Photo by Dmytro Varavin on iStock
January 10, 2024
The multiple shocks and surprises affecting our world in the 2020s can easily lead us to think that we don’t know what’s coming next. It would be folly—and senseless—to diminish the impacts of a global pandemic, geopolitical conflict, and social upheaval.
And yet, as world-shaking as these disruptions are, the underlying questions at the heart of the role of business in society remain very clear. Our collective challenge is focused on three fundamental goals: accelerating the shift to an inclusive clean energy economy, ensuring that revolutionary new technologies are designed and deployed in service of society, and creating more equitable societies and economies.
These were all core questions in 2023 and they will continue to be for the foreseeable future. And they will be BSR’s focus in 2024. As we work with our 300+ member companies globally to support their ability to transform in service of these goals, we will be focusing our insights, advice, and collaborations on these areas.
While 2024 is in many ways a continuation of underlying changes that continue to reshape our world, the new year does present some unique questions. How we respond to them will shape not only how this year plays out, but also our lives for many years to come.
Here are the seven questions that will define how much progress is made in the year ahead.
1. What impact could the 2024 global elections have on just and sustainable business, and what can companies do about it?
Nearly two-thirds of the world’s population is living in countries with elections in 2024: more than any other year in human history. These elections are, in one way, a triumph for democracies that emerged and proved resilient in the 20th century. But many people are fearful of change, facing dislocation, and are on the receiving end of misinformation. This fertile ground for populist backlash risks undermining progress on climate action, diverse and equitable societies, and the international cooperation needed for truly shared prosperity. So, while this year will understandably have a significant focus on politics, the spate of elections is very much a business issue. The outcomes of these elections will help determine not only traditional policy questions, but also the degree to which the rule of law is respected, whether international cooperation on climate and other shared challenges is possible, and the degree of support for global trade. Companies therefore should stand up for free and fair elections, and the protection of democratic processes. This role is not natural or comfortable for many business leaders. The stakes, however, are too great for businesses to stand aside.
2. Will the COP28 agreement mark a real transition?
The fierce debate over whether the COP 28 agreement was sufficient is, to some degree, beside the point. The more salient question today is: will nations, businesses, and investors breathe life into the agreement, or render it a dead letter? Investments, innovation, and collaboration are continuing, but not at the pace that’s needed to achieve the rapid transformation required to limit global warming. The just transition is now firmly on the agenda, but too few companies have comprehensive approaches needed to ensure the transition is equitable and fair for all people. The legal considerations that come along with new reporting and disclosure requirements threaten to focus attention on delivering the data rather than delivering clean energy at scale. As we enter 2024, it is not so much a course correction we need, but rather redoubling efforts, without which the emissions reductions needed by 2030 won’t materialize.
3. Are DEI commitments flagging?
There is substantial evidence that the post-2020 efforts to strengthen diversity, particularly in the US, are fading. Data suggest that companies have pulled back on DEI staffing, and the backlash against such efforts, including legal challenges in the US, is accelerating a pullback. But the need for continued progress in the effort to achieve more inclusive companies, workplaces, and communities, remains as compelling as ever. Representation on Boards and in senior management continues to lag behind the overall workforce. Income inequality continues and is partly to blame for the populist movements that have limited public commitments to progress on other key issues like climate and nature. In fact, the business case for DEI remains as strong as ever, not least given the changing nature of the workforce and consumer base. History also teaches us that there will be more moments of reckoning when companies will face pressure to explain their follow-through on prior commitments. Boards and senior management need to send clear signals that they embrace and are ready to develop the diverse workforces of the future, and this remains crucial despite legal challenges.
4. Can we ensure that emerging technology is developed responsibly and sustainably?
The arrival of generative AI was bookended by the emergence of ChatGPT at the beginning of the year and the OpenAI drama at its close. As Winston Churchill said in a very different context, this is only “the end of the beginning” of complicated debates over new technologies and their social impacts. My advice is to believe neither the techno-utopians nor the doomsayers: AI will deliver both great opportunities while presenting us with profound questions and dilemmas, and they will both deepen as the technology advances. And more questions, on other technological innovations, are coming fast: the first approved treatment based on CRISPR gene editing technology also arrived, albeit with less fanfare, in 2023, and biotech will present new and complicated dilemmas. The existing mishmash of efforts to set guidelines will only confuse matters. Setting the rules of the road for the key actors involved will require both smart and flexible regulation, ideally synchronized between jurisdictions, as well as self-restraint on the part of business. Here again, business is going to need to get engaged—appropriately—in promoting regulatory frameworks with sufficient flexibility to enable innovation to flourish.
5. Will new regulations turn sustainability into a compliance exercise?
As we have written over the past year, the rise of regulatory requirements is a game changer for every business. This is undeniably a beneficial development. There are many reasons to believe that performance and transparency will increase on a wide range of topics: climate and nature, reporting and disclosure, human rights, and corporate governance primary among them. We also see a number of unintended consequences that deserve ongoing attention. We hear from many companies that resources are being dedicated to compliance rather than performance. Businesses are busy preparing for the EU’s Corporate Sustainability Reporting Directive (CSRD); that makes sense currently but should not crowd out ongoing ambition and innovation. The valuable caution in avoiding greenwashing claims is also being applied to tamp down ambition, both in communication and goal setting. There is also a growing focus on what can be quantified and verified, which applies well in some cases (measuring emissions) and misses the point on others (positive social impact). Compliance is of course non-negotiable, but no company ever complied to innovation, ambition, and excellence, and sustainability has to find a way to achieve all of the above.
6. How is the role of the Chief Sustainability Officer (CSO) changing?
In our discussions with Chief Sustainability Officers, it is also clear that the role of CSOs and their teams is at a crossroads. There is no doubt that the increased boardroom presence of the CSO is a major step forward. This advance should not come at the expense of the change agent role that CSOs can uniquely play. They should look to the future, and not focus too much on quantifying past performance. CSOs must also learn to see across interconnected issues, not serve merely as technical engineers in specific domains. And, finally, they must understand and deliver qualitative benefits, and not focus only on things that can be measured and verified with precision: the best and highest role the CSO can play is not as a compliance officer. Maintaining the essence—and even the soul—of the role is crucial in 2024.
7. How will business juggle so much interlocking change?
The final question could be dismissed as a process question, but it is crucial. The reality is that business leaders are juggling an immense number of profound questions. Business models, the very nature of work, technologies, environmental challenges, and societal expectations continue to intensify and change. That will only accelerate this year and in the years ahead. This is why principled leadership, strong governance, and clear vision have never been more important. The to-do list for business is replete with items that present both transformative opportunities and so-called “wicked questions.” The impulse to say “not my problem” won’t work. Today’s leaders will be judged by how well they embrace change, make sense of it for their colleagues and stakeholders, and stay true to principle, while continuing to focus on long-term value creation that brings shared societal benefits and respects natural resource boundaries.
These questions are interesting to debate. But more than that, they represent a priority list for every business. In the year ahead, we will be advocating and acting to achieve real progress on each of these questions, and tracking how well business, business leaders, investors, and the entire enabling community meets these challenges. So, while 2024 will undoubtedly deliver unexpected questions and challenges, we know in advance what the ultimate test of our actions will be at year end.
For more from Aron and Sustainable Business in 2024, check out the episode in our BSR Insights Audio Series:
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