Businesses have a key role to play in Ireland’s Climate Action Plan 2021, says Shane O’Reilly, Director, KPMG Sustainable Futures.

The Irish government recently published its ‘Climate Action Plan 2021’ (CAP21), setting out a pathway to halve Ireland’s emissions by 2030 and reach net zero by no later than 2050. Within the CAP21, businesses are acknowledged as being a key player in achieving Ireland’s ambitious climate targets given their control and influence over how resources are managed, transported, consumed, and wasted. The Irish government has set a 40% reduction target for Irish enterprise’s emissions to help meet the national level of emission reductions by 2030. 

Key drivers for change

Businesses across the globe are under increasing pressure to change from stringent climate goals, investor demands for transparency and disclosure, as well as customers who are demanding more sustainable products and services. Building enterprises that are sustainable and low carbon has become a competitive and financial issue, moving beyond the social and environmental reasoning of the past. 

Climate change action presents new opportunities for Irish businesses, including increased revenue growth driven by increased consumer awareness of the environmental impact of the goods and services they purchase, cost reductions and attracting and retaining talent.

Globally, these climate-related opportunities represent a potential financial impact of over US$2.1 trillion dollars based on a survey conducted by the Carbon Disclosure Project (CDP) on 500 of the world’s largest companies. Most of this financial impact is driven by increased revenue from consumer demand for sustainable products and services.

Ireland’s readiness for CAP21

A key question is whether Ireland’s businesses are sufficiently embracing this opportunity.  According to a recent report by KPMG Ireland, 72% of the Irish companies analysed are far from ready to meet the new EU sustainability reporting rules, outlined in the Corporate Sustainability Reporting Directive (CSRD) published by the European Commission in April of this year. While only one lens, it suggests more work is needed to embed this climate opportunity in Irish businesses and communicate it effectively. 

CAP21 recognises that Irish companies which fail to decarbonise or develop sustainable business models risk becoming uncompetitive in international markets through the creation of outdated products, will struggle to attract future equity linked to the increasing non-financial reporting demands such as CSRD and will have negative impacts for the national economy and its overall sustainability transition. 

The CAP21 outlines a range of mechanisms to help incentivise increased climate action by Irish enterprise and drive leadership in this space.  For example, Irish companies will be required ‘to implement a detailed agenda of transition and change’ which will include a switch to renewables, resource management and measures conforming to circular economy principles and a focus on developing new skills and innovations across their supply chain. Carbon pricing will also be a key mechanism to help drive change and leadership within businesses. On top of these incentivised mechanisms outlined in CAP21, national level climate action such as state agency policy supports and initiatives will be important to aid enterprises, particularly SMEs who account for 99.8% of enterprises in Ireland, meet the 40% reduction target.

Going forward – a targets-based approach

It is encouraging to see some Irish companies setting climate commitments for 2030 onwards and preparing for future compliance and investor and customer demands, but we need to see more companies taking proactive action now and setting climate targets. However, it is vital these commitments align to climate science, taking a holistic approach to a company’s operations, have interim targets to assure accountability, and don’t heavily rely on unproven technological fixes to achieve these targets.

CAP21 acknowledges the national-level action needed to drive change and support companies of all sizes achieve decarbonisation at pace. Collaboration between enterprise and government bodies will be key if Ireland is to achieve its net zero target and for the Irish economy to remain competitive in the coming decades

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KPMG Sustainable Futures can support you in understanding what the Climate Action Plan means for you and tackle head on the opportunities and challenges ahead of us to ensure a climate resilient Ireland.

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