2024 was a transformative year for ESG, defined by ambitious new regulations, evolving reporting standards, and the rising prominence of sustainability governance. As businesses navigated the complexities of double materiality, data challenges, and growing accountability demands, the need for robust systems and clear strategies became more apparent than ever. Here are the five key developments that shaped ESG this year.
#1. An unprecedented wave of new standards and regulations
2024 marked a watershed year in the global ESG landscape, characterized by a surge of groundbreaking regulations coming into effect across multiple jurisdictions. At the forefront of this regulatory wave was the European Union's Corporate Sustainability Reporting Directive (CSRD), unparalleled in its scope and impact, mandating comprehensive sustainability disclosures for nearly 50,000 companies; the new rules will first apply to companies' 2024 financial year, with reports to be published in 2025.
Also on the EU front, the Corporate Sustainability Due Diligence Directive (CSDDD) entered into force on July 25th, 2024, requiring companies to integrate human rights and environmental considerations into their operations. The directive requires companies to conduct due diligence across their operations, subsidiaries, and value chains, following the OECD’s six-step framework for identifying, preventing, and mitigating adverse human rights and environmental impacts.
In parallel, IFRS Sustainability Disclosure Standards (IFRS S1 and S2)came into effect on January 1, 2024, aiming to establish a new global baseline for sustainability-related financial disclosures. Over twenty jurisdictions are moving to adopt or have already integrated the IFRS S1 and S2 standards into their national regulatory frameworks. According to the IFRS Foundation, these jurisdictions represent approximately 75% of global market capitalization, excluding the United States.
Movement on the North American front
The long-awaited U.S. SEC climate-related disclosure rule was adopted on March 6, 2024, marking a pivotal moment for publicly traded companies. However, less than a month later, the rule’s implementation was paused following lawsuits from 25 states and other entities. The rule faces an uncertain future under the incoming Trump administration, with speculation that it may be overturned altogether.
Meanwhile, states like California have taken bold action on their own. Set to take effect in 2026, California’s SB253 and SB261 mandate emissions disclosures and climate risk reporting for large public and private companies that ‘do business’ in California; thus far, the courts have upheld the rule. Other states, such as New York and Illinois, are also advancing climate-focused legislation, underscoring growing momentum at the state level.
On December 18, 2024, the Canadian Sustainability Standards Board (CSSB) released its inaugural Canadian Sustainability Disclosure Standards (CSDS1 and CSDS2), aligned with global ISSB standards. CSDS1 sets the general requirements for material sustainability-related financial information disclosure, while CSDS2 focuses on critical climate-related risks and opportunities. The standards are currently available for voluntary adoption, marking a significant step in Canada’s sustainability reporting efforts.
#2. Elevated board stewardship
We are witnessing a clear trajectory toward formalizing sustainability governance, driven by increasing demand for accountability and robust ESG oversight. A key aspect of this evolution is the rising prominence of sustainability committees. Typically established at the board level, these committees are tasked with integrating ESG priorities into strategic decision-making and ensuring corporate accountability.
Globally, this trend is mirrored in countries like Australia, where the ASX 200—a benchmark index for Australian public companies—has seen a significant rise in sustainability committees. As of 2024, 41% of ASX 200 companies have a dedicated sustainability committee, marking a 10% increase since 2021 and reflecting the growing emphasis on board-level oversight of ESG issues.
In the UK, this trend is also gaining momentum. According to the Chartered Governance Institute (CGI) UK & Ireland, a growing number of UK companies are establishing committees dedicated to ESG and sustainability at the board level. Based on their survey of 130 governance professionals, 51 of the FTSE 100 companies had established a committee as of Q1 2024, with the practice expanding beyond the largest firms. Moreover, they note new awareness and responsiveness from regulators: “In 2024, for the first time, the Financial Reporting Council’s guidance accompanying the UK Corporate Governance Code included a dedicated section on sustainability committees.”
The growing interest in sustainability committees aligns with a broader trend of increased board-level engagement and oversight in climate and sustainability governance. Recent data underscores this evolution. WTW’s 2024 Global Directors and Officers Survey highlights how 55% of global board members now view climate change as an “extremely important” or “very important” risk—up from 42% the previous year. Furthermore, some companies, 17% of the S&P 500, have established dedicated sustainability or ESG committees to ensure board-level attention and focus on these issues.
