C-suite essentials: the trends defining 2024

The HR function has had to prove its adaptability over the past few years, helping companies navigate the remote work revolution, the advent of AI and a competitive jobs market. 

While many of these trends will continue to impact talent and people functions, retention will be priority number-one for most HR leaders in the year ahead.

The talent market has been fiercely competitive in recent years and many employers have resorted to persuading the economically inactive back to the workplace to fill open positions. But with the number of vacancies tailing off over the past 12 months, and hiring budgets shrinking, most businesses will now be turning their attention from recruitment to retention.

“The priority for HR leaders in the year ahead will be talent management and retention,” says Dietmar Knoess, Puma’s global director of people and organisation. “I would be surprised if anyone says that’s not the number-one issue.”

Employees are not afraid to leave their jobs

According to the Recruitment & Employment Confederation’s JobsOutlook report, the majority (60.2%) of employers expect their total number of permanent staff to remain the same over the next four to 12 months. 

The year ahead should be easier for companies that are looking to hire too. The total number of jobs posted on the recruitment site Reed was down 18% year-on-year, according to its CEO James Reed, while the number of people applying is on the rise. “It's now a buyer's market, not a seller's market, which it had been for a couple of years after the pandemic,” he explains. 

Although all signs point to a cooler labour market in the year ahead, there is still cause for concern. A PwC survey of the UK workforce estimates that nearly a quarter (23%) of employees expect to change jobs in the first half of 2024 – an increase of five percentage points from last year.

“People are not afraid to leave within a few months or even weeks of starting a new job if they realise it isn’t the right place for them, people will job hop” says Kelly Tucker, managing director of consultancy HR Star. “It’s definitely increased over the past year. That’s why it’s important to get your culture and onboarding right.”

HR leaders are well aware of the costs required to replace an employee – Centric HR estimates this to be between six to nine months’ worth of the outgoing person’s salary, on average. Reducing attrition and deterring job hoppers from jumping ship will be a key priority.HR leaders will need a renewed focus on improving the employee experience and the overall value proposition, which includes factors such as company culture, career opportunities, flexible working structure and perks.

All eyes on employee engagement

According to Gallup’s State of the Global Workforce report, the UK has one of the least engaged workforces in Europe. Gallup CEO Jon Clifton believes that this level of disengagement will only increase unless HR leaders actively seek to address it. “The pace of change in the workplace is accelerating and that’s leading to people being more burned out,” he says. “If this isn’t handled correctly, it will result in higher turnover.”

Clifton believes that the best way for HR to address employee disengagement and burnout is by upskilling managers so they are better able to listen and respond to employee grievances. “Make sure you’re diagnosing the right problems, because a lot of the time HR is only listening to the loudest person in the organisation and that's not representative of what everybody needs,” he adds.

Amanda Rajkumar, the outgoing executive board member for HR at Adidas, agrees that middle managers are a key ally for HR professionals seeking to address employee engagement. “There has been a fundamental shift in employee expectations and many companies are seeing wellbeing flatline,” she says. “HR must work with middle managers to start understanding what's happening to their workforce and attuning themselves to how to resolve some of these wellbeing problems.”

Clear paths for career progression can also help to keep employees happy and motivated. “Employee engagement will continue to be a really important factor when you're looking to retain people,” she says. “If you want to hold on to talent, you are going to have to offer ways for them to progress, develop and learn new things.”

Pay rises, benefits and flexibility

Engagement will become increasingly important as a means of retention, as employee pay is expected to flatline over the next 12 months. Salaries have risen sharply over the past year as private sector employers sought to keep pace with runaway inflation. But the most recent data from the Office for National Statistics shows that the average basic salary rose by 7.8% during the three months to August – down slightly from the 7.9% rise seen last month.

Doug Rode, managing director for the UK and Ireland for recruitment firm PageGroup, foresees this trend continuing in the year ahead. “We’re not going to see employers continue to come to the talent market with a blank chequebook on salary, because the wage growth we’ve seen has been unsustainable,” he says. “ We won’t see salary growth continue at the same pace next year.”

Ultimately, he foresees 2024 being a year of “rebalancing”, as labour-market trends and changes in the economy become more predictable compared to previous years.

