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Jan 12, 2024

Evolving beyond disclosure: 2024’s ESG trends, opportunities and challenges

Investors are setting their sights on more than just metrics

In recent years, ESG considerations have become integral to the corporate landscape, shaping the way companies operate and investors assess opportunities. Emerging trends gaining traction in this space present both opportunities and challenges for leaders. Not only can these trends impact operations, but leaders also need to anticipate and address the concerns of investors and prepare accordingly for their changing expectations in the wider network of stakeholders.

Changing frameworks

There is an increasing surge toward comprehensive and mandatory disclosures happening across the ESG space right now. This movement is evidenced through various regulations that have been rolled out, such as California’s climate regulations, the SEC’s proposed climate reporting requirements and the EU’s Corporate Sustainability Reporting Directive.

Additionally, the International Sustainability Standards Board is developing an ESG-wide framework based on voluntary standards such as the TCFD and the GRI and has similarities to the currently proposed regulations with the goal of further standardizing global reporting.

While not all frameworks need to be implemented at this moment, multinational corporations are likely to be subject to at least one of these systems in the near future. The transition to non-financial data filing is underway, signaling a shift toward a more holistic view of a company’s operations and risks. There also remains a need to bring sustainability and ESG metrics to an auditable quality similar to financial systems, ensuring the reliability of data for informed decision-making. This emphasis on comprehensive disclosures further emphasizes the need for transparency and accountability in ESG reporting practices.

Beyond disclosure

Investors have a growing focus on ESG metrics, too. They are directing their attention toward climate risks, goals and progress, turning climate into a common topic for review. But beyond ensuring companies are future-proofed by addressing climate concerns, investors also have a growing interest in human capital metrics such as gender diversity and pay parity. Investors hope to see more voluntary ESG disclosures across the social and responsible governance topics until regulatory frameworks are consistently implemented. For companies, focusing on social aspects of ESG and setting goals beyond environmental concerns can be an opportunity to engage with investors looking for a more comprehensive assessment of company strategy.

While many companies have set and published climate goals, there is an opportunity to extend ESG initiatives beyond mere disclosure. Integrating ESG and sustainability into the core business strategy ensures that consumer stakeholders are considered, aligning with increasing interest in ESG topics, particularly among Gen Z. This integration not only satisfies the demands of conscientious consumers, but also favorably positions companies in the eyes of investors seeking a deeper commitment to sustainable practices.

Long-term value

One significant challenge for investors and companies alike is the lack of consistent ESG data across businesses, but this challenge presents an opportunity for shared learning. This exchange of insights and best practices contributes to the ‘rising tide’ phenomenon, where collective improvements in ESG practices benefit the entire investment landscape.

Additionally, driving positive change in ESG enhances long-term investor value. The analysis companies do to implement ESG strategies forces them to identify potential risks and opportunities they otherwise might not have considered, in addition to attracting consumers who increasingly value sustainable and socially responsible business practices. Companies that proactively address these aspects are better positioned for long-term sustainability and gain a competitive advantage in the future low-carbon economy. This proactive approach aligns with ESG best practice principles and strategically positions companies for success in evolving economic landscapes.

Companies that recognize the importance of ESG can use their efforts to attract and satisfy investor stakeholders. Engaging in meaningful dialogue with investors and addressing their concerns is essential. Focusing on social aspects of ESG, in addition to environmental ones, can open doors for participation in ESG-focused funds and aligns with the growing interest of stakeholders. Fully integrating ESG into business practices demonstrates a long-term commitment to positive change, creating value for both investors and stakeholders.

Renee Morin is eBay’s chief sustainability officer

Renée Morin

As Chief Sustainability Officer at eBay, Renée Morin leads the development and execution of eBay’s environmental, social and governance programs including circular commerce and renewable energy and chairs eBay’s senior leadership ESG Council. She is...

Chief sustainability officer