ESG Trends for 2024: Global Issues
ESG Trends for 2024: Global issues
As we move into 2024, climate change is becoming a more important topic for governments, businesses, and civil society alike. It’s impossible to ignore - 2023 was the hottest year on record and climate issues took centre stage at COP28, with experts emphasising the need for action towards a sustainable and equitable future. There is now a general understanding that social and climate issues cannot be ignored and the pressure for change is ramping up.
Here are the major topics that we are seeing take the forefront for ESG issues. In a series of two blogs, we will first focus on global trends, then zoom in on trends specific to ESG and business.
Fossil fuels
The question of the role of fossil fuels in global energy supplies will be a central debate in 2024. One of the major outcomes of COP28 was a final document which in UN legal jargon set out a transition away from fossil fuels alongside a tripling of renewable energy capacity and a doubling of energy efficiency by 2030. This outcome of the Global Stocktake has set the tone for action needed in the leadup to 2030 and beyond. Now the question is how the global community mobilises this commitment into tangible action – particularly when the 2023 Production Gap Report shows that government plans and projections, taken together, would increase global coal production until 2030, and oil and gas production until at least 2050.
Artificial intelligence (AI) in the spotlight
Artificial intelligence (AI) holds huge potential in advancing environmental, social, and governance goals by helping to process, analyse and interpret ESG-related data and information. This can support ESG reporting and risk management as well as tracking and promoting diversity and inclusion within organisations. AI can also assist regulatory bodies in monitoring and enforcing compliance with environmental and social regulations.
However, increasing use of AI also raises several sustainability and ethical concerns, feeding what we anticipate will be a fierce debate in the ESG scene. AI is much more energy intensive than traditional computing, with a recent study suggesting that by 2027, the AI industry could consume the same amount of energy as a country the size of the Netherlands. We are also hearing more conversations around the ethical implications of AI, with growing concerns around its tendency to perpetuate existing biases in data, and in relation to the equitable access and benefits derived from AI technologies – known as the AI divide. The World Economic Forum has also found that AI-generated misinformation and disinformation is currently the second most highly perceived global risk.
As the use of AI ramps up globally, addressing these issues will only become more important, and 2024 is likely to see more conversations around AI regulations and mitigating the stress that AI puts on the energy infrastructure.
Climate-positive technologies
Innovation and investment in climate-positive technologies will continue to be a focus in 2024 as the world looks for ways to meet Net-zero. Climate-positive (also known as carbon-negative) technology seeks to generate a net-positive impact on the environment by reversing environmental damage. These include technologies which convert CO2 into useful products and those which capture and store carbon. For example, technologies such as bioenergy with carbon capture and storage (BECCS) and direct air capture remove atmospheric carbon using geological CO2 storage.
While reducing emissions is the most important thing we can do to tackle climate change, technologies which remove emissions are necessary to offset hard-to-abate emissions, reduce atmospheric CO2, and remove historical emissions from the atmosphere. These technologies still require significant investment to progress at the rate needed to limit global warming to 1.5-2.0°C relative to pre-industrial levels. However, impetus for carbon-negative solutions is growing, and with Norway’s ‘Longship’ Carbon Dioxide Capture Project which received $1.8 billion public funding as an example, we can expect to see increased innovation and investment in this area in 2024 and in coming years.
In most sectors, technology has taken the steering wheel and ESG seems no different. Beyond more concrete conversation around the longstanding question of a ‘transition away from fossil fuels’, 2024 looks to be a year dominated by the increased use and governance of AI and climate positive technologies.