By Juana Figueroa, Sustainability Project Manager at done!
Transparency in the communication of environmental commitments, and the regulation of corporate impact reporting, as well as the battle against greenwashing lead the sustainability trends for this year.
A more rigorous focus on impact measurement, the fight against greenwashing, and new regulations signal that the 2024 sustainability agenda will be marked by transparency and accountability for the climate, social, and governance impacts of organizations.
With these trends, sustainability becomes an imperative rather than an option. And, as society and markets increase pressures to see genuine and urgent action, regulations play a crucial role.
So, what are the keys to understanding the 2024 sustainability agenda?
1. Mandatory reports emerge in the region
Reporting goes beyond showing figures and statistics. Increasingly, sustainability reporting is becoming a strategic opportunity to provide information to make informed decisions and achieve real change.
Although in most Latin American countries it is a voluntary practice, Chile became a pioneer in terms of mandatory reporting. The Financial Market Commission published regulations in 2021 that require companies to incorporate information on sustainability and corporate governance in their Annual Reports. It applies to all entities supervised by the Commission such as banks, insurance companies, issuers of publicly offered securities, general fund managers and stock exchanges.
And Colombia follows in their footsteps. At the end of 2023, the Superintendency of Companies published recommendations so that companies can report in a standardized way the impact they generate in different areas of sustainability, by promoting the use of international standards. It applies to companies under the supervision of the Superintendencies or that have achieved income greater than 40,000 minimum wages. Although they are not mandatory, they point out that companies have to be increasingly prepared to respond to these requirements.
Rigor and creativity are the key. Companies that want to stand out in 2024 must prioritize openness and honesty in their reporting practices. This ranges from the supply chain to internal decision making, allowing stakeholders to comprehensively understand the company’s commitment to sustainable development.
2. Standards align to report climate commitments
Faced with this wave of regulations there is one clear fact: the urgency of climate action. In that sense, the public and private organizations in charge of making regulations aligned on how organizations should report their environmental objectives and impacts.
The congruence between the Carbon Disclosure Project (CDP), the S2 standard of the International Sustainability Standards Board (ISSB) and the European Sustainability Reporting Standards (ESRS) promoted by the Corporate Sustainability Reporting Directive of the European Union marks a significant evolution in business sustainability standards for 2024.
This strategic collaboration not only drives the adoption of more rigorous standards, but also promotes interoperability to make it easier for companies to report their climate goals, plans and impacts. In addition, it seeks to accelerate the adoption of international standards to reinforce the commitment to providing transparent and reliable sustainability information.
Companies will be forced to raise their reporting standards and adopt stricter measures to assess and manage environmental and social risks in their operations.
3. The fight against greenwashing advances
As revealed by the CDP’s 2022 report, although many companies have net zero emissions plans, only 7% have a credible and achievable strategy to achieve them.
This data tells us that companies run the risk of being exposed by simply announcing net zero emissions commitments. How many times have we seen labels indicating products “made with recycled plastic”, “environmentally friendly”, “ocean friendly” or statements such as “we will offset your carbon footprint” without any evidence to support the credibility of the claims? these sentences?
The European Commission found that more than half of these statements were potentially misleading and unsubstantiated. That is, pure greenwashing.
Starting in 2024, at least in Europe, these practices will end thanks to the new Green Claims Directive, an initiative presented by the European Commission in 2023 and recently approved. The objective of the Directive is to ensure that companies substantiate, in a solid and verifiable manner, the environmental declarations of their products as well as the performance of their organization.
What can we expect from 2024, then? We like to think that these trends will bring greater rigor, transparency and action.
Juana Figueroa
