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What does 24/25 look like for ESG reporting?

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As we get into the swing of the new financial year, we break down 6 key ESG reporting trends upcoming in 2024/25. We cover the impact of emerging AI technology, transparent communications, the green skills shortage, biodiversity and supply chains, and the ever-changing regulatory landscape.

Read Time
4 mins
Chloe Davis

Regulatory landscape for 24/25

Senior Sustainability Consultant Amber Rochette (LLM Environmental Law & Sustainable Development) gives us a run through:

Regulation and legislation covering various sustainability topics is coming in thick and fast. In 2024 we have already seen the Biodiversity Net Gain (BNG) requirements go live in the UK, enforcing better biodiversity considerations and overall gain for all new developments. Across the pond, aligning with the EU Corporate Sustainability Reporting Directive is already starting to become a reality for many organisations. France was one of the first countries to transpose the legislation, and has set possible jail time for failing to comply. At the time of writing, 5 countries have transposed the EU CSRD into national law. The deadline for transposition is the 6th of July 2024 – so we can be sure to see a flurry of national legislation being adopted in the EU this year.

“A big thing for our clients this year is CSRD compliance and getting up to standard before it’s required.” – Alice, Client Relationship Manager

As a result, companies must ensure they have good quality evidence at hand to prove they are meeting regulatory obligations.

“At the moment, many of our clients are focusing on preparing for auditing, ensuring they have sufficient evidence and that data is of the highest quality” – Lois, Client Relationship Manager

Take a look at our deep dive into the CSRD to find out more about the requirements of the new directive and its transformative impact on reporting practices.

Biodiversity and nature recovery

We just mentioned the BNG requirements coming into effect, and biodiversity reporting is becoming increasingly important in all sectors. Net zero carbon is not enough – nature recovery is essential to protecting our planet. The latest State of Nature Report has stated ‘the UK is now one of the most e-depleted countries on Earth, yet we have never had a better understanding of the State of Nature, and what is needed to fix it’. In response, we’re seeing an increase in local action plans that focus on engaging organisations to restore local ecosystems. For example, the West of England Combined Authority in our home city of Bristol has developed a Local Nature Recovery Strategy. These strategies and action plans will trickle down to businesses in the area, as nature and biodiversity become priorities for stakeholders. Cross-sector collaboration is key to achieving these local authority goals.

Looking further afield, PwC analysis found that 55% of the global economy depends on nature. As such, it seems that the new Taskforce on Nature-related Financial Disclosures (TNFD), is long overdue. Like the TCFD (Taskforce on Climate-related Financial Disclosures), this refers to a set of disclosure recommendations for businesses to assess, report and act on their nature-related dependencies, impacts, risks, and opportunities. 320 organisations committed to nature-related disclosures based on TNFD’s recommendation at the Davos conference in January. We’re expecting more and more companies to start using the TNFD to guide their sustainability data reporting this financial year.

Responsible AI

When Open AI’s Chat GPT came into prominence last year, it put generative artificial intelligence at the forefront of everyone’s mind – from copywriters to data analysts. AI remains a hot topic, and we’ve previously discussed how it can be used in the sustainability world. But it’s not always all it’s cracked up to be – remember the classic computer science principle of garbage-in, garbage out. The data being entered must be of high quality for machine learning to produce useful insights.

Verdantix predicts that most organisations are yet to embrace generative AI for sustainability reporting with accuracy, originality and data privacy remaining a concern. Nonetheless, the use of AI will only continue to rise. As a result, we expect to see increasing regulations and standards evolve around its use following the publication of the ISO 42001 standard for responsible Artificial Intelligence Management Systems (AIMS). We’re seeing responsible AI make its way into our clients’ ESG reports as it becomes increasingly material.

Supply chain engagement

As Scope 3 reporting requirements increase in breadth and stringency, more companies will be required to report on their supply chain emissions. Stakeholders are also demanding more accountability for large corporates to be responsible for their supply chain ESG standards. If enacted, the upcoming EU Corporate Sustainability Due Diligence Directive (CSDD) would improve the regulatory framework around requirements for EU companies to identify and mitigate against human rights abuses and negative environmental impacts across their activities and supply chains. Reuters predicts that supply chains will see the biggest convergence of environmental and social elements of ESG with carbon emissions and ethical labour at the forefront.

We’re seeing lots of our clients use third-party standards or rating agencies to guide supplier data collection. For example, EcoVadis is used by lots of large organisations to manage their supply chain. Whilst there are drawbacks (it’s expensive to participate so smaller suppliers won’t have information available), it can also be an incredibly useful tool for big companies with lots of suppliers.

“One of our clients is really focusing on EcoVadis this year – not only is it a recognisable certification, but it also helps them assess their suppliers and gather ESG data “ – Alice

Read our blog post to learn more about how it works- EcoVadis explained – understanding sustainability ratings.

Transparent communications

Greenwashing was the word of 2023. And for 24/25 we’re seeing false green claims carry legal repercussions. The development of the EU Green Claims regulations, plus increasingly rigorous guidelines set by the ASA in the UK, means that companies could face significant fines if advertisements are seen to be misleading about sustainability. Not to mention the damage to reputation.

Increasingly, stakeholders will want to see the hard data behind any statements of environmental benefits. Mapping your sustainability data and having a strong data strategy in place can help you back up your environmental statements.

“Having a data mapping process in place allows you to be confident in the data that you’re collecting. If you know what checks are being put in place to validate the data, and you know that when you use that data to back up your green claims that it’s reliable, you can have a lot more confidence in the data.” – Grace Boden, Senior Sustainability Data Manager

We’re also seeing organisations commended for being transparent about the challenges they’ve faced in their sustainability journey. Reporting on the bumps in the road can garner trust and cement a culture of learning and improvement.


Green skills

As we navigate the complexities of ESG reporting in 24/25, the importance of green skills cannot be overstated. However, according to the 2023 LinkedIn Global Green Skills report, positions hiring for ‘green’ jobs are growing nearly twice as fast as the number of skilled workers who could fill them. This financial year we’re expecting to see organisations invest in upskilling their employees with an increasing need for external expertise. This is something our client relationship managers are already recognising:

“With a heavy focus on upskilling this year, we’re supporting with training, webinars and guidance documents to help ESG system users improve their data reporting abilities.” – Alice

As the demand for ESG expertise continues to rise, investing in green skills has become imperative for both individuals and organizations alike. In the rapidly changing reporting landscape of ESG, bridging the gap in green skills is a strategic imperative.


To conclude…

Our 3 top tips for 24/25:

  1. Stay on top of regulatory requirements to help you prepare for ESG reporting demands. Even if you’re not directly in scope, you might still be impacted as a supplier or customer.
  2. Make sure you have high quality data to provide evidence for audits and to back up green claims. Consider the quality and security of data if using AI.
  3. Think about nature and the environment as stakeholders in your business. Some forward-thinking businesses like Patagonia have even appointed ‘Mother Nature’ to the board. With the increasing focus on nature recovery, sustainability should be integral to strategic decision making.
Oak tree leaves

Want to talk about your sustainability priorities for 24/25?