Both Tucker and Rode agree that a number of businesses might reevaluate their benefits proposition in 2024. Rode adds: “Those organisations that want to access the broadest range of talent are looking at how they can flex some of their benefits propositions so that people can have more choice.”

Benefits platforms that allow employees to personalise their perks are going to “really come into their own”, according to Tucker. She is also seeing discount vouchers and food delivery subscriptions like Gusto become increasingly popular as employee benefits and expects this to continue as inflationary pressures persist.Interestingly, Reed notes that the sectors that are continuing to see the highest wage growth are the ones that require people to be present in the workplace. This could mean that companies that want their staff to be in the office more frequently may have to pay a premium for talent in 2024.

How will AI impact engagement and employee retention?

And retention will remain a priority despite the growing impact of AI on the workforce and business operations. “Generative AI has staying power, it’s going to be very disruptive,” says Clifton. HR leaders will need to adapt to short-term workforce disruptions while also preparing for the longer-term consequences of AI and automation.

The adoption of AI will have consequences for employees, so it will be important for HR to have a strong voice in decisions about its use. Tucker adds: “Companies will have to look at how they are incorporating these tools within the workplace, ensuring employees know how to use it and preparing for AI to potentially replace certain jobs in the organisation.” 

The integration of AI in the workplace will also lead to a renewed focus on upskilling. Owing to rapid developments in AI, the skills needed for jobs are estimated to change significantly by 2030, according to LinkedIn research. 

Luke Mckend, LinkedIn’s senior director of talent solutions says it will be down to HR leaders to gain an in-depth understanding of the skills their workforce has and the areas where upskilling is required. “Business leaders will be relying on their HR teams and partners more than ever to help their organisations keep pace with the changes,” he adds.

We have a pretty good employee value proposition already and one of the key things is that we do a four-day week. That has been absolutely successful for us. We have very high employee engagement and, at the same time, all of our external metrics (customer numbers, balances, App Store reviews, Trustpilot scores) are trending in the direction we want them to. It’s been hugely successful as a talent retention factor. 

Our flexible working policy has been important too. We're definitely not going to go back to five days a week. My big focus for my team now is to get really good at hybrid working. We’ll be figuring out how to best manage processes and workflows, but also how to manage the people component of a dispersed workforce.

When it comes to technology and the impact of AI on the workforce, I think we all need to take a step back and really consider what we’ll be able to do with tech. We're currently on the hype curve. With any new technology, it often feels like people are looking for a silver bullet, some kind of magic. But throughout my career, there's been no magic. Innovation comes from bright people working really hard for a long time and that's what makes technology successful. 

Ultimately, AI will be just another tool we can use to make our engineers better or the rest of our colleagues more productive or to help our customers. That’s precisely why it’s still important for us to attract and retain high-quality talent.

Our employees’ affinity with Mars is reflected in the fact they stay a long time: our average tenure is 12 years. We recognise that this retention and length of service is quite unique. People are initially attracted to us because of our brands but they stay for the growth opportunities and the stories that pass around our business. 

That said, there’s no denying that over the past few years we’ve seen a real shift in what people want from their employer.

Part of the reason people stay with Mars for so long is our flexibility. We offer remote working and flexible hours, as well as policies that help our employees balance work and life, such as our wellbeing programmes, equal parental leave policies and health leave. 

We’re also investing in unique approaches to flexibility, such as ‘paw-ternity’ leave, where our employees can take 10 hours paid leave to help pets acclimatise to a new home, and a new holiday policy that allows staff to take bank holidays at a time that suits them. 

Improving retention requires businesses to explore new ways to keep employees engaged and supported. At Mars, we’ll continue to listen to our people and collaborate with them on ways we can foster a workplace that works for them.

My top tip for talent retention is to build a workplace culture where employees feel they belong. Everyone wants to go to work and feel connected, valued and like they are making a real difference. 

Creating such a culture requires a multi-threaded approach. A great place to start is to establish behaviour-based values. These values need to fundamentally underpin the entire business, regardless of offices, cities or even countries. They need to be representative and consider the existing culture, which can be identified through engaging employees at all levels to understand what they care about most in their day-to-day interactions with colleagues. Giving employees a voice is essential to retention – this is the difference between values that are genuinely felt within the company culture and words on the wall. 

