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Fighting the climate crisis

With the launch of the 1,000 Chartered Accountants campaign, four members explain what they are doing personally to combat the climate crisis and share their advice to help others in the profession do the same. Kate van der Merwe Sustainability advocate I grew up with an appreciation of nature, its power and our place in it. As my awareness of the climate crisis and biodiversity loss grew, so did my frustration and sadness with the inequitable, one-dimensional systems we’ve become embedded in and their repercussions. However, the recent emphasis on holistic, inclusive, multidisciplinary thinking gives me hope. Over time, as I learn more about sustainability, I have adapted my personal and professional choices to minimise my carbon footprint and drive positive impact. I’ve been pleasantly surprised that these changes often yield unanticipated benefits. Personally, I focused on my consumption (energy use, diet, travel, consumer choices) and finances (pensions and savings). Professionally, I brought a sustainability perspective to my roles, such as flagging future regulatory considerations and chairing the Young Professionals 2017 sustainability-themed year. I went on to do a MSc in Renewable Energy and Environmental Finance and am exploring roles that will give me more direct sustainability scope and impact. There’s a growing acceptance that business-as-usual won’t continue, as it will be transformed either by devastating climate breakdown or deliberate, significant lifestyle and system changes to avoid the worst. When people are informed about issues, they can have a very strong will for action, as demonstrated by the Citizens Assembly which proposed the most stringent climate action, subsequently diluted within the Climate Action Plan. Each individual has a unique set of strengths and sphere of influence to make their positive climate impact, be it towards personal or system change. Considerations may include democratic action (e.g. voting), consumption habits and financial decision-making. Within the workplace, every decision – budget allocation/investment, targets etc. – must incorporate a sustainability perspective. How does the decision benefit society? What are the emissions/energy/biodiversity impacts across the product/service lifecycle? Is the impact equitable? These considerations are key for the future and align with the EU sustainable finance trajectory (green and socially inclusive). We need holistic and multidisciplinary approaches for comprehensive solutions. It’s time to ask questions, get creative and collaborate. We urgently need bold and brave action! Dr Judith Wylie Senior Lecturer, Ulster University Business School I love the great outdoors – living near the beach has given me an appreciation of the importance of blue water, clear sky and green space. Having local spaces where we can walk, swim, explore and find peace have become even more important to us all in recent times. My interest in sustainability has led me to researching Irish companies’ approach to corporate social responsibility. At the beginning of my studies, almost 10 years ago, I was told “you can’t study ‘hugging dolphins!’” What is pleasing, however, is how much this attitude has changed over the last decade with increased corporate action and public awareness of sustainability issues. My own research indicates that many Irish companies are listening to stakeholder concerns and are providing innovative solutions on climate change as well as committing to important sustainability goals.  It can be overwhelming when we hear news of the climate crisis and how much we have damaged our planet already; it can be easy to wonder what difference a single action can make. However, taking responsibility for small things can collectively have a big impact. I love fashion but I am conscious that the World Bank reported that the fashion industry is responsible for 10% of annual global carbon emissions, more than all international flights and maritime shipping combined. By moving away from ‘fast fashion’ and being more conscious about investing in sustainable brands, hiring clothes for special occasions and buying second-hand, I can make a difference and have fun in the process! We can all try to reduce our carbon footprints both at home and in our workplaces. Set the example for your family, friends, and co-workers. For example, eat less red meat each week, take public transport or cycle to work, or encourage the businesses you engage with to operate more sustainably. Although making changes can be difficult, use your hope for a better world to drive you and bring others along on the journey to a more sustainable society.  Tommy McLoughlin Founder & CEO at ButterflyCup My colleague, Joe Lu, invented ButterflyCup to eliminate the need for plastic lids and was looking for a business partner to help commercialise his invention. When introduced, I immediately saw its potential in the takeaway coffee and cold drinks sectors. Our cup does not require a water-proof laminated plastic coating, thereby eliminating the plastic normally required for both regular plastic-coated paper cups and for plastic lids. 600 billion cups and 600 billion lids are used globally each year between hot and cold drinks – that’s a lot of plastic. People are generally well-intentioned, but change happens relatively slowly – even when the facts are compelling. The key to rapidly altering behaviours at the pace now required because of climate change is a combination of meaningful (rather than token) regulatory incentives, disincentives and bans. Rebalancing business and customer costs is critical to changed behaviour.  For example, most people are now favourably disposed to switching to electric cars, but the cost differential remains prohibitive. This also applies to the over-use of plastic, which has a high negative environmental impact in both its production and disposal. If changes are made so that plastic costs more, it will be used less.  Improved infrastructure in areas such as vehicle electrification, waste segregation and recycling is also key to progress.  It is vital that businesses operate for the greater good rather than focusing on narrow and short-term self-interest. Unfortunately, many big corporates that are motivated by share price, CEO bonuses and so on act to protect the status quo by engaging in ‘greenwashing’ and often misleading PR while at the same time lobbying legislators in order to delay and derail environmentally positive progress – similar to how the tobacco and oil industries behaved in the past.  The voluntary actions of businesses and consumers alone is inadequate to achieve vital climate targets. Real environmental reform must be driven by legislation and regulation.  Probably the most effective contribution individuals can make is to call out bad practices and advocate for positive change, both within their work and business networks and on social media. Plus, as consumers, people need to ‘vote with their feet’ by actively supporting ethically sustainable businesses, products and practices. Prof. Pat Barker Lecturer in Business Ethics, DCU   Chartered Accountants, as professional individuals, should take a lead in focusing on what they, as individuals, are doing when it comes to fighting climate change. It’s not enough to look to big corporations and government, loudly demanding that they need to do something. Neither is it enough for us to wave generally in the direction of turning off lights at home, reducing food waste, flying less and investing in green pension funds. We need to change our lifestyles in ways that really pinch and evoke the ‘ouch’ response.   My ouch response was caused by my 11-year-old granddaughter’s suggestion that I, her mother and she adopt the One Dress for 100 Days Challenge. She hit me with this climate change challenge just as I contemplated the impending opening of the shops and the delicious prospect of buying myself some new clothes, footwear, underwear, makeup and some accessories after 14 months of lockdown. She scrambled up onto her Zoom soapbox and told me that I still have a wardrobe of perfectly wearable clothes, there’s no need to have a different outfit every day; that I wash my clothes too much and that nobody notices what I wear anyway. She delivered the killer blow – I was supporting the waste of scarce resources, encouraging child labour, and unnecessarily filling up landfill. So, I agreed to give it a shot and the three of us are now on day 20 as I write this. The feeling of doing something positive for the environment is accentuated by a sense of finding contentment in a life of less. I have recognised that 90% of the clothes we wash are not dirty enough to be put into a washing machine. I have been digging into the depths of my wardrobe to change the look of the dress and have not bought anything new. I don’t know how I will feel after 100 days, but I notice that my focus has shifted from how I look in my clothes to feeling comfortable in my own skin. Most people have not noticed that I am wearing the same dress day after day and I have embraced my own rejection of a life of unsustainable over-consumption.   I am definitely experiencing the ‘ouch’, but I do expect the lessons (if not the dress!) to persist beyond the 100 days.

Oct 04, 2021
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The north-west: in the frame for FDI

Dawn McLaughlin explains how the north-west’s reputation as a prime location for foreign direct investment has been sixty years in the making. Sixty years ago, the US industrial fibre giant, DuPont, established a base on the outskirts of Derry/Londonderry. At the time, few international corporations were based in Northern Ireland, and very few would have considered this part of the world when choosing where to invest. DuPont’s decision was not only courageous but helped kick-start and sustain economic growth and development for nearly half a century. The company remained in the region throughout the dark days of the Troubles, sustaining jobs and keeping families in work at a time when our economy was underdeveloped and primitive in many respects. For 30 years, the company put the city at the cutting edge of innovation and technology by producing Kevlar, one of the world’s most important materials, at the site. As important as the jobs were to thousands of local working-class families, DuPont’s presence was almost more important for its role in attracting other global companies to the region. DuPont became an ambassador for the north-west and strengthened its status as a region well-equipped for foreign direct investment (FDI), with its low-cost structure, strong talent pool and high standard of living. Other American and European companies were encouraged by DuPont’s positive experience in the north-west and saw Northern Ireland as a viable and strategic place to invest. FDI has been a significant driver of the North-West City Region’s economic growth over the past three or four decades. The late John Hume’s role in bringing Seagate to the city is well-known, and it has gone on to be an integral part of the local economy. By the company’s 20th anniversary in the city in 2013, it had invested over £720 million in the region, contributed nearly £50 million in annual wages, and boomed to become the city’s largest employer with a workforce of almost 1,400. To this day, Seagate remains one of the region’s most important organisations. US tech giant and insurance company, Allstate, was one of the first foreign companies to invest in Northern Ireland after the signing of the Good Friday Agreement. Starting with an initial staff of just 20 in Derry, the firm has blossomed into one of the north-west’s most recognisable employers and has spread further into the region with its Strabane office. Taking a leap of faith like Allstate’s is a brave one for a business, but one that has generated great gains for both the company and the community. With more and more companies choosing to invest in the north-west, the economy has diversified and matured. We now have a cluster of cutting-edge and exciting tech, fintech, health and life-sciences, artificial intelligence, and diagnostics firms. The Derry and Strabane City Deal is a once-in-a-lifetime capital investment package, which will help attract even more companies and nurture this ecosystem of innovation, research and development, and technology. Inward investment and FDI have played a key role in our local economy over the past sixty years and will continue to do so. As we emerge from the pandemic, partners within the city will be working hard to attract more investment, jobs, start-ups, and business. Thanks largely to the courageous decisions of companies like DuPont to come to the north-west all those years ago, this region now has a diverse and innovative economy and is an ideal location for FDI. Dawn McLaughlin FCA is Founder of Dawn McLaughlin & Co. Chartered Accountants and President of Londonderry Chamber of Commerce.

