The 7 key trends in sustainability and business impact in 2024

Transcendent, a strategic consultant for sustainability and impact, has analyzed the aspects that Spanish companies should take into account over the next year to advance their ESG commitments both at an environmental and social level.

In 2024, managing social and environmental aspects will continue to be a priority for companies, but the way to manage it will go further. With shorter term commitments, more standardized measurement and accounting methodologies that will make it possible to monetize the impact, with greater transparency in Claims environmental to avoid the Greenwashing and with a viralization of decarbonization, which will reach companies across the value chain, in order to truly reduce companies' reach footprint 3.

“The sector will be immersed in a process of evolution, maturation and sophistication over the next year, largely driven by regulation, which will bring about intense changes for companies,” said Ángel Pérez Agenjo, managing partner of the consulting firm.

The 7 big ESG trends for 2024:

1. The beginning of the end of Greenwashing

The approval in the European Parliament of the 'Green Claims Directive', which is scheduled for the first quarter of 2024, will be a key milestone in the framework of the fight against the practice of Greenwashing. A regulation that will also be reinforced by the Regulation on Ecodesign of Sustainable Products, which aims to be approved by the Commission during that same period of 2024, incorporating ecological design requirements to European products in order to improve their environmental sustainability. Within this regulation, it also contemplates the establishment of a new “Digital Product Passport”, aimed at helping consumers and businesses make informed decisions when buying products.

2. Sustainability as a new Skill judgmental

The growing commitment of companies to sustainability has triggered a revolution in the labor market. We are witnessing a significant boom in demand for professionals specialized in areas of sustainability. According to the International Labour Organization (ILO), 24 million new “green jobs” will be created by 2030.

In 2024, we will see how they are consolidated positions such as ESG Controller in financial departments, something that practically does not exist today. La The sector's employability will continue to rise. The average hiring rate with at least one “green” ability It is 29% higher than the labor market average.

New hires of young people will not meet demand of the nearly 4,000 corporations that have committed to achieving net zero emissions by 2030. In fact, in 2024 it is expected that more than 70% of vacant positions in sustainability are filled through external signings and because they cannot be filled with internal promotions, due to lack of training.

As a result of this uptick in demand for jobs in this sector, there will be a greater demand for academic training specialized in sustainability.

3. No more goals for 2050: from grandiloquence to concreteness

Pressure from investors, ratings and regulation will cause objectives beyond 2030 to lose value this year. In the coming months, companies will have to be held to account for their social and environmental objectives to shareholders, investors, employees and the market itself. Therefore, ESG ratings and rankings will no longer assess medium and long-term objectives grandiloquent and the balance between sustainability objectives and the need to generate value for shareholders will begin to shape companies' sustainability strategies.

4. Big business as a catalyst for sustainability

Big companies are going to lead the change. The Corporate Sustainability Due Diligence Directive (CSDD) will oblige companies to identify, prevent, mitigate, eliminate and repair the adverse effects on human rights and the environment generated by their own activities, that of their subsidiaries and that of their value chain. This directive states The focus on scope 3 emissions. El The drag effect that will lead to the reduction of the footprint throughout the supply chain will be key in 2024, since it represents on average 75% of total emissions.

5. The takeoff of impact investing in Spain

Impact investment in Spain is expected to take off in 2024. The volume of assets managed by the supply of impact capital in Spain in 2022 increased by 21% compared to 2021 and it is expected that continue to increase in 2024, encouraged by the creation of financial solutions that allow companies to access cheaper financing in exchange for generating more impact.

Although the figures for these assets, which seek to obtain financial returns while having a positive impact on the environment and society, different private equity funds and foundations expect growth of more than 50% in their managed assets, have not yet been released. Along the same lines, the Government of Spain has created the Social Impact Fund (FIS), with resources of 400 million euros and managed by Cofides, to invest in companies and projects that reinforce entrepreneurship and the social economy in Spain. In this way, public money can act as a catalyst to attract private investment.

An impact investment that next year will be marked by the financing of transformative projects associated with energy transition and social impact projects (vulnerable populations, identified risks).

6. Integrating sustainability and impact into business strategy

The integration of sustainability and business impact of companies will be key in 2024 for those companies that want to lead the change. Until now, materiality analyses have been projects without much use. With the CSRD and the requirement to carry out dual materiality analysis, risks and opportunities emerge in the eyes of financial directors, risk managers, as well as when carrying out strategic exercises and business plans. More than 50,000 European companies will be required to include this analysis in their business strategies in the coming months.

In Spain, the draft of the CSRD is still subject to change, which will be one of the essential aspects of a regulation that will take place during this year and that will place the sustainability information at the same level as financial reporting in the decision-making of different interest groups.

7. Measure to monetize impact, for companies that want to go further

The number of companies that are going to publish net sustainability and impact income statements will multiply in the coming months. In the corporate sphere in Spain, we will see how some companies, in order to differentiate themselves and seek to generate a net positive impact, will begin to incorporate impact measurement and management into their strategies and reporting reports.

This is still an incipient process, since only 14% of IBEX 35 companies and 2% of the continuous market have incorporated impact measurement models, according to the Transcendent report “Evolution of ESG management towards impact on listed companies”.

The consolidation of standardized methodologies that allow companies to measure, value and monetize the impact of companies on the environment and society will favor the measurement of the impact and the monetization of the actions carried out by companies.