A year of transition is upon us for 2024, one that holds both promise and risk. As we transition into the Chinese Year of the Dragon we could reflect that a previous Dragon year in 1976 looked eerily similar to the world we find ourselves today. The pessimist would view energy crisis, geopolitical tension, conflict, labour unrest, soaring sovereign debt and inflation as a world in turmoil with less hope of progression. 49% of the worlds population from 64 nations heading to the polls this year, offering the possibility of either transition however.
The ‘possibilist’ might see a bumper year of opportunity for emerging points of leadership in the sustainability space. A poor bedfellow to energy and cost of living issues in 2023, sustainability issues have quietly maintained their momentum to offer progress in 2024. Key is a growth in joined up thinking across areas of sustainability and interlinked discussion on topics. Great potential lies ahead for partnership between climate and nature. All roads no longer lead to just ‘climate’, rather this issue and other global transboundary challenges are starting to be tackled together.
We will see leadership in sustainability in 2024 in some exciting areas; some leadership will mature and some which will emerge to challenge the status quo, while some sustainability issues will have a long awaited day in the sun.
Here are our picks for those likely to lead the pack in 2024.
Natural progression
Finally we will see nature emerge from the shadows and into the mainstream of sustainability. A long time coming, considering, that over 30% of carbon reductions cannot be achieved without nature based solutions, but mother nature’s arrival on the scene is being warmly welcomed. Somehow the importance of nature to every system humans have created was, both at the same time, well known, and also perpetually externalised.
The new horsemen of the apocalypse of climate change, biodiversity loss, pandemics and pollution are all intrinsically linked to nature and the need to protect and regenerate our ecosystems. Indeed biodiversity loss is a serious enough threat that it doesn’t need to be associated with other major issues to have importance. The World Economic Forum’s Global Risk Report ranks it as a top five risk for the next decade.
However, nature finds itself in an awkward position, having to use its association with climate change mitigation as a way of seeking the light. In 2024 we should see the emergence of more nature positive leadership and a mainstreaming of discourse around biodiversity loss and, most importantly, its contribution to economic activity.
Commercial opportunities are beginning to open up on nature, especially as we start to identify and value the risk around its loss. Investment is flowing into the consultancy space to help advise companies on nature positive transitions, and start-ups abound in nature valuation. The number of green bonds associated with nature based products has tripled in the last five years to make up a quarter of the entire bond market. MSCI sees a new dawn of debt for nature swaps in 2024 with a growing interest in biodiversity financing combined with high levels of debt distress in low income countries. With growth potential of $800bn they see evidence of ‘an industry planning for significant growth’.[1]
Valuation of remains a problematic debate both tainted by the experience and struggle with formalising carbon markets and ideology of the ‘value’ of nature. The nature valuation and financing area is awash with interest and innovation which will continue to develop and expand in 2024. New methodology is being tested, largely in the space of ecosystem services or as mechanisms built off of carbon credits. 2024 will see more progress in this area but could also see another ‘wild west’ of nature credit sales (akin to that seen in carbon offsetting) which risk undermining the integrity of any momentum. This year will be pivotal in the challenge of measuring materiality for nature.
2024 will also see further progress in the disclosure of nature impact in the commercial space with the Science Based Targets Network having published the first Science Based Targets for Nature. This allied with the Taskforce for Nature-related Financial Disclosures (TNFD) will put nature at the heart of environmental disclosure for the first time.
You can only manage what you can measure
This phrase itself is almost an ideology in sustainability but the power of disclosure continues to be a key lever in the need to shift capital at scale and pace toward a required sustainable transition. It is the hardware that is powering the sustainable transition in business and it is now well embedded.
Disclosure agencies have been busy readying new initiatives around waste and plastic pollution as well as working to include recommendations from the TNFD to incorporate nature positive economic transition.
This expansion of disclosure will create challenges for companies with big exposure in these areas, including through their supply chains. As they seek to measure much more than climate, in a manner where disclosures are now increasingly requiring legal and risk oversight before submission, we can see an increased reporting burden on the agenda. As with climate, companies meaningfully understanding what it means to be nature positive or joining the circular economy is going to take some time; we are merely at the end of the beginning in company journeys on some of these topics.
However, where there is muck there is brass and as climate disclosure drove a whole new industry, the understanding of long term financial risk and the development of new commercial opportunities around these new disclosure areas are likely to lead to a similar explosion of economic activity around these new areas of disclosure finding the mainstream in 2024.
2024 will also see legislative leadership in key markets. Coming into force is the EU Corporate Sustainability Reporting Directive (CSRD), the likely introduction of the Corporate Sustainability Due Diligence Directive (CSDDD) and the first standards from the International Sustainability Standards Board (IFRS S1&2). Key to this legislative movement is a continued drive toward better understanding and sustainable management of both upstream and downstream environmental risk in value chains.
As is always the case with any transition from voluntary to mandatory reporting however is the risk of losing the meaning in the analysis and management action. This challenge at the nexus of voluntary and mandatory reporting needs to carefully managed to avoid a regression back to the bad old days of ‘reporting because you have to’ as opposed to embracing disclosure as a powerful tool for change, risk reduction and the development of new business opportunity. The mainstreaming of CDP scores was a great way of rewarding companies for their effort in the eyes of investors and the market and disclosure actors will need to continue to find ways to incentivise action to both ‘measure and manage’. The carrot may be an incentive but 2024 will also see continued discussion around accountability and the need for corporate strategies to make the required transition.
