The 6 themes that will influence ESG investing in 2024 and beyond

The International Sustainability Standards Board has recommended the establishment of a global standard for corporate disclosure on sustainability issues. The Canadian Sustainability Standards Board is working to adopt these standards for the Canadian market. These standards will work to create uniformity and disclosure across companies, sectors and industries, and will foster the transparency and cross-comparability of data on sustainability-related risks.

The need to invest in climate resilience and adaptation will continue to develop in 2024 and beyond. Governments around the world have recognized the need to invest in critical infrastructure to protect against the social and economic impacts of extreme weather. Because companies are not immune to the disruptions associated with climate risk, it will fuel pressure from investors to ensure company disclosures and risk management practices are adequate.

This should emerge as a significant topic this year. There is intersectionality with the biodiversity trend that we have seen developing and the progress of the United Nations’ global treaty to end plastic pollution. This will have meaningful implications for the use of plastics and include potential regulation on its production, design and disposal by companies.

AI was certainly front and centre in 2023, and it’s clear that the market is anticipating it to cause significant disruption — both societal and economic. On the back of this trend, governments and companies will face increased scrutiny on their governance practices around AI. We anticipate investors will seek increased disclosure on how companies are integrating AI into their operations and the risks this will engender.

We expect to continue seeing the polarization of ESG in certain jurisdictions. Some policymakers are concerned about the emerging dynamic of active ownership and how institutional investors exert their influence on the companies they invest in, particularly in relation to climate transition.

To date, the bulk of ESG investment solutions available for investors have rewarded companies with better ESG profiles or excluded companies that don’t align with investor values. This is changing. In 2023 we saw growing interest in public and private markets for investment strategies that take advantage of long-term sustainability trends. Strategies that focus on gaining exposure to the significant capital required to facilitate a climate transition have been particularly successful. We expect this momentum to continue in 2024. 

CIBC Asset Management is committed to developing and implementing best practices in responsible investing analysis. Our goal is to ensure our actively-managed strategies account for all sources of environmental and investment risk. If you'd like to learn more about ESG investing or have questions about your investment portfolio, get in touch with your advisor or CIBC representative anytime.