Our 2024 outlook: Now is the time for more ambitious corporate climate action

Our 2024 outlook: Now is the time for more ambitious corporate climate action

February 9, 2024

2023 was a year of significant developments in climate action, with progress made on several major initiatives. These include the Corporate Sustainability Reporting Directive (CSRD), the Green Claims Directive, the Carbon Border Adjustment Mechanism (CBAM) and many more. Some of these new regulations and guidelines are making climate action a mandatory part of companies' operations and reporting for the first time. This is a promising step forward, but as made clear in the synthesis report of the first Global Stocktake of the UNFCCC, we need even more ambitious targets and measures to achieve the goals of the Paris Agreement.   

In addition to mandatory requirements, new approaches to voluntary climate action are emerging, and corporate climate action is becoming part of the global conversation. COP28 proved that governments can learn from business, with their newfound focus on the voluntary carbon market. Companies can lead by example by switching to renewable energy, engaging suppliers in their emissions reduction, and financing climate projects beyond their own value chain.  

Below are several climate action topics for companies to keep on their radar in 2024. 

1. Be prepared for the CSRD and further regulations  

2024 will be a year in which regulation plays more of a role in boosting companies’ sustainability activities. More companies will be held accountable for their value chain impacts. Especially within the EU, new regulatory frameworks are starting to influence how businesses plan, manage, and communicate about their sustainability-related activities and how they engage with relevant stakeholders. 

With the CSRD and the proposed Green Claims Directive, the EU is making transparent sustainability communication a requirement. The upcoming Corporate Sustainability Due Diligence Directive (CSDDD) will mean that businesses must address the environmental and human rights impacts throughout their value chain. Additionally, the CBAM is addressing embedded GHG emissions in imported raw materials and products, pushing companies to shed light on upstream value chain emissions.    

In 2024, companies need to be informed about current and forthcoming regulations and standards for climate action. When it comes to reporting, the EU emphasises transparency and comparability of sustainability information across companies, value chains, and products. In order to meet these increasing requirements, companies must enhance their internal expertise or seek support from external experts. 

2. Expand your corporate climate action ambitions beyond the value chain 

The Science-Based Targets initiative (SBTi) urges companies to set ambitious climate action targets based on the latest science. However, not all emissions can be avoided, so the STBi further recommends that companies devote part of their budgets to beyond value chain mitigation (BVCM). This is a mechanism by which companies can direct resources towards emissions reduction beyond their immediate operations.  

Alongside the now-standard practice of equating the amount of financing for climate projects with the corporate carbon footprint, new approaches are being explored. These include determining the contribution to climate projects through an internal carbon price, as well as through a fixed percentage of profits or revenue. This strategy provides companies with a versatile toolkit to integrate climate action seamlessly into their financial and operational frameworks.  

3. Keep transparency front of mind  

With increasing demand from consumers for information on corporate sustainability measures, and with upcoming reporting requirements such as CSRD, climate action communication is becoming an essential part of reporting for more and more companies.  

It is therefore particularly important for companies to communicate transparently about their climate action. Vague, misleading claims such as “green”, “eco-friendly” or “sustainable” often lead to suspicions of greenwashing, because it can be hard to determine the actual measures or metrics behind the claims. To protect consumers and companies from greenwashing, the European Commission adopted the proposal for a new Green Claims Directive last year. Once the directive becomes law, there will be strict rules for substantiating any environmental claims made in companies’ customer-facing communication.  

Although the Green Claims Directive is not yet applicable, companies should already be as transparent as possible when making claims about their climate action impacts. Referring to facts, addressing unpleasant truths, and separating advertising statements from climate action communication will become even more important to avoid greenwashing allegations in the future. 

Transparency will also be a major topic for the VCM this year. Further progress was made during COP28 to increase integrity, with several key stakeholders in the market joining forces, including The Integrity Council for the Voluntary Carbon Market (ICVCM), the Greenhouse Gas (GHG) Protocol, the SBTi, and the Voluntary Carbon Markets Integrity Initiative (VCMI). These organisations will work together to create a standardised integrity framework for the VCM, covering the entire value chain from calculating emissions, setting targets, and implementing reduction measures, all the way to investing in climate projects for beyond value chain mitigation. 

4. Involve your suppliers in decarbonising your supply chain  

Decarbonising the supply chain poses a significant challenge for companies, but it is a crucial step on the net zero journey. On average, supply-chain emissions are 11.4 times higher than operational emissions. New EU regulations, such as the CSRD and the European Sustainability Reporting Standards (ESRS), require companies to consider the impacts, risks, and opportunities of scope 3 emissions. Assessing and reducing upstream and downstream emissions is therefore an important task.   

However, due to complex, international supply chains, assessing scope 3 emissions often presents the biggest hurdle for companies in their climate action, and best-practice guidance on how to manage and reduce scope 3 emissions is lacking.    

Engaging with the supply chain is key. Companies should acquaint themselves with the emerging technical possibilities, such as software solutions, in order to involve their suppliers as soon as possible. 

5. Keep up to date with the new Land Sector and Removals Guidance

The GHG Protocol will soon release its Land Sector and Removals Guidance. This new standard represents a significant advancement in the quantification and reporting of land-related carbon emissions and removals. Relevant to companies involved in land-related activities across operations and value chains, particularly in sectors like food, drink, print, paper, and packaging, the guidance is poised to reshape climate reporting.  

Having undergone stakeholder consultation and pilot testing, the final protocol is due for publication by mid-2024. Beyond its importance in awareness around the impacts of land use on the climate, this guidance holds pivotal significance for reporting, providing the foundational data for setting net zero targets in alignment with the SBTi.  

Companies engaging with this guidance will gain a clearer understanding of their climate impact, identifying hotspots, and pinpointing actionable areas. 

We need companies to take responsibility for climate action  

Businesses can make a significant contribution to reducing global emissions. Acknowledging their responsibility to take action for the climate is the first key step. Then it is up to companies, with the support of governments and organisations, to get involved, set ambitious climate action targets, and implement them. There is no such thing as too much commitment to climate action.  

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