Oct 04, 2021
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A decade to deliver: CFOs’ ESG considerations

Ambrose Shannon explains how CFOs can play a lead role in limiting the future impacts of climate change during what he describes as “the decade of action”. Throughout the summer of 2021, heat waves, wildfires, droughts, and hurricanes served as stark reminders that we should not take our planet for granted. The recently published report from the United Nations’ Intergovernmental Panel on Climate Change (IPCC) has made it very clear that unless immediate and large-scale actions are taken to reduce greenhouse gas emissions, these weather patterns, and the corresponding commercial impacts, will only become more severe. In Ireland, like elsewhere, companies are looking at their own commitments to environmental, social and governance (ESG) objectives (see sidebar) encouraged by both regulatory initiatives and wider societal pressures. For example, the Climate Action and Low Carbon Development (Amendment) Bill 2021 is intended to achieve net-zero carbon by no later than 2050 throughout the entire Irish economy. This entails the introduction of five-year carbon budgets on a rolling 15-year basis. In China and South Korea, where similar measures have been deployed, companies have seen significant impacts on their business models, strategies, and performance. Furthermore, the required Local Authority Climate Action Plans are expected to set out ambitious measures to significantly increase renewable energy production, decrease transport emissions, and reduce the impact of agriculture on the environment. Irish businesses have a critical role in achieving this climate-driven transition. And CFOs can play a pivotal role in areas such as leading strategic reviews, allocating capital investment, securing funding lines, protecting credit ratings and driving sustainable business performance. According to Accenture’s 2021 report, CFO Now – Breakthrough Speed for Breakout Value: 73% of respondents claim that the CFO is best placed to ensure the resilience of the organisation in today’s operating climate; and 68% of CFOs globally are now responsible for ESG monitoring and reporting. And momentum is accelerating. In November, the United Nations Climate Change Conference of the Parties (COP26) will bring world leaders together to accelerate movement toward the goals of the 2015 Paris Agreement. We expect agreement on ambitious goals, meaning that politicians, policymakers, regulators, and investors will need to work together with businesses to deliver on ESG objectives. Failure to act on climate change represents an existential risk to society and the global economy and poses a clear financial risk to businesses themselves. The impetus for business to act is time-sensitive and will likely be driven by four key factors: Governments setting legally binding emission reductions and net-zero targets; Investors and financiers wanting to understand climate-related financial risks and long-term business model viability; Employees placing increased importance on the ESG values and actions of their employer; and Customers placing ever more importance on the sustainability of the products they consume – with many seeking “champion brands”.  For business to meet these demands, CFOs and executives need to create and operationalise a comprehensive ESG strategy. Key considerations Regulators have for some time now warned about the threat that climate change poses to the stability of the financial system. Mark Carney, formerly Governor of the Bank of England, is leading a World Economic Forum (WEF) initiative to explore the risk posed to global financial systems associated with the energy transition. According to the Bank of England, as much as $20 trillion of assets could be at risk from climate change alone. The progress of delivery against ESG transition plans varies greatly from sector to sector and geography to geography. A report by Arabesque S-Ray found that just 25% of public companies worldwide are on track to deliver on their ESG-related commitments. Our research and work in this space suggest that CFOs and the wider finance team are uniquely positioned to guide their organisations in the following ways: Assessing the ESG impact on existing business models. CFOs can play a crucial role in assessing and measuring the potential impacts of ESG on current business operations. For example, identifying and modelling risks could include scenarios on the P&L impacts of a 1.5-degree world, the impacts of a higher carbon tax on profitability, the introduction of subsidies, or pricing signals to parts of the supply chain. Highlighting risks associated with ownership of certain assets. It is rational to expect the valuations of certain assets on the balance sheet to fluctuate as we progress through the transition towards net-zero. For example, we have seen large write-downs in valuations among many of the global oil majors. On the other hand, it is equally rational to expect certain asset classes to rise in value, such as those parts of the economy that support the electrification or home insulation agendas. Either way, CFOs will want to avoid holding stranded assets and will need to make more material bets on a more frequent basis over the coming decade. Identifying where investment will be needed to transition to a sustainable economy. Ireland’s transition to a more sustainable future is expected to have a wide-reaching impact on key sectors of the economy. For example, Ibec’s report, Building a Low-Carbon Economy, suggests that Ireland’s electricity and transport systems will need to reduce emissions from 1990 levels by up to 92% by 2050 and that buildings and factories will need to reduce emissions by up to 99%. Decarbonisation needs to go hand-in-hand with technological innovation, and CFOs will play a key role in identifying where investment is needed to ensure that business outcomes are achieved in a way that is economically and environmentally sustainable. Responding to investor demands and attracting investment. In the US, one-third of the $50 trillion of assets under professional management is invested in ESG strategies, according to research by the NewClimate Institute. ESG considerations are increasingly being adopted in assessing the sustainability and risk of investment decisions. At the same time, investors and pension funds are applying pressure on companies to provide products and services aligned with the UN’s Sustainable Development Goals (SDGs). Turning ESG commitments into action. Credibility is not a new concept to finance but is vital in the ESG space. As a profession, we can help our organisations avoid even the suggestion of ‘greenwashing’. Credibility is enabled by robust transition plans with regular and transparent disclosures on progress against them. Some CFOs are investing now to create enterprise-wide data provisioning and analytics solutions for ESG. This will enable them to model multiple commercial scenarios and inform the optimal pace and sequence of the pivot. Conclusion While executing a successful ESG pivot depends upon a strategy that is unique to the qualities and context of the organisation, there are a few best practices you can leverage: Conduct a materiality assessment. These sometimes behind-the-scenes assessments are a data-driven, holistic view of ESG risks and opportunities to identify gaps and prioritise the issues of focus against business and stakeholder importance. Build an effective communication method for the company’s ESG commitments and progress. This typically takes the form of a disclosure with a newly crafted framework and reporting metrics for standalone ESG disclosures, leveraging industry-leading practices. Formalise ESG governance. Stakeholders must be identified as explicitly responsible for new associated ESG activities. The company needs to craft a defined governance model and roadmap for execution, mobilising internal resources and data for ongoing assessment and reporting. These three steps have helped organisations successfully navigate and focus an ESG pivot and capture the associated resiliency and revenue potential. This is the decade of action to dramatically limit the future impacts of climate change – time is of the essence, and the time to act is now. Ambrose Shannon is a Managing Director at Accenture and CFO and Enterprise Value Lead for Ireland and the UK.

Oct 04, 2021
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IAASA’s Observations 2021