Making the workplace somewhere that employees want to stay also requires regular listening posts, such as surveys, meetings and one-to-ones. These need to occur regularly throughout the employee lifecycle and should apply to both new and long-term employees. Companies will often find surveys elicit the most honest responses, providing the most valuable retention insight – it’s the only way to learn what is and isn’t working. 

Once the issues have been identified it’s critical to act on them. Such changes must address the most critical components, including effective onboarding, a transparent approach to compensation, learning and development, recognition and rewards, and flexible work schedules.

When was the last year that couldn’t be described as ‘a tough one’? Even by charitable estimates, it has been a while. This is the age of the permacrisis and it is unlikely that 2024 will offer a turning point.

Although the cost of living – and the cost of doing business – is expected to fall in 2024, nearly two-years of record-setting inflation will have lingering impacts on businesses, and interest rates in the UK will remain above 5% at least until May.

For business leaders, the task of 2024 will be finding ways to keep consumers and employees motivated and engaged.

According to Sophie Lewis, chief strategy officer at advertising agency M&C Saatchi, the cost-of-living crisis will be an enormous challenge for business leaders in 2024. Difficult economic conditions often force business decision-makers to re-evaluate the cost base. But Lewis maintains that opportunities for sustainable growth remain despite the “rather bleak economic outlook”.

Creating value for your customers

There’s no getting around the fact that in the current climate the price of most goods and services will rise. Joe Fitzgerald, chief financial officer at Domestic & General, explains that while adept business leaders will be able to offset some of their firm’s own cost inflation, what remains will need to be passed onto consumers. “We just need to make sure we’re doing it in a fair way and not putting up our prices any more than we really need to,” he adds.

Fortunately, as Lewis points out, most consumers are reasonable and realistic and they will accept the macroeconomic circumstances which have led to price rises. Nevertheless “they still need to understand why they should choose one company over its competitors.” Indeed, increasingly, Lewis suggests, consumers want to see tangible evidence alongside ads to back up brands’ claims about the superiority of its products. 

Annika Bizon, marketing and omnichannel director at Samsung UK and Ireland, says the companies which are most likely to succeed in their sales will be the ones which can demonstrate longevity in their products or services. In 2024, consumers want to think of their most expensive purchases as investments, she explains. If a company wants to convince someone to part with a significant amount of their income when times are tough, they need to be able to guarantee at least some degree of “future-proofing them to last.”

Lewis warns firms against “jumping on the cost-of-living crisis as a marketing opportunity”, however. “If you’re not doing something tangible to help customers,” she says, “you probably shouldn’t be talking about it.” 

Noting the misstep of meal replacement company Huel last year –⁠ where the firm claimed it could help people save money on food by using its products –⁠ Lewis says brands can be sensitive to tighter budgets “without being inappropriate.”

Coping with the cost of doing business

Carl Davies, chief executive at Perry Ellis Europe, agrees that the tight economic environment will likely be the greatest challenge for most business decision-makers this year. He says that high inflation and interest-rate hikes are impacting not only pricing and investments, but also what firms are able to offer their internal stakeholders. “Everyone wants to be clear on what they are being paid,” he says, “but businesses have got to balance the need for pay-rises with their own operational costs and what they can afford.” 

Although salaries rose sharply in 2023 as employers sought to keep pace with rising inflation, the most recent data from the Office for National Statistics indicates that salary growth is slowing. And, most experts believe this trend will continue in 2024.

Doug Rode, managing director for the UK and Ireland at recruitment firm PageGroup, says: “We’re not going to see employers continue to come to the talent market with a blank chequebook on salary because the wage growth we’ve seen has been unsustainable.”

This does not mean that business leaders are dismissive of the financial concerns of their employees. But Davies says that a “proportionate” approach requires business leaders to balance those concerns with what is realistic for a business that must be savvy with its cash. “I think you have to be pragmatic,” he says, “and look at your lowest earners first. You do a percentile increase for them, relative to their salary, and then you move up [through the more senior positions at the company].” 

Ahmed Essam, Vodafone’s UK chief executive, echoes this view, adding that bosses could also explore one-off payments to help staff with the cost of living.

2023 also saw companies including HSBC and Meta downsize their offices. EY is among the latest companies to consider relocating. We may see more companies recalibrate their office requirements in 2024 as more expensive leases come up for renewal and hybrid working reduces space requirements.

