Year in Review 2024 – Sustainability and ESG

2024 has been a busy year in the world of sustainability and ESG. We continue to see significant developments, making it difficult for companies to navigate the ever-changing regulatory landscape as well as understand what their key focus areas are. Our year in review seeks to provide an overview of the key themes from 2024 and what we expect will dominate sustainability conversations in 2025.

This year, we have supported companies preparing for the first round of Corporate Sustainability Reporting Directive (CSRD), strengthening their Task Force on Climate-Related Financial Disclosures (TCFD) reporting, understanding their business and stakeholder needs to prioritise and develop sustainability strategies as well as providing assurance across a wide range of sustainability data.

Key themes from sustainability and ESG from 2024

Corporate Sustainability Reporting Directive (CSRD)

For the first time, companies are legally required to report on their environmental and societal impacts under the EU’s new Directive.

Affecting over 50,000 companies, CSRD is moving the goalposts of sustainability data requirements and reporting. It requires companies to perform a “double materiality assessment” (DMA) to identify, assess, prioritise and report on their sustainability impacts, risks and opportunities.

This involves understanding your company’s key impacts and dependencies on nature and society, identifying where these pose financial risks or opportunities to your business, and assessing your business resilience. CSRD is an opportunity to truly understand the key sustainability topics for your business and their interconnections with all departments and key stakeholders, giving a real insight into how sustainability can drive value for your business.

Responding to CSRD demands considerable resource and forward planning, and companies in scope to report under CSRD in 2026 based on 2025 data have limited time to complete their DMA if they have not already done so.

ESG assurance

Regulation is increasingly focusing on the assurance of ESG and sustainability data. More importantly, businesses are seeing the value in having their data assured. It provides confidence in the data being reported and the process of assurance highlights any potential control or data weaknesses.

As a team, we regularly support clients by providing limited assurance to ISAE 3000/3410 standards with the ISQM1 quality mark. This remains the current and robust form of sustainability assurance.

Nature and biodiversity

There is a growing emphasis on biodiversity and nature in the sustainability reporting landscape, with increasing recognition of the importance of nature to businesses – over 50% of global GDP is either moderately or highly dependent on nature.

With the first companies beginning to report under the EU’s CSRD, many will be reporting their nature-related risks, opportunities, dependencies and impacts for the first time this year.

This year also marks the first expected disclosures for early adopters of the Taskforce on Nature-related Financial Disclosures (TNFD). Additionally, disclosures under CDP, the widely adopted corporate questionnaire, are becoming increasingly focused on nature-related issues.

A new Global Reporting Initiative (GRI) standard for biodiversity has also been introduced this year (GRI 101). This brings in new and expanded disclosures on biodiversity impacts throughout the value chain, location-specific reporting of impacts, and the drivers of biodiversity loss.

With this growing focus on nature from regulators and reporting frameworks, businesses are increasingly prioritising their understanding of nature-related dependencies. We are committed to helping businesses understand and manage these dependencies effectively.

Value chain

Most companies’ greatest environmental and social impacts will occur not in their own operations, but throughout their value chains, ie suppliers, transport, distribution channels, customers, end-consumer use, and product end-of-life.

Companies and regulators now acknowledge that the value chain is a key lever to achieve sustainability goals. However, most companies face major value chain data gaps and transparency issues, which they will need to address moving forward.

Improved value chain transparency can also support other areas of business resilience such as reduced supply chain disruptions and simplification of supply chains.

Looking forward: sustainability and ESG trends in 2025

UK endorsing ISSB standards

The International Sustainability Standards Board (ISSB) released their S1 and S2 sustainability standards in July 2023.

The UK government has outlined its aim to make UK-endorsed ISSB standards available in Q1 2025, which subject to a positive endorsement decision, will be known as the UK Sustainability Reporting Standards (SRS). The government has also confirmed that no significant changes are expected from the standards as they have been written. 

The ISSB S1 and S2 standards seek to create a common language for sustainability disclosure that is useful to readers of the financial statements:

• IFRS S1 sets out the general requirements for the disclosure of sustainability-related financial information and includes a number of conceptual foundations around fair presentation, materiality, reporting entities and connected information.
• IFRS S2 builds on the requirements of the Task Force on Climate-Related Financial Disclosures (TCFD) and specifically addresses disclosures around climate-related risks and opportunities. It provides additional guidance around the use of scenario analysis, greenhouse gas emissions and climate-related targets.

We anticipate that premium-listed businesses will be the first to report under the UK’s SRS, followed by large private businesses, similar to current TCFD reporting mandates in the UK. However, we will await information in 2025 and update as we learn more.

CSRD – preparing for reporting

The approximate 50,000 EU companies that must report in line with CSRD in 2026 will be focusing on preparing for this reporting. Both the double materiality assessment (DMA) and subsequent reporting under the European Sustainability Reporting Standards (ESRS) need to be assured. This will require a major focus on collecting data and implementing internal controls to ensure data is assurance ready.

Data collection requirements will vary depending on each company’s identified material topics. However, we anticipate that all companies will need to increase controls and processes around the collection of sustainability data, as there will be many new data points for companies to collect, along with the assurance requirement that will be new to a lot of companies.

At RSM, we are working with our business transformation colleagues to refine our approach to this sustainability data challenge by building bespoke tools for clients that enable them to understand their data and support them in getting ready for CSRD assurance.

Digital Product Passports

A Digital Product Passport (DPP) is an electronic record of product information and its value chain. It includes details on materials used, country of origin, environmental impact and end of life care. The aim of the DPP is to promote transparency for all stakeholders (consumers, investors etc) to enable them to make more informed purchasing decisions.

This regulation falls under the EU’s Ecodesign for Sustainable Products Regulation (ESPR) and applies to all products being sold in the EU market, regardless of the country of production. Member states will be adopting DPPs that will be mandated across 2026–2030. The information required to be included further emphasises the need for accurate sustainability data and supply chain engagement.

Other bitesize points

• Failure to prevent fraud – this extends to ESG data and builds on the theme of greenwashing.
• Human rights remains an important topic for businesses, both operationally and within their value chain.
• In October 2024, a new legal duty requires employers to take reasonable steps to prevent sexual harassment of their workers. We anticipate additional focus on this as businesses ensure they’re meeting compliance with this new legislation.
• Horizon scanning – the sustainability landscape will continue to evolve across 2025. Understanding what is important for your business will remain key to meeting developing stakeholder needs.

How our sustainability and ESG team can help your business

Our team of sustainability and ESG experts can support you regardless of what stage you’re at on your ESG journey. With pragmatic and tailored advice, our goal is to enable you to become a more sustainable business, meet your stakeholder needs and drive value and opportunities.

If you would like to discuss any of the topics mentioned above, please reach out to the team below or your usual RSM contact.