macOS Sonoma Display Sleep issue

The Sleep option is not clickable. When I close the lid (upper half) it doesn't go to sleep, the screen just stays on and does not lock and stays lit and unlocked.

I am using a workaround to get my laptop to sleep using Hot Corner Shortcuts.

Device: M1 Macbook Air

Software Version: Latest macOS Sonoma 14

Any advice to fix is much appreciated.