With office vacancies nearing post-financial crisis levels in the UK, finding more cost-effective ways to maximise the use of this space will become the norm. For instance, the popularity of flex spaces is seeing a resurgence as companies shirk long leases in favour of more flexible arrangements. Some businesses are exploring the idea of sharing office space with other organisations in order to split the overheads. Workspace management technology, which allows employees to book office space more easily and for companies to monitor use, is aiding this transition.

In 2024, I expect we’ll see a continuation of some of this year’s macroeconomic themes: further slowing of global economic growth, a gradual decrease in inflation (but not a full reversal) and continued geopolitical risks and conflict. Organisations that need to fundraise will be faced with a challenging and expensive funding environment.

I have three major priorities for the year ahead. First, I would like us to increase our focus on customers. In 2023, we reorganised a large number of our operational functions to serve our customers better, reducing touchpoints and streamlining their experiences. Many of the benefits will land in 2024.

I also want us to focus on our internal systems. In this environment, efficiency and scalability is king, so we will be redesigning a large portion of those systems to lower our unit costs and remove complexity and duplication, preparing us for continued growth.

Finally, it's about just getting it done. As a company grows, it’s easy to introduce too much consensus, and less individual or group autonomy and accountability. Our focus in 2024 will be to 'make it happen', ensuring we remain nimble and deliver the things that really matter.

This year will undoubtedly present challenges for businesses, who will need to be mindful of the cost-of-living crisis, which is affecting everyone.

But, at the same time, there is still some cause for optimism. Major sporting events, such as the Olympics and the European Football Championship, are likely to yield spending moments and it’s important that companies are fully prepared to participate in any spikes in consumer confidence. Even in a downturn, people still want to save up and treat themselves from time to time, so it’s vital that businesses signpost their products and services as offering value for money.

For me, the key to having a successful 2024 will hinge on being prepared for any given scenario. That means having a Plan A, B, C, D and more. We’ve got to think deeply about where and how people are consuming content, what messaging strikes a chord and what doesn’t. We’re working hard on content and campaigns that can achieve maximum impact and connection as quickly as possible.

The current reality is that, even though inflation has started to come down, we’re still feeling tough macroeconomic headwinds, and consumers are still incredibly cost-conscious. In the coming year we’ll be focusing on driving profitable transaction growth, by which I mean business that will create value for customers but will still be profitable for our franchisees.

We’re not willing to cut the quality of our product and we don’t believe that straight discounts will resonate. What consumers really want is innovation-led value – and they want it at a good price. We’ll be delivering this through product innovations and special partnerships. Last year, for instance, we did a partnership with Teenage Mutant Ninja Turtles, offering themed pizzas. That didn’t provide price discounts but still created something special; an added value.

Technology has become a driving force behind many successful businesses. Despite several years of macroeconomic challenges, most firms will plough ahead with investments in digital technologies in 2024. In particular, business leaders will have their eyes on AI, which is expected to have a significant impact on business operations and workplaces.

The challenge, according to Kruti Patel Goyal, chief executive at online fashion retailer Depop, will be for business leaders’ to develop their understanding of AI beyond “just an efficiency tool” and start to think about how it can enhance user experience in 2024. 

She explains that Depop aims to use the technology to personalise its offerings. “We expect it to have a transformational effect on our marketplace over time. In the future, it could help to reshape the buying and selling process,” she explains.

Iñaki Ereño, the chief executive at Bupa, has similar ambitions. In addition to leveraging AI to help with healthcare diagnostics, he says upskilling staff across all areas of the business to use such technology is one of his top priorities. “Bupa recently hosted a global two-day hackathon programme, available to all 82,000 staff, designed to train as many people as possible on generative AI,” he notes.

John Ridding, the chief executive of the Financial Times, agrees that AI will present many opportunities next year, but stresses the enduring importance of human oversight. Particularly pertinent within the media and content creation spaces, he points out, companies should be wary of the “rise and risk of deepfakes and AI hallucinations.” Ridding says the business implications of AI could be “profound”, but urges any developments to be handled carefully and to treat personal data with respect.

AI will soon be an everyday workplace tool

Security and training will be essential as AI becomes an everyday tool across the workforce. While many people became aware of the power of generative AI models, such as ChatGPT, in 2023, this year will see more businesses and employees integrate it into their daily workplace routines.

