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Four ESG Trends for 2024

CEDA’s ESG Community of Best Practice forum brought together experts and stakeholders to discuss the future of ESG both in a global and Australia-specific context. Here are four ESG trends explored, set to take centre-stage in 2024.

1. Shareholders to hold companies more accountable for ESG commitments than ever before
Holding companies accountable for their ESG and decarbonisation commitments was a prevalent topic of discussion throughout the forum. Pollination Group Founder and CEO, Martijn Wilder AM, spoke about the disparity between corporate commitments and “real action,” that continues to be a concern in 2024. 

“Many corporates have committed to fairly large ESG agendas and put out pretty contemporary plans about what they’re going to do, but there’s very little substance as to how those broader commitments…are actually going to be rolled out,” he said. 

“A lot of corporates have made these commitments without any thought as to how they are going to implement or finance them…they just think that by making that commitment, it’s good enough. You do start to see shareholders now pushing back on that.” 

Mr Wilder also argued that company ESG commitments were no longer the responsibility of a sustainability leader or team alone, but a board-level priority. 

“I think directors are becoming more attuned to the fact that globally, particularly here and in the UK, that when they make these commitments, they have to follow through.”

2. Get curious: AI for ESG-related business model innovation 
The use of AI in creating business models which meet ESG goals was also a topic of conversation, led by CSIRO Data 61’s Entrepreneur-in-residence and Responsible AI Think Tank Lead, Judy Slatyer. 

“You’re going to see AI used to create different business models and that's why your year is going to be really exciting,” she said. 

Ms Slatyer provided examples of recent developments including the “largest infrastructure services company in the world,” which have set a target of 75 per cent of income from sustainability projects by 2023 and are now using robots to complete dangerous maintenance without risking the lives of employees. Other cases discussed included CSIRO’s ongoing ‘Healthy Country AI’ initiative, which works with indigenous companies to ensure that communities can adaptively manage their lands through increased data and empowerment. 

The CSIRO Entrepreneur-in-residence urged the audience of business leaders to, 

“Get curious. Ask Chat GPT about ESG challenges…ask Google Gemini. Just start playing.” 

3. An increase in mandatory climate-related financial disclosures 
Gilbert + Tobin Partner, Ilona Millar, acknowledged the increase in Australian climate-related disclosure obligations in 2024. Ms Millar referenced the recent changes to Part 2M of the Corporations Act, passed by Parliament in March this year, which includes adding climate-related financial disclosures to a mandatory sustainability report, required as part of companies’ annual financial reporting obligations. 

“Sustainability reports would need to be signed off by directors and those sustainability reports would be built around the four pillars of: governance, strategy, risk management, and metrics/targets, that have underpinned disclosure obligations,” she said. 

Ms Millar also explained how Australia’s recent changes to the Act have been influenced by changing international standards, 

“These mandatory climate-related financial disclosure obligations have been on the cards for the last 12-18 months, building on all of the developments that we’ve seen internationally with the agreement to the ISSB’s Sustainability Disclosure Standards last year,” she said. 

The panel discussed that this increased reporting requirements and calls for accountability were an important step in combating growing ‘greenwashing’ issues within Australian corporations – the act of providing misleading investors and the public regarding a business’ positive environmental impact. 

4. Funding the ‘Nature Agenda’ 
When discussing global ESG trends from his perspective, Mr Wilder acknowledged a “huge global commitment to the need to fund nature.” Despite describing nature as being more “tangible” than climate, the Pollination CEO said, 

“It’s much more complex and your ability to get an economic return by investing in nature is fairly limited to those economic activities that interact with nature.” 

“But the nature push is coming, and I think from and ESG perspective, that’s going to be pretty fundamental to the global economy.” 

Speaking about the “nature agenda,” from an Australian perspective, Ms Millar referenced Australia’s ‘Nature Repair Act’ as an example of this growing focus within both corporate and government agendas. The Act, which came into effect in December 2023, establishes a framework for a biodiversity market – mobilising private finance to repair and protect the natural environment. 

“I think with nature we're at the beginning of that journey, but we will move very rapidly to a similar point in terms of understanding these impacts and dependencies to companies and then the importance of that duty where that will materially affect the performance of a company,” said Ms Millar.

Also “wearing the hat” of President of the World Wide Fund for Nature (WWF) Australia, Judy Slatyer said, 

“The biggest challenge for companies is the double materiality of nature…meaning they can be impacted by nature degradation, but they can also impact nature degradation. How do they get the two right and how do they balance the trade-offs?” 

Curious to join the conversation?
This discussion was a part of CEDA’s ESG Community of Best Practice exclusive event series. Find out more about how your organisation can join the community to partake in the future learning, sharing of insights and leadership of ESG best practice with other Australian organisations.