On the near-term horizon: Artificial intelligence, nature and biodiversity risks, and a muting of ambitious public climate goals.
March 25, 2024
For more than a year, European sustainability executives have been focused on how they would comply with the Corporate Sustainability Reporting Directive (CSRD), the EU regulation requiring third-party assured disclosures of climate targets, greenhouse gas emissions, governance and more. Now, as CSRD goes into effect for the reporting year starting in January, they’re illuminating ways regulation is already changing corporate sustainability.
Last week I talked with 20 Europe- and U.K.-based sustainability leads from some of the world’s biggest companies at the London meeting of Trellis Network, GreenBiz’s peer membership group.
They’re a step ahead in making or at least considering fundamental shifts, driven by regulation, that the U.S. practitioner community is only starting to confront, because CSRD applies to 50,000 companies, including 10,000-plus based outside the EU, and the U.S.’s own SEC climate disclosure rules weren’t issued till earlier this month. While CSRD takes a more comprehensive approach, the U.S. rules also require companies to disclose on emissions and climate risks.
There are ripples U.S. sustainability practitioners can anticipate as the regulatory disclosure waves make their way across the Atlantic. Here are three of the most pronounced.
Less appetite for ambitious public goals
Motivation is diminishing for sustainability "first movers" to set ambitious public goals such as Science Based Targets or participate in voluntary indexes and disclosures such as the Dow Jones Sustainability Indices (DJSI) or the Carbon Disclosure Project known as CDP. Leaders will likely quell their stated ambitions in the fear of being held legally accountable for aiming high, but may privately continue to set and achieve audacious goals. At the same time, the bar is being raised for "bottom-dwellers," corporate sustainability laggards dragged into the fray by regulated disclosures, the European Parliament’s greenwashing crackdown and rules such as the Corporate Sustainability Due Diligence Directive that will govern environmental and human rights within corporate supply chains.
Integral AI
While it’s no secret that complex sustainability data begs to be automated or that AI tools have developed to fill the space, EU regulation has launched CSRD-reporting compan
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