Carbon markets will continue to struggle
For too long carbon offsets have been beset with cynicism and rampant opportunism. 2023 saw the real lows of the integrity of certain offsetting projects which depressed the entire market. The Guardian’s release of analysis showing 90% of rainforest carbon offsets from a market leader were ‘worthless’ certain rocked the industry and similar releases throughout the year drove a high level of pessimism in carbon circles. Recently this was followed up with an exposure of how cookstove projects may be overstating their carbon benefits by an average of 1000%.
This low point was maybe necessary however, as the debate shifted toward quality rather than quantity. This has driven greater scrutiny by companies on where their money goes and how a lack of quality may affect company risk directly. Many companies stopped their purchase of credits.
2024 will see new integrity guidelines (Integrity Council for Voluntary Carbon Markets) in place for voluntary carbon markets but it remains to be seen if this will mean that buyers will drive a demand for higher quality projects based on a more scientific approach of crediting.
Within financial markets there is a general agreement that global market price isn’t possible without harmonisation or regional differences and while private initiatives seek to achieve this through new alternative exchanges, very little progress is apparent to create a global carbon market at the intergovernmental level. Calls at COP28 for a UN backed market sadly failed, missing the opportunity for regulation at the global level.
While 2024 may not see a global price for carbon, interest will continue to increase amongst European governments, Singapore and Arab states, amongst other authorities who would like to find a way to become the hub for a commoditised and liquid carbon market. Until then voluntary markets will continue to be a source of finance for climate mitigation and biodiversity projects, especially where access to other sources of capital are scarce.
Plastic Floats to the surface
Plastic pollution has been too far down the agenda for too long. Its impact on economy, human health, economic activity and biodiversity are well known. For too long it has been a subject of bottles on beaches and injured wildlife while alarming studies have shown that nearly three quarters of us have microplastics in our bloodstream and the health implications of the leaching of chemicals in plastic are disturbing. At current estimates nearly 20% of carbon emissions will come from plastic production by 2040, meaning it has a key role to play in climate debates as well. Sadly, just like climate, plastic pollution disproportionately affects those nations most under threat from climate change, especially the Small Island Developing States. Estimates put the cost of marine plastic pollution at between 1-5% reductions in ecosystem services causing nearly $2.5 trillion in annual losses.[2]
Help may be on its way in 2024 with international leadership set to finalise a global treaty to end plastic pollution. If ratified in 2024, this treaty would be the first legally binding international effort. It is hoped that it will mandate national action plans from all countries to tackle the full life cycle of plastics and address some of the more tricky issues such as product design and disposal. Again, opportunity is present in the potential for a large circular economy for plastics with a focus beyond recycling to reuse and refill.
Away from the international stage continued restriction on the scourge of single use plastics in Europe, the US and many other countries ought to show 2024 as another year of leadership and progress on this important issue.
Will we have our ‘methane moment’?
Our outlier bet for 2024 is the rise of methane in the climate debate. Despite anecdotes for decades of livestock ‘pumping’ methane into the atmosphere and contributing to climate change, methane has had a quiet time. This is surprising considering it’s potency as a greenhouse gas and the bulk of the emissions come from the same alleged villain as carbon, namely the energy sector. With 80 times the power of Co2, despite being shorter lived in the atmosphere, it is a critical near term risk often missing from discussions. The Environmental Defence Fund reports 25% of today’s global warming is driven by methane from human actions.[3] They have been calling for a ‘methane moment’ for some time and 2024 may see its dawn. The immediate benefits of methane reduction make it a priority to meet existing targets.
The general consensus is growing to acknowledge that without a discussion on methane, climate targets may be impossible to achieve. The good news is that existing technology can have a dramatic impact on the majority of the methane problem.
Those with their fingers on the pulse of future trends in sustainability are predicting increased discussion around methane in 2024 with some non-traditional sustainability players such as China potentially leading the debate.
A year for inflection
Finally, as actors in a the social good space, we have tirelessly campaigned for compliance, better reporting and good behaviour. 2024 is a year for us to maybe reflect on our own business activities and how they impact the planet. Too often we might find ourselves falling back on our ‘doing good’ as enough, thus not looking too hard at our own footprint.
There are lots of things we can do however. We should certainly practice what we preach and meaningfully measure our footprint and find approaches to reduce it. There are many things we can do and we should borrow from others best practice. Some in the social good space are offering their staff an extra days holiday if they travel by a more sustainable method or offering early ends to Fridays for those who car pool with colleagues. Other companies are going meat free for company funded meals and banning single use plastics. There is always more we can do and 2024 is an opportunity for us all to find ways to reduce the mark we leave.
[1] https://www.msci.com/research-and-insights/2024-sustainability-climate-trends-to-watch
[2] https://www.sciencedirect.com/science/article/pii/S0025326X19302061
[3] https://www.edf.org/climate/methane-crucial-opportunity-climate-fight
James Sawyer
James joined Oxford HR in 2023 as a principal consultant. He has over 25 years of experience in the non-profit sector focused in conservation, environment, animal welfare and emergencies. He has operated in more than 40 countries in his career, delivering policy change at national and international levels as well as significant service delivery to beneficiaries and changes to protected area status.