Each year, the Irish Auditing and Accounting Supervisory Authority (IAASA) publishes a paper outlining areas to which entities should give extra attention when preparing their annual financial statements. Maurice Barrett explains the most recent findings. In September, IAASA published its most recent Observations paper, Observations on Selected Financial Reporting Issues – Years Ending On or After 31 December 2021. While directed primarily at the comparatively small number of issuers falling within IAASA’s accounting enforcement remit, the topics covered in the paper are relevant to a wide population of entities. The Observations paper is written primarily from an IFRS perspective. However, most of the topics covered apply equally to entities applying FRSs. To that extent, IAASA encourages the broadest distribution and application of the topics referenced in the Observations paper. Recurring themes There are recurring themes that appear in the Observations paper year after year, the more common of these being: Tailoring of disclosures to the specific circumstances of the entity and avoiding boilerplate disclosures; and Disclosing the significant judgements and sources of estimation uncertainty and changes in the key assumptions underpinning assets, liabilities, income, expenses and cash flows. The objective of financial statements is to provide financial information about the reporting entity that is useful to users of the reports in deciding to provide resources to the entity. That objective is achieved, at least in part, by ensuring that disclosures are tailored to the specific circumstances applying to the entity in the reporting period. The provision of boilerplate information by, for example, repeating large tracts of IFRSs in the accounting policies section of financial statements is unlikely to be seen by users as useful information. Similarly, devoting time to crafting the disclosures around the significant judgements and sources of estimation uncertainty and changes in the key assumptions should result in user-relevant information being given. Judgements and uncertainty vary from entity to entity and over time, sometimes with speed (the COVID-19 pandemic illustrated just how quickly the economic landscape can change and just how flexible and adaptable business models can be). Financial statement disclosures need to be continually examined and adapted to the business environment as circumstances evolve. The disclosures that were appropriate last year may no longer provide users with decision-useful information this year. COVID-19 COVID-19 and the public health measures put in place to contain its spread had different impacts on different sectors of the economy. Similarly, the speed and duration of any recovery are expected to impact various sectors differently. It is important for issuers to clearly explain in the management report both the impact COVID-19 has had on the development and performance of its business and the position of the issuer, and management’s views as to the path to recovery. Depending on the specific circumstances of the issuer, some of the COVID-19 matters that IAASA expects issuers might disclose in their financial statements are: A discussion of the impact of COVID-19 restrictions on the economies or markets in which the issuer operates; The continued impact of COVID-19 restrictions on the entity’s broader financial performance such as raw material price increases, margin reduction, or supply chain constraints; and How financial performance, financial position, and cash flows will likely be impacted by the pandemic and/or the economic recovery. These disclosures should reflect the impact of the pandemic on the recognition, measurement, presentation and disclosures in the financial statements, including impairments (IAS 36), expected credit losses (IFRS 9), going concern (IAS 1) and provisions (IAS 37). Climate change The IASB published Effects of Climate-Related Matters on Financial Statements, highlighting how IFRS require entities to consider climate-related matters when the impact is material to their financial statements. This educational material complements an article that IASB member, Nick Anderson, wrote on this subject in 2019. The IASB paper and the related educational material are available on the IASB website. The educational material contains a non-exhaustive list of examples of when entities may need to consider climate-related matters in their financial reporting. It aims to support the consistent application of IFRS, but it does not add to or change the requirements in the standards. The list of examples provides guidance on how issuers might consider the effects of climate-related matters when applying IFRS, including IAS 1, IAS 2, IAS 12, IAS 16, IAS 38, IAS 36, IAS 37, IFRS 7, IFRS 9, IFRS 13 and IFRS 17. Entities, recognising that investors are increasingly demanding ESG (environmental, social and governance) information, should consider this educational material when assessing the impacts of climate change and risks in their financial statements. This is particularly relevant in the areas of judgements, provisions and measurement of assets (asset lives and recoverable amounts). Impairment Impairment continues to be an area of focus in IAASA’s financial statement examinations and is a recurring theme in our annual Observations paper. IAASA challenged issuers where no impairment testing was performed, yet impairment indicators in the context of COVID-19 restrictions (travel restrictions, non-essential activities closed) were in place; the decline in certain issuers’ revenues, profits and operational activities; and issuers operating at less than normal capacity. IAASA concluded that these happenings were indicators of impairment, and these issuers should have carried out an impairment review. Accordingly, IAASA required such issuers to perform an impairment review in accordance with IAS 36. Management, directors and audit committees must ensure that impairment reviews are performed when indicators of impairment are identified to ensure that an asset or cash-generating unit (CGU) is carried at not more than its recoverable amount. IAASA will continue to challenge issuers on IAS 36-related topics, including: Whether or not CGUs have been tested for impairment at an appropriate level; The discount rate used to measure the recoverable amount and whether or not that rate has been appropriately set; The determination of the key assumptions used, the long-term growth rates used and the disclosure of sensitivities; and Whether or not all key assumptions are realistic and consistent with other information in the financial statements. While the depth and duration of the impact of COVID-19 restrictions and the trajectory of any recovery remain uncertain, there are signs that restrictions are being eased and the Irish vaccination programme is enabling a re-opening of society. Consequently, relief and supports will be unwound over time and the longer-term impacts on expected credit losses will become apparent. IAASA reminds entities to continue to consider ESMA’s public statement Accounting Implications of the COVID-19 Outbreak on the Calculation of Expected Credit Losses in Accordance with IFRS 9. IAASA expects financial institutions to distinguish between measures and reliefs that impact the credit risk of financial instruments over the expected life of financial assets and those that address the temporary liquidity constraints of borrowers and apply IFRS 9 accordingly in preparing their financial statements. Fair values COVID-19 restrictions continue to pose challenges to fair valuation measurement (including the fair valuation of non-financial assets and liabilities) for many entities. The impacts of the pandemic are likely to result in changes to the valuation methodologies used, as well as to fair valuation assumptions. Entities should continue to consider: Changes in valuation techniques; Independent valuation reports and pre- or post-COVID-19 fair value assumptions and transactions; and COVID-19 expanded fair value disclosures – sensitivity. IAASA has noted certain issuers recognising deferred contingent liabilities arising from past acquisitions. It observes that volatility in the expected future EBITDA, forecast cash flows, and/or risk-adjusted discount rate(s) due to COVID-19, Brexit and economic disruption may result in volatility in the fair value measurement of deferred contingent liabilities. IAASA expects issuers to ensure deferred contingent liabilities are measured in accordance with the requirements of IFRS 13 and disclosed in line with the requirements of IFRS 13.93(d). Alternative performance measures ESMA’s Guidelines on Alternative Performance Measures (APM) have been in force since 2016. These APM guidelines are supplemented by a series of questions and answers, which provide guidance on the practical application of the APM guidelines. IAASA continues to examine issuers’ use of APMs and continues to identify shortcomings in the application of, and non-compliance with, the requirements of the APM guidelines, including instances where issuers: Present APMs with more prominence and emphasis or authority than measures directly stemming from the IFRS-based financial statements; Fail to provide reconciliations for all APMs presented; Use incorrect labels to describe APMs (e.g. the expression ‘EBITDA’ is used rather than ‘Adjusted EBITDA’); Fail to define an APM or fail to set out the basis of the calculation applied, including details of any material hypotheses or assumptions used; Fail to explain the use of APMs; and Fail to present prior period comparative amounts for APMs. Conclusion I believe that, to use a saying of our times, “we’re all in this together” and that preparers, management, audit committees, directors, auditors and regulators all can, and generally do, work together to achieve high-quality financial reports. IAASA’s assessment is that the quality of the financial reports it examines is generally high and compares favourably with European issuers. It is hoped that our Observations paper will in some way contribute to that continued high quality. Maurice Barrett FCA is Senior Financial Reporting Manager at the Irish Auditing & Accounting Supervisory Authority. IAASA’s Observations paper is available at www.iaasa.ie.

Oct 04, 2021
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Will your business be around in 10 years?

You don’t have to listen very carefully to hear the rattle of bandwagons being boarded as governments, quangos and interest groups issue their calls to action on behalf of Planet Earth, writes Dr Brian Keegan. It is over 20 years since the Kyoto Protocol was signed. With hindsight, the aspirations back then were relatively modest, amounting to little more than a commitment by governments to reduce carbon output. That hasn’t got us very far, as highlighted by the report over the summer from the Intergovernmental Panel on Climate Change (IPCC). There is no one to blame except us when it comes to increases in planetary temperature. The political difficulty with the climate crisis is akin to the political difficulty facing many countries in relation to pensions. Everybody knows there is a problem, but the crisis is happening too slowly for urgent remedies to be acceptable. It is painful to increase the retirement age (an approach currently under examination in Ireland and the UK) or add to the tax burden. Both or either option would correct the ratio of pension beneficiaries to pension funders. Yet, there will be no immediate political benefit. The political dilemma is the same when it comes to decisions over climate policy. We have fixed climate problems before. Forty years ago, the big environmental concern was the hole in the ozone layer. Changes in industrial policy resulted in the virtual banning of chlorofluorocarbons in refrigeration and other industries to help repair it. But where is the political dividend for those who took these actions? This is the nub of the problem for both the Kyoto Protocol and, more recently, the 2016 Paris Accord. Both initiatives depended primarily on government action, but government action on its own isn’t sufficient. A similar fate awaits the Irish Government’s Climate Action Act and the British Government’s Climate Action Act of 2019. It is all very well setting legally binding emissions targets – net-zero by 2050 in both cases – but people still have to travel, work, eat, and stay warm. Even when governments mandated the curtailment of normal life, as was the case with successive lockdowns in the past 18 months across the world, the impact on global carbon emissions fell short of the 7% reduction per annum promoted as necessary by the UN. Preparations for the next international gathering on climate change, known as COP26, are being finalised for November 2021 in Glasgow. However, while all this activity and wordsmithery is happening, the real progress on climate change may be taking place elsewhere. There is evidence that private sector financing for non-sustainable business activity could dry up. Speaking to a TASC think-tank event recently, the chief executive of AIB, Colin Hunt, put the matter succinctly: “Companies that don’t take this seriously won’t be around to talk about it in ten years’ time”. He is echoing a sentiment that seems increasingly prevalent in the investment community and is supported by academic research. Of course, all this comment could be mere virtue signalling and a form of greenwashing in itself. Nevertheless, it does seem that environmental investment considerations are genuinely more prevalent. It follows that environmental, social and governance (ESG) reporting will come more to the fore, even without government prompting. The chief executive of the International Accounting Standards Board has suggested that if ESG reporting for investors is correct, by addressing investor concerns, we will also address broader societal concerns. Government carbon targets might indeed be met, but by private investment strategies rather than climate legislation. Dr Brian Keegan is Director of Advocacy & Voice at Chartered Accountants Ireland.

