2024: Predictions (and Hopes)

From doomsayers to rose-tinted glasses prognosticators have been stating their sustainability / ESG predictions for the year ahead. Here are mine.

1. STAGNATION AND PARALYSIS IN THE US - As America once again enters into the year-long spectacle that has become the hallmark of presidential politics, with no clear outcome (at this point in time), companies are going to sit on the sidelines and wait to see what this coming November will bring. Will the SEC be given the 'green light' to go ahead with even the watered-down climate disclosure requirements is is considering? Or will a new administration put an end to the efforts to provide the 90 percent of investors with the information that they say that they want - and need - to make informed choices.
2. EUROPEAN DISCLOSURE REQUIREMENTS CATCH MANY UNPREPARED - Yes, it is true, some multinational companies have recognized that disclosure requirements will include those of them that do enough business in the European Union to qualify. But building the systems today in order to comply tomorrow is too big a leap for far too many.
3. SCRAMBLE FOR COMPLIANCE - Related to the above, at some point the 'chickens will come home to roost' and CFOs / Legal / Regulatory professionals are going to wake up to the uncomfortable reality that they are not ready.
4. CEDING THE 'BACK OF THE BOOK' - All those agencies that have made good money preparing beautiful, compelling and glossy Sustainability Reports are going to find themselves needing to either build or partner with professional that can help them meet the new reporting requirements. Just as they prepare Annual Reports but others provide the verified data tables, sustainability reports will have to follow the same pattern until the day (which I wish would come sooner) when companies realize that they only need one report; with ALL of the important/material information.
5. AI AND SOFTWARE WILL BE UBIQUITOUS - Doing even a Scope 1 and 2 greenhouse gas inventory can be an herculean effort. Getting the data from different systems, different locations and different people followed by calculations (making sure you use the right emissions factors based on locale, for example), aggregation, documentation and validation. Companies will eagerly embrace the promise of AI and Data Mining systems that offer to do much of the work automatically, or offer a simpler way than Excel (still the most used tool) to collect the data, promising to 'spit out' reports that meet the various reporting frameworks. Some, undoubtedly will be excellent. But others may not have all the needed functionality and many companies, facing scrutiny, may find themselves 'blaming it on the software.'
6. THE "ANTI-ESG" MOVEMENT WILL COLLAPSE - Stop me if you're heard this before - this was more 'sound and fury' than anything else. Companies have reacted by changing their language, but not their commitments to building customer loyalty, attracting investment capital, attracting and retaining top talent, reducing risk and regulatory compliance costs, improving production efficiency, etc. All those things are sound business, all of them drive value creation and all of them are best accomplished by committing to efforts that fall under the broad umbrella of 'sustainability' or 'ESG'.
7. STOP FIGHTING ABOUT WHAT WE CALL IT - This won't happen in 2024, but perhaps we will move closer to adopting the language (see #6) that works and stop fighting about what ESG means ('I thought the 'S' stood for 'sustainability' said someone to me recently) and focus on what it takes for businesses to do all those things listed above in the 21st Century. Another one that makes me cringe is that we are not in the 24th year of people saying 'I want to know what's sustainable and good for business'; completely conflating 'sustainability' with environmental sustainability/stewardship. In any event, we all should just give up competing on the terms 'purpose', 'CSR', 'ESG', 'Stakeholder Capitalism' etc. etc., etc. and just accept the fact that what we do matters a heck of a lot more than what we call what we do.

After all, that is the bottom line.

Still.