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The phrase "acknowledges the challenges" is correct and usable in written English.
You can use it when discussing recognition of difficulties or obstacles in a particular context, such as a report, essay, or conversation about a project or situation.
Example: "The report acknowledges the challenges faced by the team during the implementation phase."
Alternatives: "recognizes the difficulties" or "addresses the obstacles."
Exact(17)
Dr. Demetri, of Harvard, acknowledges the challenges of using data self-reported online.
Epocrates acknowledges the challenges of balancing the needs of its two groups of customers: medical professionals and drug companies.
Jackson Moulding, who helped set up Ashley Vale, is a passionate supporter of self-build, but acknowledges the challenges.
Haskins acknowledges the challenges, but is adamant that the uptick in the city's economy has begun already.
Anyway, it is doubtful that Mr. Rosenthal, who died in 2006, would have wanted any addendum attached that acknowledges the challenges to his conclusions.
What jumps out during the show is a plucky character who acknowledges the challenges of his life while focusing on the rewards.
Similar(40)
Director Jonathan Munby acknowledges the challenge.
Mr. Cuoni acknowledges the challenge.
Still, Ms. Dworin acknowledges the challenge of getting others to see such emotional work.
He acknowledges the challenge in attracting an interesting and diverse membership -- cool as well as "minted," in Cockney parlance.
Hillary Clinton acknowledges the challenge.
More suggestions(15)
acknowledges the threats
agrees the challenges
acknowledges the obstacles
acknowledges the difficulties
recognises the challenges
emphasizes the challenges
acknowledges the gauntlet
discovers the challenges
recognized the challenges
acknowledges the problem
acknowledges the contest
recognizing the challenges
acknowledges the difficulty
acknowledges the predicament
acknowledges the change
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Since I tried Ludwig back in 2017, I have been constantly using it in both editing and translation. Ever since, I suggest it to my translators at ProSciEditing.

Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com