Aiding this will be the release of new AI-enabled tools. Google released its AI assistant for its suite of workspace apps in August, meanwhile Microsoft has promised to keep improving its Copilot tool. 

Early adopters of Microsoft’s AI tool have stated that it makes them more productive and improves the quality of their work. Interestingly, 77% of users said that once they started using Copilot in the workplace, they didn’t want to give it up. It seems a surefire sign that more people will be using AI assistants at work in the year ahead.

“AI is going to be everywhere,” says Josh Bersin, HR analyst, author and founder of advisory The Josh Bersin Company. “All of these workplace tools are going to be smarter and provide more information and advice… we’re just getting started with this. In a year’s time, it will be another order of magnitude better.”

This will contribute to growing fears of AI making certain roles redundant. However, James Reed, CEO of jobs site Reed.com, notes that he has not seen a large rise in the number of specific AI jobs being advertised on its site. Instead companies are increasingly asking for AI skills within the job description. “I would expect that phenomenon to continue next year,” he adds. Those who are able to upskill and utilise this new technology will be in demand in 2024.

Cybersecurity and the spectre of malicious AI

AI can also be something of a double-edged sword. “AI is a big buzzword at the moment,” says Donna Lyndsay, sustainability lead at national mapping agency Ordnance Survey. She does not neglect to mention the security concerns, however. “There are some massive productivity gains we can see coming down the line next year as long as people are aware and mindful of the risks.”

Supply chain and procurement professionals are particularly attentive to the risks posed by AI. Incidents such as the Moveit vulnerability illustrate how easy it can be to break into big companies via their suppliers. 

Saul Resnick, chief executive of DHL Supply Chain UKI, says: “Cyber attacks are probably the biggest fear that I, or anyone in my current position, holds.” Indeed, Gartner has predicted that 45% of all organisations will have experienced attacks on their software supply chains by 2025.

AI has featured in a relatively small proportion of reported cyber incidents over the past year, but this will change as criminals start using the technology to “personalise and slowly scale up cyber attacks”, predicts Phil Venables, CISO at Google Cloud.

“By using AI-based large-language-model algorithms, attackers can make malicious content that looks, flows and reads like the original, making it even harder to detect phishing emails and messages,” he warns. 

More broadly, the use of generative AI to create fake news and related material on the internet could massively increase the spread of disinformation, thereby “reducing public trust in online content”.

But, while AI presents a clear danger in the wrong hands, the technology’s capacity to process and contextualise huge volumes of data also has the potential to reinforce firms’ cyber defences. 

“This will come to fruition in 2024, with AI enabling defenders to strengthen detection and accelerate analysis,” Venables says. “It will equip them to respond quickly and at scale.”

It will be no surprise that one of the key business opportunities for CEOs in 2024 will be understanding how to make the most of AI. Generative AI in particular has been top of everyone’s minds over the past year, but it’s important to remember that AI has been transforming the way we live, work and experience the world for more than a decade and the business opportunities to succeed and grow are endless.

I am constantly hearing from business leaders how excited they are about the potential of AI, but also how overwhelming it can be to make sense of all these opportunities. AI is a 'horizontal' technology, in the sense that it can be applied widely. With this in mind, seeking clarity on how AI can be applied to drive the most important business goals should be a priority for business leaders.

The most important thing for CEOs to do in 2024, however, is simply to embrace the opportunity. AI is not a fad. It’s the most profound technology we are working on today. From optimising operations and predicting customer needs, to streamlining supply chains, AI has the potential to create competitive advantage for every business.

In 2023, we completed a massive digital transformation project. What we are looking for in 2024 is getting the entire organisation to be more collaborative, more agile and to take the ways of working from that transformation project and embed it in the wider organisation.

Looking at call centre technology, AI is a fundamental part of the tech stack now. And so we’re certainly looking at that quite seriously for 2024 in terms of how we can use that to improve the customer experience and help our call centre agents to do their jobs more effectively. 

Through our digital transformation, we’ve gone from two tech stacks to one new one. We've introduced a lot of new tools and technology and now it's about making sure we have clean data so we can maximise that from a monetisation perspective. Because of this, we've invested hugely in our data analytics team and our data engineering capabilities.

