ESG reporting in 2024: Will you be affected?

The main image for this comundo blog post about ESG reporting in 2024 is a close-up photo of a hand. In the hand is a sprouting plant and in the background we can make out some trees, although they are very blurry
The path to net zero

Environmental, social, and governance (ESG) reporting in 2024 will bear the impact of new regulations worldwide, particularly in the European Union (EU). More pertinently, it’s becoming a priority for investors and consumers, pushing enterprises and small businesses to rethink their carbon footprint. 

Consider this: The 2023 KPMG CEO Outlook survey found that 45% of CEOs prioritise ESG and believe it’s important for improving financial performance. It’s also (painfully) clear that ESG regulations are a key element in the global efforts to uphold the Paris Agreement and achieve climate targets.  

In this article, we’ll zero in on ESG trends and regulations in 2024, focusing on Europe. We’ll also list key events scheduled to take place where ESG leadership and innovators come together to discuss solutions. 

The question is, will you be affected by ESG regulations? Let’s find out! 

New ESG reporting regulations in 2024 in the EU 

The EU's Corporate Sustainability Reporting Directive (CSRD) is set to go into effect at the start of 2024. It’s the most comprehensive (and stringent, yikes) corporate reporting regulation that will bring sweeping changes to how companies report their emissions. 

The EU has also introduced the European Sustainability Reporting Standards (ESRS), a new framework for ESG reporting for companies affected by CSRD. It comprises 12 standards, two generalised, five related to environmental impact, four covering social impact and one on governance. With CSRD and ESRS, the EU aims to bring more transparency (and more initialisms) in ESG reporting and target a broader base of businesses operating in the block. 

Here’s a large number to put things into perspective: 50,000. 

That’s the estimated number of targeted businesses in the region that will be affected by the new regulations, which is more far-reaching than its predecessor directive.

The new ESG reporting regulations essentially make value chain emissions necessary. The CSRD conditions also apply to international companies with subsidies registered in the EU countries. Put bluntly, there’s no escaping these regulations (no matter what interdimensional portal you try to conjure). 

Although the directive will go into effect in stages, 2024 marks the beginning of the change businesses must adapt to regarding ESG reporting. The reporting requirements will indirectly bring companies in and outside Europe under the umbrella for more accurate and transparent carbon accounting. 

A quote from the article: 5 key trends in ESG reporting 2024.

5 key trends in ESG reporting 2024

The field of ESG, in general, is going through a renaissance. Here are the emerging trends in ESG that will impact reporting in 2024:

ESG reporting for smaller companies

With more stringent regulations going into effect in 2024 in several regions and more in the works, more businesses are expected to be required to report their emissions, social impact and governing practices. 

For instance, CSRD in the EU doesn’t yet target small businesses, but it’s under consideration for the future. Even if small businesses aren’t targeted directly by directives, they may have to calculate and report their carbon footprint if they do business with corporations with mandatory reporting requirements. 

In short, smaller B2B companies are more likely than ever to be directly and indirectly required to report their ESG data in 2024. 

ESG to become an integral part of finance

For years, ESG has been seen as merely a requirement by corporate leadership, especially finance leaders. However, with the changing attitudes of investors and more scrutiny on financed emissions, ESG targets are likely to become an essential component of financial strategies. 

Besides, there’s evidence that incorporating sustainable and fair practices can lead to better financial performance and new opportunities to expand to different consumer bases and markets. Who doesn’t like the sound of $$$? 

By 2024, ESG will essentially become a domain of finance leadership in big corporations worldwide, particularly in the EU and North America. 

Greenwashing under the microscope

With more transparent reporting requirements, companies may no longer be able to hide their real emissions behind greenwashing campaigns. 

The EU, again, is leading the charge in battling greenwashing, banning it by introducing new legislation to target companies that make false sustainability claims. 

Companies found guilty of misreporting and greenwashing can face fines worth millions. A subsidy of Deutsche Bank was fined $19 million in the US in 2023. So, what was acceptable (questionably so), in the last few years is slated to become a serious financial liability. 

More value chain transparency

Companies in the West may have made commendable advances in reducing their carbon footprint, but have fallen short in targeting their emissions down the supply and value chains. Either due to the complexity or sheer ignorance, Scope 3 (as per GHG Protocol) emissions have been vastly underreported. 

However, that’s about to change.

Regulations, such as the CSRD, now mandate Scope 3 emissions, which will pass the burden of collecting ESG data down the supply chain. In other words, suppliers will have to begin collecting and reporting ESG data beginning in 2024 if they already don’t. 

