2024: The Year for Climate Action in Business

Will 2024 be the year we finally begin to rise to the climate challenge? We are just six years away from 2030, and the world is on pace to miss the carbon goals established in 2015 during the Paris Accord. Put simply, companies are not yet doing enough to ensure the future of our planet and the ecosystems that people and our economy rely on.

This year, businesses must significantly improve their carbon emissions data and begin actively reducing emissions across their value chain to keep pace with new regulations, market pressures and competitors. Investors, customers, and regulators all see the risk that the transition to the low carbon economy poses to businesses. These stakeholders not only want better carbon data to assess who will win and who will lose -- they want to see real progress. This year, expectations will be higher than ever for companies to step up to the challenge.

Reporting Regulations Are Coming

New climate reporting regulations take effect in 2024. The European Union’s Corporate Sustainability Reporting Directive (CSRD) requires certain companies operating in Europe to begin disclosing the year’s emissions -- including Scope 3 (indirect emissions). Yet Forrester predicts only 20% of covered entities will make the mandated reporting deadline.

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Organizations doing business in California must start capturing emissions data in 2025 to fulfill the state's climate reporting law obligations in 2026. Even more companies will be required to disclose carbon impacts when the US Securities and Exchange Commission (SEC) finalizes its ESG reporting requirements. If the regulations are announced in 2024 as expected, they will take effect in 2026.

To comply, large corporations will need Scope 3 emissions data from all levels of their value chain. Gathering this information does not happen with the flip of a switch and will require collaboration with other entities of all sizes. This network pressure means that companies of all sizes, not just those directly subjected to regulations, can no longer delay developing comprehensive carbon management processes.

These laws have significant potential to drive meaningful carbon reductions through their Scope 3 requirements. As additional medium and large organizations fall under reporting requirements, more companies will be compelled to measure carbon output to support their corporate customers, eventually leading to the global adoption of emissions reporting and management.

Progress Toward a Greener Grid

I predict that in the United States, the Inflation Reduction Act (IRA) will accelerate the transition to a green economy in 2024. The IRA offers substantial tax credits for renewable energy generation and storage projects, making them more economically viable than fossil fuels. Funding also supports domestic manufacturing of clean energy technologies like batteries and solar panels to increase access to these tools. Since the IRA took effect, companies have announced more than $270 billion in planned clean energy projects, with significantly more investments likely in the years ahead.

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However, infrastructure limitations represent a critical barrier to scaling renewable energy adoption in the United States. We can create power from renewable sources, but we lack the capacity to transmit it. As a result, many parts of the country that could run on clean energy remain tethered to fossil fuel plants.

Upgrading the intricate natural gas and fossil fuel delivery frameworks will be difficult. Building new infrastructure often takes decades due to costs and policy hurdles. Policymakers must take dramatic and swift action to address this problem.

Sustainability Will Be Critical to Business Success

Sustainability has moved from a peripheral corporate value to a strategic business imperative impacting day-to-day operations. Physical threats -- like extreme weather -- cause major business disruptions; resource scarcity driven by climate instability threatens production and delivery. This is already directly impacting agricultural sectors and insurance markets across the US. Businesses must also consider shifts in product demands as we transition to the low-carbon economy. For example, how much will consumer demand fall for gas-powered equipment, like cars, snow blowers or lawnmowers?

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Customers, investors, governments, and employees are demanding action to mitigate climate risk and impact. Eight in 10 consumers consider a business’s sustainability when making purchasing decisions. Companies must build these considerations into their long-term business strategy.

Traditionally, sustainability initiatives have been siloed from the rest of the organization, but those walls must be demolished. Sustainability roles play a critical part in strategic planning -- and all business leaders must assume these responsibilities in their day-to-day operations to drive impactful change. 

Rising to the Challenge

Companies face a pivotal moment to set the trajectory for a sustainable future. Carbon management is no longer a comms initiative. Organizations globally must move decisively from making climate commitments and collecting data to executing reduction strategies.

The year ahead can become a turning point if business leaders across sectors choose to act with the urgency, investment, and collaboration the decarbonization effort demands. Our collective future depends on companies making substantial progress in mobilizing the sustainable revolution in 2024.