Oct 04, 2021
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Budgeting time for managing people

People management has been evolving over the generations, paving the way for productive development conversations that benefit both the organisation and the employee, writes Michelle Halloran. There has been a gradual sea-change in the role of the people manager over the last few decades, but it has taken a global pandemic to catapult us into a new way of working. Now, as we optimistically enter the post-pandemic world, it is time for a radical break with the past, to ditch our outmoded perspectives on people management and take a hard look at the role of the 21st-century people manager. From the top down, organisations must stop pretending that managers with staff reporting to them can perform a fully loaded, 40-hour-a-week job, with a bit of ‘HR soft stuff’ thrown in on the side. Organisations need to start budgeting – in terms of time and money – for the investment required for their people to properly function and perform well in the new world of hybrid working. Old habits die hard Many of us have inherited a view of ‘people management’ involving uniform nine-to-five working hours, little flexibility, a strict dress code, and the expectation of often-unquestioning respect and compliance. Structured, objective performance management and review processes are a relatively new replacement for the once-a-year ‘quick chat’ to be told whether or not you were going to get the much longed-for pay rise. Your boss was typically a white male in his forties or fifties – benevolent when you did well; strict and disciplinarian when you did not. This model of people management has its roots in the traditionalism of the generation born from 1928 to 1944, at a time of economic hardship, when the old class system was still prevalent, and you respected authority unquestioningly. Evolving workforce generations The ‘Baby-Boomer’ generation (born 1945 to 1964) wanted much more from their working lives. They had learned from the experiences of the previous generation, seeing them gain very little in terms of improved quality of work and life in the post-war years, despite their sacrifices. However, while they may have done some hell-raising in their youth, and instigated the beginnings of a more equitable society, by the time they hit their mid-twenties, most were settled down and working even harder than their parents in evolving white-collar roles – you didn’t have to be American to buy into the American Dream. While their style and tone were less formal, and there was a shift in the gender balance at work, they (male and female) continued the patriarchal style of people management. Generation X (born 1965 to 1979) threw down the gauntlet in the area of gender equality, and achieved some real change in terms of family-friendly working hours. They also introduced and implemented performance management in the workforce, a concept driven by increased global business competition, where pay was linked to the achievement of targets, and an employee review was conducted once a year at which an employee’s rating was discussed and explained. Then came Generation Y, or the ‘Millennials’, (born 1980 to 1994). Since 2016, ‘Gen Y’ has comprised the majority of the workforce; therefore, knowing how to lead and motivate them is vital to the success of any people manager. The first ‘digital natives’, with access to vast resources of information and opinion, they do not unquestioningly accept what their boss tells them. With businesses driven hard to compete by rapidly advancing technology and globalisation, Gen Y has to work smarter, harder and faster than any previous generation. To maintain this level of productivity – adapting to unprecedented levels and speed of change – today’s employees need a lot of time, emotional sustenance and practical support from their managers, without which they will feel let down and move on to another employer. The early indications for Generation Z, born after 1994, are that they view being an employee and having their own professional ‘gigs’ on the side as not being mutually exclusive. Understanding how precarious job security can be, they are emerging as self-reliant and flexible but needing at least as much emotional support at work as Gen Y. The 21st-century people manager As a 21st-century people manager, your language and approach needs to move away from performance reviews towards ‘development conversations’, or even, simply, ‘check-ins’. These should be planned and scheduled. The more frequently you, the manager, make these calls, the shorter they will be, as they become part of a running conversation between you and your team member. This is especially important in a hybrid work environment where we cannot avail of ad hoc, informal conversations as we could pre-pandemic.  Allocate roughly a day a week into your schedule to have these employee check-ins. These should be strategic, not tactical conversations, with the emphasis on how the team member feels they are performing and coping with their work. This discussion must sit outside other routine discussions and communications about what needs to get done. In Table 1, I set out a suggested plan for managing development conversations with each of your team members (reporting to you as their line manager), outlining the frequency and purpose of each conversation, and useful questions to ask. (Quarterly and monthly meetings can encompass weekly check-ins as they fall due.) The business case So, you may be asking, if I am going to spend all this time talking to my team members, helping them to perform, how do I get my own job done? I can’t afford to spend a day a week on employee development conversations! Well, you can’t afford not to. There is extensive research on the positive impact of proper employee engagement on profitability and productivity. For example, a comprehensive report published by Gallup in 2017, involving meta-analysis of 339 research studies across 230 organisations in 49 industries and 73 countries, found that business or work units in the top quartile of employee engagement outperformed bottom-quartile units by 10% on customer ratings, 17% in productivity and 21% in profitability. Work units in the top quartile also saw significantly lower staff turnover, theft, absenteeism, and fewer safety incidents and quality defects. Taking as the baseline Gallup’s 21% increase in profitability as a result of higher employee engagement, if one day per week is allocated for people managers to have development conversations with their team members, costing 20% of the organisation’s people managers’ time, the impact on profit will be positive. Further gains and savings are available from increased productivity and customer satisfaction, lower staff turnover and absenteeism, reduced wastage, higher quality adherence, and so on. The business case for allowing people managers time to manage their people is clear. Human nature being what it is, however, such change will be resisted, despite the pressures from the generational transition outlined and the recent acceleration towards complex, individually tailored working arrangements. An organisation could introduce such change through a pilot scheme, evaluating results after 12 months using metrics like internal and external customer satisfaction, team productivity, absentee rates, staff turnover and quality of output. Budgeting time for people management is a change in approach that is long overdue. We have the motive – a more profitable business and a happier place to work – and with the shift towards hybrid working, we now have the opportunity. Michelle Halloran is an independent HR and people management consultant.

Oct 04, 2021
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The magic diamond of performance

