ESG principles and standards which has been highlighted by sustainability experts and thought leaders. There is a reason more and more companies are tying their goals and targets to the Science-Based Target initiative as well as other ESG reporting frameworks; amidst more vocal anti-ESG sentiment, objective voices and enhanced ESG data quality are coming to focus.

According to Workiva’s Executive Benchmark on Integrated Reporting 2024, 82% of institutional investors surveyed say they have not changed how they make investment decisions despite recent criticism of ESG. We expect ESG reporting to continue to more closely mirror that of financial reporting, with an emphasis on evidence, verification, and neutrality. The collective goal is to establish a solid foundation for ESG practices that align with transparency, reliability, and accountability, underscoring the significance of a data-driven approach within the ESG landscape.

If you are environmentally conscious and looking to grow your portfolio contact EGÉA SRI contact EGÉA SRI for more information today!