NEW data from the inaugural EY Ireland State of Sustainability report reveals that although 41% of businesses believe the pandemic has spurred them to improve their sustainability efforts, two thirds (66%) are doubtful they could reach carbon reduction goals by 2030 as set out in the Paris Agreement. The research was conducted by EY to understand the degree of readiness among Irish organisations around sustainability and the changes that lie ahead.
With a national target of reaching carbon neutrality by 2050 set by Government, and the publication of the Climate Action Plan imminent, a united approach by Ireland’s business community will be required to support a reduction in national carbon emissions. According to the report, the standout challenges facing businesses in meeting emissions targets include:
Reporting standards: Over half (54%) of companies in Ireland don’t engage in environmental, social and governance (ESG) reporting according to recognised frameworks and standards (e.g. Global Reporting Initiative, Sustainability Accounting Standards Board, TCFD etc), and when it comes to monitoring their sustainability performance, almost two in five (38%) either only have a basic level of reporting or none whatsoever.
Targets: A significant number of companies have emissions targets that aren’t scientifically reinforced. Fifty-eight per cent of companies claim they don’t currently have science-based targets to support the achievement of net zero by 2030, while a further 20% don’t know if their existing emissions targets are science-based or not.
Expertise: A lack of specialist expertise and adequate resources to support implementation of the sustainability function is a real challenge for many Irish companies – 40% say they will be seeking support from independent advisors in the next 6-12 months to help them improve their sustainability efforts.
Profitability: Only three per cent of companies see their ability to grow profits as a motivating factor for engaging in sustainability efforts, despite the fact that 44% of businesses believe their sustainability efforts to date have positively impacted their bottom line.
Commenting on the report findings Stephen Prendiville, Head of Sustainability at EY Ireland said: “Developments in recent months have shone the spotlight on climate change. It’s undeniable that the time to act is now and businesses have a very real responsibility to take charge of the role they can play in addressing the global climate change crisis.
“Businesses need to interrogate current approaches to reporting and target setting to ensure they are effective and achievable. They also need to ensure the right people with the right expertise are in place to execute their sustainability strategies and to track progress. Furthermore, businesses need to proactively consider the cost-saving benefits of sustainable practices from the get-go and build them into financial planning. It doesn’t undermine sustainability efforts to draw a connection to long-term profitability, on the contrary, it supports its adoption and longevity.”
Reassuringly, the research finds that 71% of businesses believe their leadership has a high level of understanding of sustainability within their organisation, however this doesn’t seem to be translating into action, with almost one in five (18%) of businesses saying they either don’t consider the sustainability credentials of their suppliers and distribution or retail networks at all, or they do so at a basic level.
Meanwhile, a further 30% say they don’t regularly assess current and emerging sustainability risks and opportunities, and almost one in 10 (9%) say that their organisation currently has a basic focus or none at all on sustainability.
Mr Prendiville added: “It is crucial that Ireland as a nation commits fully to achieving its 2050 ambition of carbon neutrality as well as the more imminent 51% reduction in greenhouse gas emissions by 2030. The business community has a key part to play in realising this ambition, and it is reassuring to see from our research that a significant proportion of Irish companies are now even more committed to improving their sustainability efforts than they were pre-pandemic. That being said, the longer sustainability is perceived (and pursued) as a regulatory minimum, the more challenging it will be for businesses to truly capitalise on the opportunities that value-led sustainability can provide.”
When it comes to the motivating factors driving Irish companies to engage in sustainability efforts, the number one reason outlined was a desire to do good for the environment (22%), followed by legislative compliance and the need to future proof the company, which were both ranked at 16% and consumer appeal (10%). Just two per cent stated that they were motivated by their desire to not be penalised financially, and no respondents said they we driven by the potential of being able to charge more for their products or services.