Brendan McGurgan FCA explains the four facets of Sebastien Tondeur’s Magic Diamond of Performance, which has helped the MCI chief’s company scale at speed and generate annual revenue of over $500 million. Sebastien Tondeur, CEO of MCI, has led the company on an incredible scale-up journey. From a team of 30 operating in his home country of Switzerland, MCI has grown to employ almost 2,500 across 60 cities in 30 countries. Today, the company has revenue of over $500 million. There are, of course, many facets to this success, but I want to focus on the novel way Sebastien manages company performance. The Magic Diamond of Performance, as he calls it, focuses on four areas: Financial success; Employee promoter score (eNPS); Customer promoter score (cNPS); and Sustainability (aligned to purpose). Sebastien argues that you don’t need to measure and manage hundreds of different metrics. Instead, focus on these four areas and you will save time, energy, and resources. You will also remain acutely sensitive to the pulse of the business. Let’s look at each in turn. Financial success Anyone leading a high-growth or scaling organisation understands the importance of financial metrics. As a Chartered Accountant, I am only too familiar with ROCE, ROE, EBITDA, ROI, APT, etc. Put just about any three letters together, and it will likely be an acronym for yet another financial measurement. The question, of course, is which should you focus on? Sebastien cites four, which combine to capture financial performance. This is positioned at the apex of the diamond. Sales growth; Gross profit margin; Net profit margin; and Cash headroom. Sales growth Sales growth indicates the sales team’s ability to increase revenue over a fixed period (current month vs prior month, current quarter vs prior quarter, current month vs same month prior year etc.) It is calculated as follows: As a benchmark, a scaling company has average annualised sales growth of 20% over three years. Gross profit margin Gross profit margin indicates the amount of money remaining in sales after deducting the costs of goods sold. The calculation is as follows: Gross profit margin assesses how efficiently the company generates profit from sales. For example, suppose your gross profit margin is low compared to your peers in your industry. In that case, it may point to inefficiencies in your manufacturing or lost opportunities in terms of realisable sales price vis-à-vis the value you are delivering to your customers. Net profit margin Net profit is arrived at by deducting all company expenses (excluding the cost of goods sold) from gross profit. Net profit margin is the ratio of the net profit that is generated as a percentage of revenue. It indicates how much of the revenue you earn is actual profit. Here is the formula: Net profit margin = net profit/total revenue x 100 Net profit margins vary by business size and industry. As a rule of thumb, a 10% net profit margin is considered average, a 20% margin is considered good, and a 5% margin is considered low. A consistent net profit margin aligned with sales growth is reflective of a successful scale-up. Significant fluctuations in net profit margin while a company is growing is often symptomatic of deficient processes and systems capable of supporting sustainable growth. Cash headroom There is an old saying in business: “sales is vanity, profit is sanity, and cash is reality”. This is very much the case in a scaling business, where cash is the fuel for growth. I led the finance function of a dot-com company through the boom and bust of the early 2000s. It was my first taste of industry, and it provided a lasting and salutary lesson in the importance of cash. It was there that I learned the golden rule: “s/he who has the gold makes the rules”. Cash headroom refers to the difference between a business’s required monthly cash resources and the available cash resources. For example: assume a business must pay out £1,000 per month to cover overheads and expenses. If, after payments from customers, it has £5,000 in the bank, the business has cash headroom of five months. To put it another way, if there are no further customer orders, there is sufficient cash in the bank to cover five months of committed overheads and expenses. In my previous business, we targeted a business KPI of six months’ cash headroom. Anything more would trigger a conversation about where to better deploy the surplus cash. Anything less triggered a deeper look at the reasons why. Are orders declining? Are customer payments late? Have we seen a general increase in costs? Employee net promoter score (eNPS) If people are the most important asset in business, then leadership should protect and nurture that asset. To do this, you need to know how happy your team is and how engaged they are with your business. Good business leaders want their people to bounce into their workplaces, to bring high energy levels and a keen desire to provide amazing service to customers. A good leader wants to provide fulfilling, meaningful, vision-aligned work to the people they employ. One of the world’s leading experts on customer and employee loyalty is Fred Reichheld, the founder of Bain & Company’s loyalty practice. Fred created the Net Promoter System (NPS) in 2003 and since then, it has been used by a range of leading companies such as Apple Retail, Philips, Charles Schwab, Allianz, American Express and Intuit to generate extraordinary results. In essence, Fred’s work laid bare the link between loyalty and profits. eNPS measures employees’ willingness to recommend the organisation to others as a great place to work. It indicates engagement levels, motivation, and intent to remain with the company. It also uncovers the likes and dislikes of employees as they pertain to the company. How do you calculate it? The genius of eNPS lies in its simplicity. In an era of survey fatigue, it provides an incredibly easy and efficient way to survey employees. First, they are asked one quantitative-based question: “How much would you recommend working here to a friend or colleague?” The employee uses an 11-point scale from zero (not at all likely) to ten (extremely likely). Follow this up with an open-ended question: “Why do you feel this way?” Those who score between zero and six are detractors. They are unhappy, disengaged, and could be looking for roles elsewhere. Those who score seven or eight are passives. They don’t love working for you, but nor are they entirely disengaged. Those who score nine or ten are promoters. They love their work and won’t hesitate to tell everyone. The eNPS score for a period – typically a month – is calculated by subtracting the percentage of detractors from promoters, omitting the passives from the calculation. The score is then displayed as a number rather than a percentage. eNPS: a worked example There are ten employee responses in ‘Improve Your Workplace Inc.’: 3, 4, 5, 6, 8, 8, 8, 9, 10, 10. This equates to: • Four detractors (3, 4, 5, 6) = 40% • Three passives (8, 8, 8) • Three promoters (9, 10, 10) = 30% The calculation: 30% – 40% = -10 What is a good score? Jennifer Willy, Editor at Etia.com, says that anything above zero is generally acceptable: “Different companies and organisations have different standards and benchmarks to measure their performances. But generally, a score between 10 and 30 is considered good while anything near 50 is excellent.” Why is eNPS important? A State of the Global Workforce report published by Gallup in 2017 showed that 85% of employees worldwide are either not engaged with their work or are actively disengaged. Disengaged staff are less productive and are more likely to make mistakes. Worse, negative attitudes can contaminate an otherwise positive workplace culture. Conversely, employees engaged in their work are more productive and tend to positively influence their teammates. Consequently, employee retention rates will improve, and your team will produce better results for your clients. To put it simply, happy staff means happy clients. Customer net promoter score (cNPS) Successful scalers are obsessive about delivering value to customers. They are consciously tuned into why they do what they do and how that impacts their customers’ lives or businesses. Assessing the customer’s engagement with you is critical. It helps guide and inform loyalty initiatives and overall brand-building, and it forms the third area of focus in the Magic Diamond of Performance. How do you calculate it? cNPS is calculated the same way as eNPS. It is defined as the willingness of customers to recommend a company’s products or services to others. Like eNPS, customers are asked a single question: to rate on an 11-point scale (zero to ten) the likelihood of recommending the company or brand to a friend or colleague. Based on their rating, customers are classified into three categories: detractors, passives, and promoters. As with eNPS, cNPS is found by subtracting the percentage of detractors from the percentage of promoters. The result will be a number between -100 and +100. A cNPS score above zero is considered good, as it indicates that your audience is more loyal than not, and anything above 20 is considered favourable. Bain & Co., which pioneered this methodology, suggest that above 50 is excellent and above 80 is world-class. These are general guidelines, however. A good cNPS will depend on the industry and country in which the business operates. Sustainability (aligned to purpose) MCI’s purpose is as simple as it is profound: “when people come together, magic happens”. This purpose permeates every part of the business and is the slide-rule for all decisions. The company may have pivoted several times in its evolution, but that core purpose – bringing people together to build communities and create experiences – has remained. Sebastien explains that with growth came a consciousness of the company’s impact on the world. As MCI’s reach became global, it began to understand that it could accelerate change and promote a more sustainable and inclusive society. Anchored by its purpose, the company’s goal is to encourage an active culture of care and responsibility, backed up by concrete actions. This forms the last area of focus in the Magic Diamond of Performance. Why is sustainability important? A view common in SMEs is that sustainability issues are for governments and larger corporates, as smaller entities are simply too busy wrestling with the day-to-day demands of the business. Sebastien, however, sees sustainability as an enabler of company growth. “I don’t think we have a single under-25-year-old candidate that hasn’t asked us about the sustainability programme. I don’t even think it’s an option for any business. You just have to have an answer when the question is asked.” Sebastien is not alone in this view. Marga Hoek, author of The Trillion Dollar Shift, puts it like this: “Business for good is good for business”. What do you measure? Sebastien’s mantra is “think big, start small, scale fast”. It’s all about learning as you go. MCI used the UN Sustainable Development Goals (SDGs) to guide their sustainability initiatives, picking a small number of the entire 17 to make a start. “We give a lot to the community as a business – doing volunteer work, helping kids, working on cleaning projects… and then, over time, we became more sophisticated. Now, we have a large community of what we call sustainability leaders. They cover a range of areas – environmental, social, diversity, inclusion. Belonging is a big topic right now. I give them a budget, I give them approval, and I rely on them to give me recommendations. They communicate to the company and engage the people.” MCI’s sustainability journey, which started with a single small step, has become a hugely impactful sustainability strategy based on four SDG-aligned pillars: people, planet, profit and governance. For example, under the ‘planet’ pillar, the company successfully reduced its carbon footprint by 20% in 2020. And as Sebastien points out, the most sustainable companies are the least wasteful. Waste is tangible in some industries, but how do you reduce waste in a knowledge-based company? In my previous business, we put our pre-sales function under the microscope and found that only 7% of sales leads converted into sales orders at our worst. That’s 93% wasted effort in customer calls, follow-ups, budget quotations, design drawings etc. So we zeroed in on our customer conversion ratio and, over time, increased our conversion rate to 20% – not by generating new leads, but by becoming more efficient in processing the leads we already had. Have fun with this aspect of the Magic Diamond of Performance. You don’t need headline-grabbing initiatives or noble sustainability targets, not at the start at least. Instead, look for an area of your business where you generate waste and aim to reduce it. In so doing, you will leverage your people’s time and creativity. In time, this process will compound to greater employee engagement and productivity, customer advocacy, and an improved bottom line. Conclusion Sarah Kennedy is Vice-President of Global Marketing at Adobe Experience Cloud. She says: “The companies that will excel long-term are the ones that know it’s not just about shareholder value… it’s also about focusing on the customer and employee experience, and how those, in turn, contribute to society”. If you’ve found yourself drowning in the vast sea of performance measurement options, then the Magic Diamond of Performance could be the lifeboat you and your business need. Brendan McGurgan FCA is Co-Founder of Simple Scaling, a company dedicated to inspiring, connecting and enabling ambitious leaders of SMEs to scale with purpose.

Oct 04, 2021
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Chief Executive’s welcome - October 2021

As ever, this is a busy time of year when the Institute commences its CPD programme for the autumn and we unveil our programme of events and conferences. The business environment has continued to change substantially in the last year, and we have formulated this programme of events, courses and specialist qualifications with a keen eye on equipping members to leverage that change in their professional lives. We have engaged closely with our members to ensure we are addressing your needs in our new programme. I look forward to your feedback. After a lengthy period of virtual engagement necessitated by the pandemic, we surveyed our members in recent weeks to hear your preferences on engagement in the coming months. It is clear from your feedback that a shift has taken place when it comes to events. We see an appetite to attend larger conferences, awards ceremonies, and social events in person, but it is also clear that the virtual option will remain a preferred one for many when it comes to CPD courses, briefings, and other smaller-format meetings. This feedback will inform our planning in the months ahead. As we move out of the shadow of COVID-19, another crisis will dominate this coming quarter – the climate crisis. COP26, which will take place in November, will drive this focus. Accountants’ skills and expertise strongly position them to help businesses adapt to meeting the sustainability challenge. The evolution of the CFO role in recent times is proof of this, but sustainability expertise is equally becoming critical among accountants at every level. The Institute will maintain its focus on equipping members for this task. Finally, I would like to direct your attention to our recently published position paper, The Next Financial Year, which details policy measures the Institute is calling for in the months ahead. Informed by extensive engagement with members in business, practice, and the public sector, it focuses on improving government policy for businesses on the island of Ireland without demanding additional exchequer funding or support. I look forward to engaging with you all in the coming weeks and months. Barry Dempsey Chief Executive  

Oct 04, 2021
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Hybrid working and employee engagement

Now that October heralds people returning to the office, leaders need to communicate with their employees to understand their preferred way of working. To ignore this, says Louisa Meehan, risks staff disengagement and demotivation. It is wonderful to see Ireland reopening and returning to working together in person, albeit with all the necessary COVID-19 precautions. However, it will not be quite the same as the workplace of 2019, and leaders should remember that. For instance, there will be three distinct groups in the office: Those who want to make a total return to the office; Colleagues who wish to work remotely on a permanent basis; and The hybrid model we have all been preparing for and hearing about for 18 months – a balance between home and office working. According to the Second Annual National Remote Working Survey carried out by NUI Galway in May 2021, more than 95% of employees want to continue to work remotely. The most popular work pattern identified was a hybrid model of attending the workplace for part of the week and working remotely for the remainder. There are many clear benefits to remote working for both the employer and the employee, with flexibility and high productivity at the top for many. Additionally, we have seen broader environmental and community benefits over the last 18 months. However, many leaders are concerned about keeping employees motivated and engaged while working away from the office. Employee engagement Author Daniel H. Pink identified three core elements to individual motivation: Ability to obtain mastery in your chosen area. Having a clear purpose; a shared vision of the future. Autonomy, or a degree of control over your work. Flexibility and remote working have been something the lucky have benefited from for several years. They have avoided long commutes, which has enabled a better work-life balance. That level of flexibility is often a key motivator and ups the level of engagement for those able to take advantage of it. Remote and hybrid working as elements of a broader flexible working strategy clearly aligns to staff autonomy. This kind of work can also encourage the development of – and proficiency in – skills, allowing additional time for study or personal growth activities. Finally, hybrid working should complement the company ethos, values, and purpose. Thus, when handled well, remote working has the potential to drive up employee motivation and engagement and organisational productivity. People management One of the biggest concerns from leaders today is the ability to effectively manage staff remotely. For most leadership teams, this is a journey, and taking time to focus on enhancing people management skills, focusing on employee motivation and engagement, is time well spent. In the end, it’s essential to focus on what drives your team to do better – is it a good work-life balance? Flexibility? Now, we have the means to meet those needs. Effective people managers with positive leadership skills can enable productive remote working. Louisa Meehan is the Founder of Woodview HRM.