#3. Continued global harmonization efforts
The move toward harmonized global sustainability reporting standards accelerated in 2024, driven by efforts to improve interoperability among frameworks and reduce the burden of double reporting. The EU’s CSRD and its European Sustainability Reporting Standards (ESRS) have played a leading role by aligning with existing standards and frameworks, including the TCFD, IFRS, and the GRI, in addition to the EU Taxonomy for Sustainable Activities. Similarly, the newly implemented CSDDD aligns with other EU initiatives, such as the CSRD and EU climate legislation.
Moreover, collaboration between major standard-setters has continued to drive momentum. For example, the GRI and Taskforce on Nature-related Financial Disclosures(TNFD) released a joint interoperability mapping tool earlier this year, simplifying biodiversity reporting for thousands of organizations. This resource aims to streamline processes, enhance transparency, and address challenges in integrating nature-related disclosures into broader ESG frameworks.
Complementing these developments are the IFRS Sustainability Disclosure Standards (S1 and S2), which embed the TCFD Recommendations within their structure. These standards, developed by the ISSB, align closely with the EU’s ESRS, further supporting global harmonization. By focusing on comparability and transparency, IFRS S1 and S2 represent a cornerstone in creating a unified foundation for ESG reporting, enabling businesses to meet growing demands for consistent, reliable sustainability data.
#4. Double materiality proved challenging
Double Materiality Assessments (DMAs) became one of the most intricate aspects of ESG reporting in 2024, driven by the CSRD’s dual focus on financial risks and broader environmental and social impacts. These requirements demand a deeper, more comprehensive evaluation from companies.
Deloitte identifies several challenges, including balancing diverse stakeholder perspectives, aggregating impacts across varied domains, and the absence of uniform metrics, which complicates prioritization and decision-making. Ensuring consistency across assessments adds another layer of difficulty, emphasizing the need for standardized and objective methodologies to support effective reporting
These challenges are compounded by the whole-of-value-chain approach, which demands assessments across upstream suppliers and downstream customers. S&P Global notes that visibility into value chain activities remains a significant hurdle, particularly for companies with extensive supply chains or operations in regions with less advanced reporting frameworks. Many organizations lack the capabilities to assess and report on their full value chain exposure effectively.
With estimated annual costs of EUR 320,000 per company and resource-intensive requirements, double materiality assessments have proven to be both complex and costly, underscoring the need for better tools and frameworks to support compliance.
#5. ESG data management and reporting woes persisted
ESG reporting challenges persisted in 2024, with many corporates still feeling unprepared to meet more stringent disclosure requirements.
Reuters reports that “only 22% of CFOs said they feel they are ready for climate reporting and assurance requirements even though they see reporting requirements increasing over the next five years.” Similarly, findings from KPMG’s ESG Assurance Maturity Index—based on responses from 1000 companies—found that less than 30% of companies are ready for upcoming ESG assurance requirements, with “skills and resources seen as the single biggest challenge for all levels of maturity”.
Managing ESG data remains a critical challenge. KPMG’s recent survey reveals that 47% of organizations still rely on spreadsheets. This raises concerns about the risks of low-quality data, which can lead to inaccurate market valuations and ineffective management of ESG issues. Poor data governance continues to exacerbate these challenges, leading to fragmented information across departments.
These ongoing issues not only hinder effective ESG strategy implementation but also increase the risk of greenwashing, as companies may present misleading information due to unreliable data. As stakeholders demand greater transparency and accuracy in ESG reporting, organizations must invest in robust data management systems that ensure high-quality, consistent, and verifiable data.
Navigate 2025 with the right tools
Faced with mounting ESG reporting demands, companies are seeking innovative solutions to navigate the road ahead. Research by Verdantix shows that 81% of firms planned to increase spending on ESG reporting and data management software in 2024, driven by rising regulations, expanding disclosure requirements, and the need to proactively manage risks while improving sustainability performance.
The right software is no longer just a convenience—it’s a necessity. From streamlining materiality assessments to managing carbon emissions, advanced tools are helping businesses tackle evolving ESG demands with greater efficiency and effectiveness.
Looking to navigate 2025 with clarity and confidence? Our team is on stand-by to explore how Novisto can help elevate your ESG strategy. Contact us today.