Will 2024 be the year we finally start tackling climate change? 2030 is just six years away, and the world is on pace to get there. Failure to meet carbon targets It was established in 2015 during the Paris Agreement. Simply put, companies are still not doing enough to secure the future of our planet and the ecosystems on which people and economies depend.
This year, companies must significantly improve their carbon emissions data and start aggressively reducing emissions across their value chains to keep up with new regulations, market pressures, and competitors. Investors, customers and regulators are all aware of the risks that the transition to a low-carbon economy poses for businesses. These stakeholders not only want better carbon data to assess who wins and who loses, but they also want to see real progress. This year, the expectations for companies to meet this challenge will be higher than ever.
The arrival of reporting regulations
New climate reporting regulations will come into effect in 2024.european union Corporate Sustainability Reporting Directive (CSRD) requires certain companies operating in Europe to begin disclosing their annual emissions, including Scope 3 (indirect emissions). However, Forrester predicts: 20% of eligible entities Meets mandated reporting deadlines.
Organizations operating in California must begin collecting emissions data in 2025 to meet the following requirements: State climate reporting laws More companies will be required by the Securities and Exchange Commission (SEC) to disclose their carbon impact. ESG reporting requirements. If there are regulations, Announced in 2024 As expected, they are scheduled to come into force in 2026.
Compliance for large companies will require scope 3 emissions data from all levels of the value chain. Gathering this information doesn't happen at the flip of a switch; it requires collaboration with other organizations of all sizes. This network pressure means that companies of all sizes, not just directly regulated companies, can no longer delay the development of comprehensive carbon management processes.
These laws have great potential to drive meaningful carbon reductions through scope 3 requirements. As more medium-sized and large organizations fall under reporting requirements, more companies will be forced to measure their carbon emissions to support their business customers, ultimately leading to global adoption of emissions reporting and management. It will be done.
Progress towards a greener power grid
In the United States, Inflation Control Act (IRA) The IRA provides significant tax credits for renewable energy generation and storage projects, making them more economically viable than fossil fuels. The funding will also support domestic manufacturing of clean energy technologies, such as batteries and solar panels, and increase access to these tools. Since the IRA went into effect, companies have announced: Over $270 billion Planned clean energy projects are likely to see significantly more investment in the coming years.
However, infrastructure limitations remain a significant barrier to expanding renewable energy deployment in the United States. We can generate electricity from renewable sources, but we don't have the ability to transmit it. As a result, many parts of the country that could run on clean energy remain tied to fossil fuel factories.
Upgrading the complex natural gas and fossil fuel supply framework will be difficult. Building new infrastructure often takes decades due to cost and policy hurdles. Policymakers must take dramatic and immediate action to address this problem.
Sustainability is essential for business success
Sustainability has moved from being peripheral to corporate values to a strategic business imperative that impacts day-to-day operations. Physical threats such as extreme weather can cause significant disruption to business. Resource scarcity due to climate instability threatens production and delivery. This is already having a direct impact on the agricultural sector and insurance markets across the United States. Companies must also consider changes in product demand as they transition to a low-carbon economy. For example, how much will consumer demand for gas-powered equipment like cars, snow blowers, and lawn mowers fall?
Customers, investors, governments and employees are demanding action to reduce climate risks and their impacts. 8 out of 10 consumers Consider the sustainability of your business when making purchasing decisions. Companies must incorporate these considerations into their long-term business strategies.
Traditionally, sustainability efforts have been isolated from the rest of the organization, but that wall must be broken down. The role of sustainability plays an important role in strategic planning. all Business leaders must assume these responsibilities in their daily work to drive impactful change.
face the challenges
Businesses are at a pivotal moment in determining their trajectory towards a sustainable future. Carbon management is no longer a communications department endeavor. Organizations around the world need to decisively move from tackling climate change and collecting data to implementing reduction strategies.
The coming year could be a turning point if business leaders across sectors choose to act with the urgency, investment and collaboration that decarbonization efforts require. Our collective future depends on companies making great strides in driving his 2024 sustainable revolution.