Oct 01, 2021
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What’s next on the climate agenda for business?

With Ireland putting its climate goals into law, businesses will find it tough to meet their targets. Although it will undoubtedly be a challenge, says Michael Hayes, there are ways Irish companies can act now – not only for themselves but for their stakeholders too. One of the key objectives of COP26 is to provide a forum to create a globally co-ordinated climate response, where all nations commit to ambitious emissions reductions plans (also known as Nationally Determined Contributions or NDCs). Achieving this globally co-ordinated response, including the creation of an internationally agreed carbon market (which COP25 failed to achieve), will be one of the key measures of the success of COP26. Ireland has joined a select few countries in enshrining its climate goals in law. The Climate Bill, ratified this summer, commits to a 51% reduction in emissions by 2030 relative to a baseline of 2018, with the Climate Action Plan and the first round of sectoral carbon budgets due in the final quarter of this year. Nonetheless, Ireland remains an outlier in pollution with the third-highest emissions per capita in the EU. Where carbon leakage is a concern, partnerships and collective action across governments, businesses, and civil society are essential. Why does climate matter to business? Too often, we think of far-off impacts of climate change such as wildfires in California or Australia – but Ireland is not immune to the climate crisis. The EPA’s recent Status of Ireland’s Climate study showed that the decade between 2006 and 2015 was the wettest on record, while 15 of the top 20 warmest years on record have occurred since 1990. Meanwhile, KPMG’s most recent CEO survey shows that in both the Republic of Ireland (40%) and Northern Ireland (44%), a noticeably higher percentage of respondents than the global average (27%) are concerned that not meeting climate change expectations will result in public market investors shying away from their organisation. Financial risk Businesses and listed corporates, in particular, are getting it from all sides in terms of ESG. Companies face a genuine and immediate financial risk if they don’t address ESG concerns. Investors may walk away, customers may not buy their products and services, consumer sentiment is changing rapidly, and employees want to work for companies with purpose. Companies that do not address the climate change and ESG agendas in a meaningful way will suffer. This has become even more serious in the aftermath of the IPCC report and its ‘Code Red for the Planet’ warning, and regulators and governments will force the agenda. Businesses that don’t appreciate the scale of new policies and regulations coming down the tracks run a real risk of being left out in the cold. Meanwhile, the most immediate pressure comes from investors who often manage other people’s money. Government stimulus required CEOs in Ireland and worldwide indicate that a multifaceted approach will be required to address climate change. Over three-quarters of leaders surveyed globally (77%) believe that government stimulus is needed to turbocharge their goals of reaching net-zero. This figure is even higher in the Republic of Ireland (80%) and Northern Ireland (82%). That so many CEOs say government stimulus and assistance will be required to help their organisations reach climate targets is interesting. There is a clear message there that most corporates believe they will not get to net-zero alone. No one should be under any illusions about how difficult it’s going to be.  What can business do? The same research showed that 84% of business leaders in the Republic of Ireland and 76% of their counterparts in Northern Ireland are focused on locking in the sustainability and climate change gains made during the pandemic. Companies with huge air miles before the pandemic simply stopped flying, with resulting cost savings and environmental gains. COVID-19 provided a unique test-bed for accelerating and testing new ways of working, and it’s hard to see how we could revert completely to where we were before. Furthermore, many organisations will be consciously working to ensure that they don’t slip back to old ways of working. Measure the gains Companies that wish to hold onto gains made during COVID-19 must know what they want to lock in. They need to set out clear KPIs and metrics for those gains. Many companies implemented good ad hoc climate initiatives during COVID-19, but the absence of a structured framework or programme means many of the gains are unlikely to persist. Creating frameworks and programmes now will help companies bed down those gains and build on them in the future. However, it should be noted that gains from climate action tend predominantly to be long-term in nature. Therefore, organisations should put governance structures in place to recognise such long-term gains. Michael Hayes is the Global Head of Renewables at KPMG.

Oct 01, 2021
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Five steps to an October goal reset

Summer has faded and we’re now full swing into autumn, which is the perfect time to re-examine your goals and focus on what you can achieve by the end of the year. Moira Dunne outlines five easy steps to a more productive you. Autumn is a great time to reset and refocus. The summer months are often filled with distractions, especially as most will take the time to recharge and refresh. Now October has arrived, it is an excellent time to consider the final three months of the year. Review your goals Consider the goals you set at the start of the year. There may be goals you haven’t started yet or new goals that emerged as the year progressed. Now is the time to re-evaluate your priorities so you can focus on the most important things between now and December. Be realistic By this point, you should have a realistic view of your busy schedule. Where can you find extra time to work on your goals? Set one goal to achieve over a realistic timeframe. Once you make progress, you will feel productive and motivated to tackle the next one. Remove the vague The key to making progress is to break down a big goal into smaller actions; that way, you can begin to make gradual progress every week. Use short gaps in your schedule to work through a few tasks each day. They all add up and, if well planned, will result in you achieving the overall goal by your deadline. As Tim Herrera recently said in his Smarter Living article in the New York Times: “Rather than looking at tasks, projects or decisions as items that must be completed, slice them into the smallest possible units of progress, then knock them out one at a time”. Setting goals Here are five simple questions to help you set a good goal. What is the change I want to make? Be clear and specific. This will help you decide the work that needs to get done to achieve the goal. Why do I want to do it? What is my motivation? What difference will it make? Does this fit with my overall vision and purpose? When does this goal need to be achieved? Set a deadline for completion and then work backwards to set interim deadlines for smaller tasks along the way. This helps you stay motivated and focused throughout. What are the risks, the stumbling blocks or things that may prevent you from succeeding? List anything that may get in the way – things that could cause you to give up, things that blocked you in the past, things to avoid this time. What actual work needs to be done to achieve the goal? This will help you develop an action plan – essentially, to map out the work you need to get done. Action plan Once you work out the above steps, you can start to build your action plan. Add target dates, measures and resource names for who will complete the work. A simple table or an Excel spreadsheet will help you track your progress against the plan. How great would it feel to finish the year on a high? Now is the time to focus so you can have a productive fourth quarter. Moira Dunne is the Founder of BeProductive.ie.

Oct 01, 2021
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From aspiration to action

