The 2024 sustainability landscape has ushered in a significant era of ESG capacity building, with companies making strides in embedding sustainability into their core operations. According to Deloitte’s 2024 Sustainability Action Report, 98% of executives have reported progress toward their sustainability goals over the past year. This shift is driven by the formation of cross-functional ESG working groups, an increase in specialized roles such as Chief Sustainability Officers (CSOs), and a focused effort on integrating ESG into corporate strategies.

Main Takeaway 1: ESG Capacity Building

2024 has been marked by a concentrated effort to build ESG capacity across organizations. Companies are establishing cross-functional ESG working groups that meet regularly to oversee sustainability initiatives. The report highlights a significant increase in the appointment of Chief Sustainability Officers (CSOs) and ESG controllers, indicating a strategic shift towards integrating sustainability into corporate workflows. Furthermore, 98% of executives report making progress toward their sustainability goals, signaling that ESG initiatives are becoming deeply embedded within organizational structures.

Kristen Sullivan, Audit & Assurance Partner, Sustainability and ESG Services, Deloitte & Touche LLP, comments, “The creation of dedicated ESG teams, the rise in specialized roles, and investments in sustainability reporting, all indicate a strategic shift toward embedding sustainability into their core operations.“

Main Takeaway 2: Recognizing the Benefits of Sustainability Reporting

Organizations are increasingly recognizing the internal and external benefits of investing in sustainability reporting. The report shows that more than half (51%) of surveyed companies expect to see greater efficiencies, lower risks, and enhanced trust with stakeholders as direct benefits of ESG reporting. Additionally, companies anticipate external gains such as improved brand reputation, talent attraction, and higher pricing abilities. These findings underscore the growing recognition that robust ESG practices not only mitigate risks but also enhance overall business performance.

Sullivan adds, “While challenges still exist, the commitment to sustainability is becoming more evident as companies continue to unlock the potential of ESG insights.“

Main Takeaway 3: Ongoing Challenges with Data Quality and Scope 3 Emissions

Despite the progress made, data quality remains a significant hurdle for many organizations. The report reveals that 57% of companies identify data quality as their top challenge, with 88% ranking it among their top three concerns. The complexity of ESG data, particularly in accurately measuring and reporting Scope 3 greenhouse gas (GHG) emissions, continues to be a major challenge. Currently, only 15% of companies are disclosing Scope 3 emissions, despite the growing regulatory pressure to do so. These challenges highlight the ongoing difficulties companies face in navigating the complexities of ESG reporting.

As companies continue to invest in resources and infrastructure to strengthen ESG reporting, they must also address these data challenges to fully realize the benefits of their sustainability efforts. The report emphasizes that while significant progress has been made, the journey towards robust ESG integration is ongoing, with many companies still working to fully meet the demands of comprehensive ESG reporting.

The 2024 Deloitte Sustainability Action Report illustrates that while organizations are making notable strides in ESG capacity building, significant challenges remain. Companies are recognizing the tangible benefits of ESG reporting, but the road to comprehensive sustainability is fraught with complexities, particularly around data quality and Scope 3 emissions. As businesses continue to embed ESG into their core operations, overcoming these challenges will be key to unlocking the full potential of sustainability initiatives.