The New Maxims in Corporate Sustainability

Sustainability 2024 – What’s the trend? - Part 1

In today's fast-paced and constantly evolving world, sustainability has become the foundation of effective strategy and planning. As companies and industries grapple with the complexities of our modern era, staying informed about key sustainability trends has become not just beneficial, but essential for achieving long-term success and regulatory compliance.

Throughout the past months of 2024, we have observed several emerging trends in sustainability. In this series, we will delve into some of the most significant trends, offering comprehensive insights into how they are shaping the future of corporate practices and environmental stewardship.

The New Maxims in Corporate Sustainability

Two years ago, in November 2022, the European Parliament took a monumental step by adopting the Corporate Sustainability Reporting Directive. This set of rules mandates that companies regularly publish detailed reports on how their activities impact both people and the environment. The directive officially came into force in January 2023, and now, in 2024, the first companies are required to apply these new rules.

Similarly, in the United States, the Environmental, Social, and Governance (ESG) Law, which was enacted in 2024, has dramatically changed the regulatory landscape. What was historically voluntary reporting on sustainability practices has now become mandatory, requiring companies to make detailed sustainability information publicly accessible.

Legislation like this is symptomatic of a wider trend towards increased transparency, which is gaining momentum worldwide. Investors, pressure groups, and the general public are increasingly vocal about environmental and social issues, demanding greater accountability and openness from corporations.

One of the key issues addressed by such legislation is the “temporal mismatch” in carbon accounting. Consider a simple example: an organization might offset its carbon emissions by planting trees. While the carbon emissions are released today, the trees might take 50 years to mature before they can fully mitigate the emissions. This temporal misalignment needs to be accurately reflected in carbon accounting and associated sustainability reporting.

Countries that signed the Paris Agreement committed to limiting global warming to 1.5°C above pre-industrial levels. Scientists tell us that to achieve this goal, we need to reach net zero emissions by 2050. While planting trees today is beneficial and a commendable practice, it is insufficient on its own to meet the immediate targets necessary for achieving this commitment.

 (to be continued)