Marie Donnelly, Chair of the Climate Change Advisory Council, discusses her organisation’s role in helping Ireland achieve  its ambitious climate change targets – and how Chartered Accountants, and we as individuals, can support that work – with the Institute’s Public Policy Leader, Cróna Clohisey FCA. Cróna Clohisey: First, as Chair of the Climate Change Advisory Council, could you explain your organisation’s purpose, remit, and ambitions? Marie Donnelly: The Climate Change Advisory Council was established by the Climate Action and Low Carbon Development Act in 2015. We are an independent advisory body, and our role is to assess and advise on how Ireland is making the transition to a low-carbon, climate-resilient and environmentally sustainable economy by 2050. It is probably relevant to point out that in July of this year, there was an amendment to that Act called the Climate Bill Amendment Act and it has had a material impact on the Council, both in terms of its operations and structures. For example, the Council is now mandated to bring forward carbon budgets for the five-year periods 2021–2025, 2026–2030 and a provisional one then from 2031–2035. These budgets set out the maximum amount of greenhouse gas emissions that can be emitted by Ireland in the five-year period. The budgets are all-economy budgets and once the Government receives them and hopefully accepts the budget from us, the Government then allocates the budget across each of the sectors with ministerial responsibility for keeping their sector within the budget. That’s the most immediate and visible action emanating from the Act. Each year, the Council also conducts an annual review. The annual review heretofore was a catch-up on a range of things. The Act is now quite specific in that the Council must review each sector, identify the emissions coming from each sector, and identify the policies and actions that are working or, as the case may be, not working. It’s a sectoral review, and much more detailed than has been the case up to now. The new form of review will begin in October 2022. In principle, the cycle is that the carbon budget will be published, the Government will allocate a budget to each of the sectors, and Government will then publish a Climate Action Plan. This plan has policies, practices, and initiatives by sector designed to reduce emissions and stay within the carbon budget. We then comment on each sector’s emissions and the following year, the Climate Action Plan will be adjusted because some things will have been done, or more needs to be done. We are into a rolling cycle of activity thereafter. It is often said that time is running out in our fight against climate change. For context, can you explain where the world is currently in terms of that fight, and what might happen in the decades ahead if the appropriate corrective action is not achieved? I think it is clear to everybody that climate change is already happening, even here in Ireland. If you look at the IPCC (Intergovernmental Panel on Climate Change) report that was published this summer, it was very well presented in that they had maps so you could pick up your own area and learn what is likely to happen. It is probably fair to say that the implications of climate change for more southerly countries include extensive droughts with a shortage of water, impacting on food production and, indeed, the capacity to live in some of those spaces. Further north, you could have greater cold measures with higher rainfall, snow and ice. The island of Ireland is in the middle. We are a temperate climate so for us, we are looking at warmer and possibly drier summers and somewhat colder and probably wetter winters. The impact on Ireland is likely to come from a number of things, though. First, we are likely to have more storms and they are likely to be more intense. I don’t think there was a hurricane in Ireland before Ophelia, so we’ve had our first hurricane and we have seen some horrendous storms. The number of named storms we have is increasing every year. Second, and we can see this for ourselves, is rainfall that can be almost tropical in nature. This is leading to floods. Third, the sea is warming and sea levels are rising at about 1mm per year. We did a coastal workshop recently and the implications for coastal cities like Cork, Dublin, Galway and Limerick are really quite significant over the next 30-50 years. We may need to look at coastal defences for these cities because of sea rise. There are implications, even in a country like Ireland. We are a small country and a temperate climate, but even in Ireland you can see the implications coming down the track so action clearly is necessary. Now, people have argued that Ireland is so small, our efforts don’t really matter – but that’s not correct. We need everyone to put their shoulder to the wheel or we won’t succeed, so there isn’t a free pass for anybody. It doesn’t matter whether you are big or small, rich or poor, we all have to do something in this space. That’s the urgency for us – to do something, and to get on with it. The Paris Agreement was a time of hope, but events have arguably diminished that optimism with some extreme weather events this year alone – not to mention that climate change and its impacts are reportedly accelerating. In that context, what does the COP26 event in November need to achieve? Sometimes words are very important, so I think there must be a declaration of ambition and a commitment to that ambition from each of the countries. Ireland has declared its ambition of a 51% reduction by 2030 and we need to put it into action. We have seen numbers come from other countries – the US, Canada and the EU member states – but what we are really looking for is the other big countries to make that commitment, and first among them would be China. We then need an acknowledgement from fossil fuel-sourcing countries such as Russia, Saudi Arabia and Australia, for example, to make the kind of commitments that are necessary – to at least make the pledges. Then, the second stage must be to put them into practice. In that challenging context, is net-zero genuinely achievable by 2050? Yes, and I have no doubt that it is achievable. I would admit, however, that I could not tell you today how we will achieve it but I am absolutely convinced that solutions will be developed in the coming years that haven’t even been thought about today. Technological evolution and the capacity to innovate will be brought to bear in this space, but it is a black box for the moment. Nonetheless, for now we must use the technologies that are available, and intensify our efforts.  There are many levels of responsibility when it comes to fighting climate change – political, corporate, societal, individual. In your view, what is the route to sustainable life in the medium-term and who bears the brunt of the responsibility for bringing about change? Everybody has a role, but there are distinct responsibilities for various groups. Certainly, the Government has a role. It has to set the ambition, which indeed it has, but it must follow-up that ambition with the economic environment, the behavioural environment, that allows for success. Part of it will be ‘command and control’, such as the standards in our building regulations, part of it will be through a carbon tax, part of it will be through grants and incentives, and part of it will be through ensuring that the policy environment allows both businesses and individuals to make the right choices. So I do think that Government has a really important role to play. But, of course, it won’t be able to deliver on this itself. I also believe that industry in its widest sense has a huge role to play. It needs to be a leader in itself and many companies are making announcements regarding net-zero or carbon reductions, for example. Some of these announcements could be interpreted as marketing activities because they say that they will reduce their carbon footprint by a certain amount, but they are going to buy carbon credits to achieve that. It’s good, and I don’t wish to denigrate that, but it isn’t the depth of action we need. Industry has a hugely influential role in the context of its stakeholders and if you add up the number of contacts an organisation has with clients and customers, the communication potential is enormous.  While I do see industry as being very pivotal in this space, it’s also down to you and me as individuals. Ultimately, we will be presented with choices and sometimes, the choices might be a little bit more expensive or difficult. But really, the onus is on us to make the right choice because in the end, it will benefit ourselves, our families and the climate. Our more than 30,000 members are often relied upon for guidance in this space as advisors to, or within, a business. So, what is your message for Chartered Accountants specifically with regard to their role in fighting climate change? The first thing is to know your number. Accountants are very well-placed to know what the number is for the business or activity. By that, I mean: what is your emissions profile today? You can have a pseudo-calculation of that by looking at your energy because you can then do your calculation from energy into emissions. If you happen to be sourcing products from the agricultural sector, you might have to take methane into account as well. But the first thing is to put a number on it and understand the composition of that number. Doing so allows you to then develop a plan to tackle the number. It’s like any business activity – what’s the number, and what will the cost of investment be? Once you know the cost of investment, you can plan each of the steps on that basis. I would also say that it isn’t just the accountants that should know the number; it’s important that all others in the business know the number too. Sometimes, the number can be impacted by something as simple as daily routine in the workforce. That kind of information is really the first step, and then you can build various mechanisms to reduce emissions thereafter. A recent op-ed in the New York Times asked whether we need to shrink the economy to stop climate change. In your view, can economies continue to grow while we rely on “rapid market-led environmental action and technological innovation” to diffuse the threat? First, we need to consider what we mean by growth. Sometimes people talk about GDP growth and other times, they talk about job growth or quality of life so the metric you use for growth is important in this context. If I start with quality of life – will that improve in a more sustainable world? To that, the answer is a clear yes. There is no discussion that a more sustainable world will be a healthier world because we will have cleaner air and water. It will be a more comfortable world once we get our houses both comfortable and carbon-free. The world will be sustainable in itself because we will not be depleting natural resources to the point where we won’t have any left, we will recycle them. So, the answer to that is quite clear and obvious – but it is difficult to put a number on it because how do you quantify quality of life? It’s not necessarily a monetary thing. If I look at jobs, this whole change we are going through will have an impact on jobs. I’m old enough to have lived through the digitalisation process. Way back in the 1990s when we were talking about computers and the internet, the horror was that computers were going to displace people from the labour force as the work would be done by computers. Some of that was correct in that jobs that were there in the 1990s are not here anymore. But we are employing more people today, in different ways and doing different things. The change this time around will be exactly the same. However, we need to focus on those who will be adversely affected and ensure that measures are in place to allow them to be aware of, and access, training and alternative opportunities. Those who will be somewhat impacted – plumbers or electricians, for example – will need opportunities to upgrade their skills. They will still be there, but they will be doing different things going forward. I think it’s a manageable process on the employment side. The positive for Ireland is that we have discovered a natural resource that will power our economy going forward. We can substitute importing that energy with our own, and that’s very positive in terms of jobs. In terms of the GDP element of the economy, it’s going to cost money. Different numbers are put out there, some people are talking about 2% of GDP into the future but there are two elements to consider. If you look at our capital expenditure, how much additional expenditure will be required? And more importantly, how much of our current capital expenditure should not be spent in the areas in which it has traditionally been spent and should instead be diverted? That will be the challenge in terms of the more macroeconomic considerations. You spent many years working at a European level to promote energy efficiency and global leadership in renewable energy. Can Ireland do more, in your view, as an island nation to lead the charge in renewables? Yes, and we are really at the cusp of that right now. When we talk about wind, solar energy and – in time, perhaps – marine, the opportunity is, of course, that it is a natural resource. There is a higher capital investment, yes, but a much lower operational cost and that’s a characteristic of renewables in any context. Take the electric car, for example – a little bit more expensive to buy, but cheaper to run. The electricity system on this island is unique in Europe in that we have a pooled electricity system with Northern Ireland. It is the only integrated electricity system in Europe. We are an island off an island, and the analogy in size would be Demark. But unlike other countries, we have a very distinct characteristic vis-à-vis Demark in that Denmark is between Norway, Sweden and Finland on the one hand and Germany, the Netherlands and Poland on the other. It’s part of what’s called the Nord Pool electricity scheme, and it means that electrons can float very easily between all of those countries. So if, for whatever reason, the wind doesn’t blow in the North Sea and the Danish offshore wind electricity volume drops, they can source from Germany, for example, and interchange very easily. Ireland doesn’t have that. We’re an island off an island and at the moment, we just have one interconnector to the UK. So we don’t have what’s called a balancing possibility through a very large electricity system like the one on mainland Europe. We will therefore have to be able to bring variable renewables to our electricity system and balance them on the island. That will require quite a bit of innovation, both in terms of technology and in terms of the management of our electricity system. In order to make that work, Ireland will have to be a real demonstrator of demand management for the electricity system. In that, we will need both industry and consumers to manage their demand. Otherwise, if the peak gets too high, it will break the system. So, we need to spread the demand away from the peak to maintain a stable system. That will be very innovative for electricity systems globally and in that context, I think it’s fair to say that Ireland is a living laboratory. As the interview nears its end, is there anything you would like to add? We are in a situation where we are kicking off a very complicated process in Ireland coming out of the Act. We’re a little bit slow because we are already one year into the first set of five-year budgets, so we will eventually have to catch up. I think the single biggest challenge we will face, however, is not money – although money is always a problem. It’s not even innovation or technology. It’s behaviour – our own behaviour and industry behaviour. That will have to shift because we will not be able to behave in the future as we have in the past. This is what I mean by choices and I think the pandemic has been a forerunner of some of the choices we will have to make. We as individuals will have to think more about the way we live and do things. It’s not that we need to necessarily deprive ourselves, but we do need to box smart as to how we get the services we want. Mobility is a service, for example. If you want to go from here to there, think for a moment about the most sustainable way of getting there. It’s not to say don’t make the journey – although that might be correct at times! – but rather, what is the most sustainable way to travel and can we change our behaviour a little bit in that context. In terms of the way we heat our homes, is there another way of achieving a comfortable living space other than the way we have done traditionally. The other issue about behaviour is the more we can automate it, the more likely we will be to succeed. As an example, using various energy-intensive appliances at home can be done in a more sustainable way. With a smart meter and programming capacity, the use of these appliances at times of low demand, which is probably at night, in an automated way is a real support to behavioural change. Nobody wants to manually put a wash on at 2am but if you automate it using technology, that will be a huge support to behavioural change. Behaviour is the hardest thing to influence, and that is the single biggest challenge we have before us when it comes to tacking climate change. I couldn’t agree more. I have come to the conclusion that putting a carbon tax on petrol or diesel, for example, isn’t enough to change behaviour. But perhaps the simple act of including the amount paid in carbon tax on each receipt could have an effect. Visibility is vital. That’s right. And if we were to eliminate all of the subsidies to fossil fuels as a first step, it would go a long way to paying for some of the climate change measures. It seems like a no-brainer to be perfectly honest. Why tax people when all you need to do is remove the subsidies? This is a serious question we will need to consider into the future.