We’ve been focusing on digital engagement for about five years, and in that time we built a full-stack digital solution for the UK market – the ‘MyAccount’ platform. Our goal is to build the best online appliance-service solution in the world. We’re not trying to force people online, but we do want to offer customers a choice in how they engage with us. Domestic & General has always operated a phone-based service model, and while we still have customers who prefer to conduct their business over the phone, about 50% of our UK customers are now using the MyAccount platform.

From a finance perspective, the main consideration is that developing a world-class digital solution requires a lot of up-front investment. You have to be brave and commit to the investment needed to back your vision. It’s worked out well for us so far, but we’re still on the journey, and we’ll continue to invest in tech and data in the year ahead.

Businesses have faced a difficult operating environment over the past few years. First the Covid-19 pandemic, then war in Ukraine, have caused rising inflation, increased interest rates and high wage growth, meaning many businesses face difficult decisions in order to maintain profitability.

That has meant many companies putting improving sustainability on the backburner. But, as record global temperatures in 2023 show, climate change isn’t taking a break. In 2024, businesses will need to find a way to think long-term on sustainability while facing short-term pressure on their top line. That necessitates more robust net-zero plans but also expanding scope beyond carbon, amid new ESG regulations focused around reporting and transparency.

Preparing for new sustainability regulations

Around the world, governments will be introducing and updating sustainability regulations in 2024. There is a huge array set to come into force in the coming years and companies will need to prepare.

Levent Ergin, global chief ESG sustainability strategist at Informatica, says: “We are approaching a tipping point with ESG. Instead of companies operating blindly by accessing ESG data from a black box, new regulation promises greater clarity, and reliability in ESG data – something which is fundamental for informed decision-making and responsible capital allocation.”

Many of these regulations are aimed at making data and progress towards sustainability goals more transparent and standardised. The corporate sustainability reporting directive, for example, aims to standardise non-financial reporting. Applying to all large companies and listed SMEs that operate in the EU, it will require them to publish regular reports on their environmental and social impacts with the aim of helping investors, policymakers and consumers evaluate their performance.

Similarly, the EU corporate sustainability due diligence directive mandates that companies operating in the bloc identify, report on and mitigate the impact of their operations (including those in their supply chains) on human rights and the environment. And in the UK, the Streamlined Electricity and Carbon Reporting regulation requires companies to report on their emissions and energy consumption.

Dana Haiden, chief sustainability officer at Virgin Media O2, says the business is preparing for this increase in reporting and transparency requirements already and this will intensify going into 2024. “The remit of these new regulations is so wide it impacts almost everybody in some way.” 

All these new regulations mean companies will need to provide new data points, KPIs and metrics around sustainability. It also puts the onus on business to understand their ESG data and ensure robust data governance in this area. Those that cannot risk their corporate reputations plus could miss out on sustainable sources of funding or even be fined.

“Adapting to these new standards will be a challenge for the organisations that don’t already have an intelligent approach to ESG data management and governance. These companies will find this process highly complex and resource intensive,” says Ergin. “But those that do have a robust approach to ESG data governance, will have an advantage.”

Moving the sustainability conversation beyond carbon

Much of the focus both among global governments and businesses up to now has been on carbon emissions and reducing them. However, there is a growing realisation that while transitioning away from fossil fuels is important, it is just one aspect of dealing with the climate crisis and that efforts need to be more broad-based if we are to stave off the worst effects of climate change. 

“The view of sustainability is broadening from an environmental perspective, but also from a social perspective,” says Haidan. 

At COP 28 in December, a greater emphasis was put on reducing emissions of methane – a greenhouse gas that is 28 times more potent than carbon dioxide in trapping heat in the atmosphere. A move away from fossil fuels will help but a reduction in materials going to landfill by both companies and consumers is needed as well. 

The role of nature and biodiversity is also, finally, under the spotlight. Only around a third of Europe’s biggest companies have set targets that aim to address deforestation and protect biodiversity, according to S&P Global. Yet allowing nature to degrade further poses significant business risks and means companies will be addressing this area more in 2024 and beyond.

The World Economic Forum estimates that, in 2019, more than half of the world’s $44tn (£35tn) economic value was moderately or highly dependent on natural resources. And healthy ecosystems have a key role to play in absorbing greenhouse gas emissions, keeping global temperatures lower and mitigating the effects of, for example, storms and floods.