Data accuracy is a different question, though, which may require some work. However, the International Sustainability Standards Board (ISSB) has introduced a better framework for Scope 3 reporting to make the supply chain more transparent. 

Investment in ESG management

With ESG reporting and initiatives becoming integral to businesses in regions like North America and Europe, corporations are inclined to invest more in ESG-related operations. 

They’re likely to have dedicated personnel for ESG management, who are in charge of developing environmental and social policies and overseeing mandatory ESG reporting according to applicable standards. 

In 2024 and beyond, more companies will hire ESG managers and analysts. Smaller companies may designate existing managers to oversee ESG policies and reporting, but whichever route is taken, their primary responsibility will be understanding the regulations and ensuring compliance. No small task! 

ESG conferences to look out for in 2024

Many organisations will host ESG events to offer opportunities for investors, business leaders, and climate advocates to discuss developments in ESG standards and initiatives. 

No matter where you are, you can likely attend an ESG conference. Here are just a handful of events scheduled for 2024:

Will my company be affected by ESG reporting regulations in 2024?

Whether your company is required to disclose and report its ESG data depends on where it’s registered and operates. Companies in the EU that meet the criteria set by CSRD will be required to report in stages, so not all of the affected companies will be required to report this year.

In 2024, those EU companies that were already required to report data under NFRD will have to report for the fiscal year 2024 (2025 reporting year). Other companies will be required to report in the reporting year 2026 and 2027. The last to be impacted are international companies operating in the EU.

If your company was required to report before, you will be mandated to report for the 2024 year. If not, you still have time until it becomes mandatory, that is, if you meet the directive’s criteria. Even if your company is smaller than the threshold of CSRD, you may choose to report data voluntarily.

As for companies in other parts of the world, it’s best to check the local requirements and comply with them at the end of the 2024 fiscal year.

Preparing for the changes

2024 looks set to bring big changes to ESG in many parts of the world. Businesses in the EU and greater Europe must comply with new regulations and become more transparent with their reporting, and tougher regulations mean a greater need for more accurate carbon accounting and energy consumption, vital to ESG reporting. 

If your company wants to get a step ahead – and stay there – get accurate data in your reporting. comundo’s solution gives you just that. It’s not based on estimates but hard data that ensures your business satisfies shareholders and reports accurate data to the authorities. More importantly, it empowers you to make the right decisions for efficiency. 

FAQs

When will ESG reporting become mandatory?

ESG reporting is set to become mandatory in the EU for nearly 50,000 companies, including international companies operating in member states. CSRD regulation is set to be implemented in phases, with the first phase in 2024. The first phase will impact companies that were already required to report under the preceding regulation and will use the new ESRS standard to report in 2025 for the year 2024.

How many ESG reporting frameworks are there?

There are hundreds of ESG reporting frameworks, some of which are followed globally. Some frameworks are industry-specific, such as those for buildings or chemicals. Some of the most commonly used ESG reporting frameworks are:

  • Global Reporting Initiative (GRI)
  • Carbon Disclosure Project (CDP)
  • Sustainability Accounting Standards Board (SASB)
  • Science-Based Targets Initiative (SBTi)
  • International Integrated Reporting Council (IIRC)

What is the deadline for ESG 2024 reporting?

According to CSRD, the companies that were subject to NFRD will have to submit ESG reports for the fiscal year starting 1st January 2024. That means these companies will be required to report in 2025. There’s no set deadline as of yet for the submission of the reports. However, affected companies should prepare to report in the first quarter.

Which countries have mandatory ESG reporting?

A large number of countries have adopted regulations mandating ESG reporting, particularly for large companies. These countries include the UK, Malaysia, Singapore, the Philippines, and the 27 member states of the EU. Hong Kong has also introduced mandatory ESG reporting.

What is the difference between ESG vs. sustainability reporting?

ESG reporting is often used interchangeably with sustainability reporting. The latter is essentially a part of ESG reporting. Sustainability reporting, like ESG, involves voluntary or mandatory (depending on jurisdiction) reporting of a company’s non-financial performance, particularly concerning environmental, social, and governance issues.

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Ryan Stevens

Technical content creator
Ryan is a senior technical content creator, helping tech businesses plan, launch, and run a successful content strategy. After an extensive academic career in engineering, he worked with dozens of tech startups and established brands to reach new clients through proven content creation strategies.
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