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Key Trends Shaping the Sustainability Agenda in 2024

1/12/2024
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As we step into 2024, the corporate sustainability landscape is quickly evolving, transitioning from a nice-to-have into an absolute business imperative. Corporates are bracing for a new era of stringent transparency and regulatory scrutiny, with the EU's Corporate Sustainability Reporting Directive (CSRD) coming into effect on 1 January and the US’s Securities and Exchange Commission (SEC) slated to introduce climate-related disclosures in April.

Amidst heightened scrutiny from both consumers and regulators keen to spot greenwashing, the demand for authentic corporate accountability is louder than ever. Therefore, businesses are breaking away from traditional thinking, no longer viewing sustainability as a burdensome obligation but rather as a long-term catalyst for cost-efficiency.

Euromonitor International has identified three key trends shaping the global sustainability agenda in 2024.

Compliance and disclosure: Stepping up to standardisation

The first crucial trend to watch is the increasing focus on compliance and disclosure, as 2024 will see standardised reporting framework taking place like the EU's CSRD and the US’s SEC Climate Disclosure.

Such regulatory advancements are , reshaping the way businesses account for their sustainability efforts. From now on, reporting will not just be about ticking boxes; it is evolving to foster a culture of transparency and accountability that goes beyond compliance to drive real change.

In fact, preparing for these changes, more corporates mentioned publishing sustainability reports from 2022 to 2023, with ESG and Sustainability reports the ones that grew the most, according to Euromonitor’s Voice of the Industry Sustainability Survey 2023.

Although these changes initially impact the EU and the US, businesses worldwide should adopt these standards to stay ahead of stricter regulations, particularly given the increased scrutiny of supplier emissions transparency in global trade.Chart showing Main Corporate Sustainability Report Types Published

For fast-moving consumer goods companies (FMCGs), this standardisation in reporting presents an opportunity to demonstrate their commitment to sustainability, differentiate their brand and build trust with consumers, stakeholders, and regulators. Moreover, a standardised reporting framework, aligned with international standards like the EU's CSRD or the International Sustainability Standards Board (ISSB), can also aid in identifying and mitigating potential environmental risks, and consolidating information to take better decisions, thus enhancing business resilience.

Transparency: The antidote to greenwashing

A growing demand for corporate transparency is shaping the sustainability landscape, as consumers are increasingly savvy, and regulators are more vigilant than ever about greenwashing.

For instance, the EU's Green Claims Directive is set to play a decisive role in protecting consumers by requiring companies to substantiate their sustainability claims. So, in 2024, differentiation will hinge on the use of trusted, certified claims, and the backing of third-party entities. Also, considering the increasing scrutiny over scope 3 emissions and the mounting pressure of natural disasters on supply chain efficiencies, closer collaboration with suppliers and stronger partnerships will be crucial.

45% of global respondents mentioned their company plans on investing in certifications to avoid greenwashing over the next five years

Source: Euromonitor’s Voice of the Industry Sustainability Survey 2023

For FMCGs, this amplified demand for transparency requires a holistic approach to sustainability, from sourcing and production to marketing and sales. It's about showing, not just telling, how they are making a positive impact.

So, by providing consumers with clear, credible, and accessible information about their sustainability efforts, FMCGs can stand out in a crowded market, cultivate loyalty, improve brand reputation and drive sales. Additionally, transparent practices can help companies anticipate and adapt to regulatory changes, thus strengthening their resilience and capacity for sustainable growth. 

Sustainability as a cost-efficiency driver

In 2024, forward-thinking businesses are beginning to reframe sustainability as a long-term driver for cost-efficiency. This is particularly relevant for FMCGs, which often operate on thin margins and need to balance their sustainability goals with their financial objectives.

Businesses investing in Sustainability Initiatives to cut costs increased by 6.5 percentage points from 2022 to 2023

Source: Euromonitor’s Voice of the Industry Sustainability Survey, 2023

Implementing sustainable practices can lead to significant cost savings in the long run. For instance, Taco Bell and KFC are using artificial intelligence to make their weekly supply orders, increasing accuracy and curbing food waste. Also, investing in renewable energy is part of corporates’ long-term strategies to decrease operational costs and carbon emissions. For example, Nestlé is investing in a 600-hectare solar project in Texas. The company will purchase 100% of the renewable electricity from the project, which will help power many of Nestlé's US facilities, expecting to reduce 126,294 tonnes of CO2 annually.Chart showing Selected climate-related actions companies are currently investing or planning to invest in 2023

Moreover, a strong sustainability strategy can help FMCGs attract and retain talent, engage stakeholders, meet growing consumer demands and drive innovation, opening up opportunities for new products, services, or business models that can generate additional revenue.

By integrating sustainability into their core strategy, FMCGs can not only enhance their environmental and social impact but also boost their bottom line, demonstrating that sustainability and profitability can indeed go hand in hand and avoid passing on higher costs to financially stressed consumers.

As we venture into 2024, it's clear that sustainability is a business imperative. From strict compliance and disclosure regulations to the demand for transparency and the view of sustainability as a driver for cost-efficiency, FMCGs are being pushed to evolve. By embracing these trends, businesses can not only meet regulatory demands and consumer expectations, but also build resilience and trust, drive innovation, and ultimately secure their long-term success in a rapidly changing landscape.

Visit our Sustainability page for further insights into where to play and how to win with sustainable claims.

 

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