Navigating the ESG Landscape in 2024

As we stand on the cusp of 2024, the corporate world is gearing up for a transformative year in Environmental, Social, and Governance (ESG) practices, propelled by a wave of new regulations. These standards, spanning the global stage, signify a collective commitment to heightened transparency, accountability, and sustainability, fundamentally altering the way businesses operate and disclose crucial information. 

An Overview of New ESG Legislation

We’ve briefly summarized the important regulations reshaping corporate landscapes: 

SEC’s Climate Disclosure Rules: 

• Expected Effective Date: April 2024 
• Applicability: All public companies filing the US 10-K and foreign private issuers filing 20-F forms with the SEC 
• Requirements: Companies must disclose climate change risks and greenhouse gas emissions, aiming to standardize corporate climate-related disclosures for investors. 

EU’s Corporate Sustainability Reporting Directive (CSRD): 

• Effective Date: January 1, 2024 
• Applicability: Large companies and listed SMEs operating in the EU (around 50,000 companies) 
• Requirements: Mandates reporting on climate impact, introducing standardized non-financial reporting, and redefines materiality. Aims to shift ESG from compliance to a strategic business overhaul. 

California’s Climate Corporate Data Accountability Act (SB253): 

• Deadline: End of 2024 
• Applicability: Companies with more than $1 billion in global revenue doing business in California 
• Requirements: Mandates the establishment of processes for auditing 2025 emissions ahead of 2026 reporting. Covers scope 1, 2, and 3 emissions. 

Global Plastics Treaty: 

• Anticipated Effective Date: Late 2024 
• Overview: The first-ever global agreement to address plastic pollution, setting binding rules for plastic production, reuse, and disposal. 

EU Deforestation Law: 

• Deadline for Compliance: December 2024 
• Requirements: Prohibits EU sales and exports of certain commodities associated with deforestation unless they meet strict requirements. Requires proof of a deforestation-free supply chain for products marketed in the EU. 

EU Nature Restoration Law: 

• Expected Adoption: February 2024 
• Requirements: Companies must verify products marketed in the EU do not incorporate commodities from recently deforested areas. Sets EU-level objectives for nature restoration measures.

European Parliament – Sustainable Finance Disclosure Regulation (SFDR): 

• Effective Date: June 2024 
• Applicability: Financial market participants and financial advisers active in the EU 
• Requirements: Mandates reporting on new ESG disclosure requirements, aiming to make sustainability profiles of funds more comparable and better understood.

UK FCA – Sustainability Disclosure Requirements (SDR): 

• Effective Date: May 2024 
• Applicability: FCA-regulated firms, including asset managers and owners 
• Requirements: Introduces rules and guidance to improve trust and transparency in the market for sustainable investment products, with an anti-greenwashing rule. 

Explore how Kodiak Hub can improve ESG & Sustainability throughout your supply chain and enhance your CSDDD & CSRD reporting. 

Regulations That Went Into Effect in 2023 & Expand in 2024: 

German Supply Chain Due Diligence Act (LkSG): 

• Effective Date: Already applying to enterprises based in Germany with more than 3,000 employees, or German-registered branches of foreign companies with over 3,000 employees, since 2003.  
• Expansion: In 2024, LkSG is broadening its reach to enterprises based in Germany (or German-registered branches of foreign companies) employing over 1,000 employees. 
• Requirements: Requires companies to identify, assess, and prioritize human rights and environmental protection throughout their supply chains, including their own business areas, the actions of their contracted partners, and the actions of other (indirect) suppliers.  

How Kodiak Hub's SRM Platform Can Streamline Your ESG Compliance

As businesses navigate this intricate web of regulations, staying ahead of supply chain risks becomes paramount. Kodiak Hub's product, safe(SOURCE), comes to the forefront, providing a robust solution to identify and act upon supply chain risks faster. 

safe(SOURCE)™ macro risk assessment and safe(SOURCE) premium sanction screening allow you to easily identify & manage supply chain risks related to the context in which your suppliers operate. For instance, if your suppliers operate in a part of the world that entails business ethics risks or health and safety violations, this should impact the way you choose to interact and express requirements on these suppliers. 

With safe(SOURCE) premium's sanctions, blacklists, and PEPs (Politically Exposed Persons) screening comprehensively covered, it gives you a heads up before you run into trouble. 

In the ever-evolving landscape of ESG compliance, utilizing tools like safe(SOURCE) becomes essential for businesses to not only navigate regulatory changes but also to proactively address and mitigate supply chain risks, ensuring a sustainable and responsible future.