As we stand on the cusp of a new year, in retrospect 2023 was a landmark year for supply chain sustainability, marked by significant progress and a growing sense of urgency. The year saw progress on multiple fronts - technological advancements, regulatory shifts, and an increased global awareness about environmental and social responsibility.
As we head into 2024, these budding trends are poised to transform the landscape, painting a picture of resilience and responsibility. The momentum should accelerate, bringing transformative changes and exciting opportunities.
In this blog, we delve into the pivotal trends that defined 2023 and anticipate directions that will shape supply chain sustainability in 2024.
2023: A Year of Groundwork and Awakening
Climate Fintech Took Center Stage: One of the defining trends of 2023 was the emergence of Climate Fintech. Blending finance and sustainability, Climate Fintech emerged as a powerful force, channeling investments into green initiatives like renewable energy and carbon capture. This trend will mature in 2024, attracting even more funding and offering innovative and environmentally conscious investment options.
Regulation Paved the Way: The year saw a surge in regulatory activity, with initiatives like the EU's Corporate Sustainability Reporting Directive (CSRD) and proposed SEC rules in the US laying the groundwork for standardized and enforceable sustainability reporting. 2023 also saw BRSR picking up more steam in India, with more and more companies including it in their annual reports.
Human Rights Came into Focus: The Business and Human Rights Resource Centre's (BHRRC) Business Reporting on Sustainability Reporting Standard (BRSR) gained traction, highlighting the importance of transparency in a company's impact on human rights. This focus on ethical practices will remain central in 2024, aligning with broader sustainability goals.
Climate Risks Hit Home: Extreme weather events throughout 2023 served as a stark reminder of the urgency of climate action - from devastating wildfires to unprecedented floods, the need for comprehensive climate risk management strategies became evident. We expect this wake-up call to drive a more profound integration of climate risk management strategies into business practices in 2024. Organizations began to realize the urgency of integrating climate resilience into their supply chain processes to mitigate potential disruptions and ensure long-term sustainability.
COP28 Key Takeaways:
While the fossil fuel agreement primarily garnered the headlines, how countries will choose to contribute to the equitable distribution of carbon emission responsibility will only emerge in 2025—delayed gratification once again, which is becoming the norm with the COP summits. The topic of greenwashing rose again with the selection of the host and calls to stop using tree plantations to avoid responsibility to reduce emissions were loud. Organizations must now sift through the details to align their climate efforts to help their nations meet their commitments. The overwhelming mood favored accelerating renewable energy adoption, which organizations must consider seriously to avoid reputational loss.
2024: An Era of Transformation and Impact
AI Becomes the Sustainability Champion: Artificial intelligence (AI) is poised to play a transformative role in sustainability. Advancements in AI will simplify ESG data management. It will streamline collecting, analyzing, and reporting sustainability metrics. The technology will also help optimize resource utilization and empower companies to make data-driven decisions for improved energy efficiency, reduced environmental impact, and upgraded overall sustainability performance.
Regulation Takes the Wheel: With regulations like BRSR, CSRD, SEC, and TNFD in full swing and potential new rules coming into effect, 2024 will see a significant increase in standardized and transparent sustainability reporting. This regulatory push will drive greater accountability and accelerate progress toward environmental and social goals. Moreover, we also expect more stringent actions and vigorous legal repercussions for greenwashing. The EU has agreed to ban greenwashing and set new rules to prevent deceptive advertisements. It will likely force companies to be more careful in their environmental narratives.
Circular Economy Takes Hold: The circular economy will be a defining trend in 2024. Organizations will integrate circular economy principles into supply chain sustainability strategies as they recognize the importance of reducing waste and optimizing resource utilization. From product design to end-of-life considerations, a circular economy approach aims to create a closed-loop system that minimizes environmental impact.
Third-Party Assurance Gains Trust: As companies prioritize credible sustainability reporting, the demand for third-party assurance services will rise in 2024. Independent assessments will strengthen the validity of sustainability disclosures, fostering greater trust and transparency in the market. This move aligns with the broader trend of ensuring transparency and accountability in pursuing sustainable business practices.
Enterprises Empower Their Suppliers:
An increasing number of regulations now demand Scope-3 emissions data in ESG disclosures. We expect that as this trend evolves, so will large enterprises. More and more enterprises will enable their value chain suppliers through technology and other resources, and empower them to capture and process data more effectively and efficiently. Collaboration will hold the key in this evolved enterprise-suppliers relationship.
Collaboration was also one of the key themes our esteemed speakers at Treeni’s 9th edition of Sustainability for Breakfast resoundingly echoed in their panel discussions. The summit saw thought leaders, seasoned veterans, and best industry practitioners coming together under one roof to discuss Supply Chain Sustainability within the ITeS Sector. Click here to read the key takeaways.
Takeaway: Seizing the Opportunity
Collectively, these trends paint a picture of a rapidly evolving landscape for supply chain sustainability. With a more robust regulatory framework, innovative technological solutions, and heightened awareness of social and environmental responsibilities, 2024 presents a unique opportunity for businesses to embrace change and secure their future. Organizations that actively understand, embrace, and leverage these developments will be best positioned to positively impact the world while achieving long-term success.
We can collectively move towards a more resilient and sustainable future where the supply chain drives positive change by seizing this opportunity. The groundwork laid in 2023 has set the stage for a transformative year ahead, and the responsibility lies with all of us to make 2024 a turning point in the journey towards a sustainable future.
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