“One big trend is this connection to nature and biodiversity,” says Haidan. “Up until this point, the biggest focus has been on carbon – tracking, management and reduction – and biodiversity and nature has not been a big focus.

“Now we’re seeing more companies choosing to voluntarily disclose their nature-related financial risks, which is the first time many companies have started to look at the impacts of their business on nature.”

Balancing short-term profit with long-term sustainability investment

In August, a team of researchers from the University of Bath, the University of St. Gallen and the Swiss Finance Institute conducted research into the progress companies make on their ESG initiatives when facing competitive pressures. The research, highlighted by investment strategist Joachim Klement, found that those facing higher pressures in their home market, and therefore lower margins, tended to invest less in ESG. This despite other studies suggesting that strong ESG performance and being a good corporate citizen can be a source of competitive advantage.

The research suggests that when faced with short-term operational challenges, leadership focuses on short-term operational measures to fix them at the expense of longer-term focus areas such as sustainability. But the research also found that at companies with longer-term shareholders or those operating in industries that consider climate action more important, the shift away from ESG was not as great.

Research also suggests that those companies that invest for the long-term outperform those swayed by short-term winds. And those that go on the offence during difficult economic times tend to be rewarded with higher revenue growth and earnings.

The trend in 2024 for businesses, then, is how to balance the long-term need to invest in sustainability efforts with the short-term need to boost earnings. As global temperatures continue to rise and the 2050 deadline for net-zero carbon emissions draws ever closer, 2024 is seen as a pivotal year in whether the world is on track to limit global warming.

But Mette Lykke, CEO of food waste company Too Good to Go, admits it takes a lot of resources and is an area that is increasingly complicated for businesses, especially with the added cost of incoming regulation.

“This is an area that is very complicated and is going to take a lot of resources to figure out,” Lykke explains. “There’s definitely a balance to be found between how much a business spends on reporting versus actually doing initiatives that could move the needle.”

Virgin Media O2’s Haidan agrees that this need to think long term around sustainability is “misaligned” with quarterly earnings reporting. However, she believes there will be more companies taking the sustainability agenda seriously and so prioritising beyond the short term.

“At Virgin Media O2, we get a lot of support from the management team and the organisation overall to really embed sustainability in the right intervention points within the system. For instance, sustainability is part of our investment committee review, so any capex investment we make we also review whether it impacts our carbon reduction targets,” she says.

“Embedding that through that process means no matter what we do in the short term, sustainability is still embedded in the way we plan long-term.”

Getting communication right

A final area business leaders and sustainability experts must focus on in 2024 is communication. The Advertising Standards Authority is already clamping down on misleading environmental claims in communications and recently updated its guidance.

Companies now need to follow key principles including ensuring that if an environmental claim relates to a sole product, rather than the whole business, that should be made clear; including ‘balancing information’ if a business has a harmful impact on the environment but is highlighting positive environmental activities; and including information on overall harmful impact if an ad refers to lower-carbon activities.

Companies also need to be wary of using imagery of the natural world, using absolute claims such as ‘sustainable’ or ‘environmentally friendly’ and suggesting its negative impact is a thing of the past if it is not. 

Brands that fail to adhere to this are likely to fall foul of the advertising code. It could also cause a hit to brand reputation. For Lykke, key to avoiding this is ensuring that communications are sincere and not just done for storytelling purposes.

“There is a lot more scrutiny now (from consumers and policymakers). For example, you need to invest in carbon accounting and then have experts review what you do if you want to make any external claims,” she explains.

For Virgin Media O2’s Haidan, while sustainability is core to its business, it is not something it talks about a lot in communications. It doesn’t not offer products or services with green claims attached to them, except for device recycling whether the link is clear. 

As the Intergovernmental Panel on Climate Change has warned, the world is nearing the threshold where 1.5 ºC of warming above pre-industrial levels, as agreed internationally as part of the Paris Agreement in 2015, won’t be achieved. That could have dire consequences for society, economies and businesses. 

In 2024, companies need to think longer-term, prepare for more robust regulation and look beyond carbon. As Haidan puts it, sustainability must be part of every decision and integrated into every aspect of business.