Oct 01, 2021
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Combatting virtual fatigue

After 18 long months of remote working, many people are feeling fatigued at the thought of attending yet another virtual meeting or event. Patrick Gallen gives us top tips on how to cope in these virtual settings. Do you find yourself avoiding, cancelling, or rescheduling virtual meetings, virtual coffee or virtual team events? When you do attend such virtual meetings or events, have you noticed that during the meeting you’re not present or focused, and afterwards you’re incredibly tense or tired? These are all potential signs that virtual fatigue has set in and you’re not alone. It is reported that 38% of workers say they’ve experienced virtual fatigue since the start of the pandemic, and anecdotal evidence would suggest that this trend is growing. Virtual fatigue is the feeling of exhaustion that often occurs after attending a series of virtual meetings or other virtual events such as webinars or training. Stanford researchers identify four causes for virtual or ‘zoom fatigue’ and found that not only is it more fatiguing seeing ourselves in real-time, but the cognitive load placed on our brains is much higher in virtual settings. But why does this happen more so than the typical in-office meetings we are used to? Our focus is diminished When we’re at home and in a video call, it’s easier to lose focus or get distracted. We tend to try to do things simultaneously, like answering emails or sending texts while attending a virtual meeting. The home environment also lends itself to other distractions, particularly if we do not have access to a private working space.  It is more difficult to ‘catch up’ In a face-to-face meeting, it is easier to ask clarifying questions, pick up on non-verbal cues, and help the meeting stay on track. In a virtual setting, if we miss something, have people speaking over each other or if there are technological challenges, it becomes more difficult to stay engaged. Looking at a camera is exhausting In a virtual setting that involves cameras, we feel obliged to appear engaged by looking into a camera for extended periods. This can lead to extensive scrutiny of our own performance and appearance which can have negative, long-term impacts on our self-esteem. Now that we know how to identify virtual fatigue it is important to consider how to reduce it with a few handy tips. Meeting structure Keep meetings short and try to limit the number of people present on calls. Where possible, avoid scheduling consecutive video meetings. Don’t forget the real world Take regular and structured breaks during the day from your workspace, and take time outside in fresh air and sunlight. Avoid multitasking Try to be ‘in the here and now’ when engaging in virtual activity. Avoid emails, texts, and external distractions where possible. Turn your camera off If it’s appropriate and you need a break, then turn your camera off – but don’t be tempted to use this as an opportunity to do other things. Instead, use it to really start listening to what people are saying and engage meaningfully Switch up your communication method Is a meeting really required? Would a phone call or email suffice? Think about the most effective communication method for your messaging and how you can get this across. Pay attention to how you’re feeling, and take these steps to prevent fatigue before it becomes a problem. Patrick Gallen is the Head of People and Change Consulting at Grant Thornton.

Sep 24, 2021
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Upskill to manage cyber storms and their aftermath

With the seismic shift to new ways of working, security and the role of the CISO has never been more important. Ross Spelman outlines four key areas a CISO should consider upskilling in to navigate this new landscape. The outbreak of the pandemic and the alarming rise in the number of sophisticated cyberattacks has brought Chief Information Security Officers (CISOs) to the crossroads of disruption and transformation. The acceleration in adoption of new technology has heightened business risk and vulnerabilities. To manage cyber risk better and to strategise for business continuity amidst disruption, the CISO needs to acquire new skills. Establish new and open communication A modern CISO should focus on establishing new and open communication channels and methods to support business enablement. Security by design needs to be an enduring principle for all organisations where trust and transparency will be key. One of the most important skills for a CISO to have in the post-pandemic world is to establish teams that are open and approachable for the business.  Set agenda for qualification of security risk Setting the agenda for the quantification of security risk in financial terms should be a goal of the CISO. This should be directly linked to security investment and measured and reported on a regular basis. Understanding and communicating the value of security investment for the business will significantly help to drive continual improvement and senior executive buy-in. Embrace continual change Embracing continual change is essential for CISOs. The ability to enable the business to evaluate exciting technology innovations in an agile and secure manner could prove decisive for establishing trust. This will be critical from a cultural perspective to change any perception of security as a blocker to that of an enabler for the business. This will move security up the value chain. Enable automation of security control and reporting Automation of security controls and reporting should be central to the objective of any new security initiative that a CISO drives. The days of the perimeter are long gone and this has been reinforced by the pandemic-imposed 'new ways of working'. The result is a shift from technology and data-centric security to a more user-centric security. This will require more sophisticated detective and preventative controls which have begun to emerge through security solutions, leveraging automatioplun, artificial intelligence and machine learning techniques. With the move to more user-centric security, cyber leaders in Ireland need to stay plugged-in to technology developments. Having soft and technical skills in equal measure can help Irish CISOs contain volatility and risk to the business introduced by new ways of working. Ross Spelman is the Cybersecurity Director and Lead at EY.

Sep 24, 2021
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Four critical areas for consideration in Budget 2022

As Budget 2022 rapidly approaches, which topics will be the most significant? Susan Kilty examines four critical areas that will be essential to creating substantial and sustainable economic growth. Budget 2022 will be set against an ongoing backdrop of significant economic, political and societal uncertainty. In addition to the continuing fallout from COVID-19, the unprecedented challenges we face include climate change, housing, healthcare, international tax reform as well as the scale of Ireland’s fiscal indebtedness, one of the highest in the developed world. But there are many positives that we should account for: the success of Ireland's vaccine programme, a rebound in economic growth, consumer spending and jobs increasing while exports continue to power ahead. Our economy is now firmly in recovery mode. This Budget will be an opportunity to set Ireland on a path to sustainable recovery and growth as Irish businesses seek to restart and recover, while investing in the things that matter for society. There are opportunities to use tax policy in new ways to support investment in targeted areas. Aside from macro issues such as housing and health, there are four critical areas Budget 2022 should focus on to put our economy on a sound financial and sustainable footing to create real growth and jobs. 1. The domestic economy Given that the Budget is a tool that impacts society at large, but is at its core a fiscal plan, we look first at the economic background. The State has borrowed €34 billion to date in additional funding to help us deal with the impact of COVID-19 and ancillary costs. The Government's Summer Economic Statement envisages big deficits right through to 2025, culminating in a budget deficit of €7.4 billion in 2025 (currently estimated to be €20 billion for 2021). Consequently, our national debt is expected to be €282 billion by 2025. Stabilising our national balance sheet will not be easy. We will need our economic growth rate to exceed our national debt interest rate to have a chance at reducing the deficit in the short-term and the overall balance outstanding in the long-term. It is welcome that the Minister has already indicated that “the forthcoming Budget will be the first step in a two-part budget to reduce the deficit”. We need to balance support and investment to the multinational sectors with support for the backbone to our economy, our SMEs and family businesses, to help with their recovery and renewal. Any tax incentives need to be fit for purpose and targeted as a result. 2. International tax reform and FDI One of the only bright points on an otherwise bleak economic tax outlook in the last 18 months was the continued strong performance of multinationals that export goods and services from Ireland. Certain sectors such as pharmaceuticals, technology and manufacturing of high-value goods have bolstered corporate tax receipts and maintained high-quality employment that supported strong personal tax income receipts for the country. This demonstrates the reliance that we place on foreign direct investment to support a range of tax streams both directly and indirectly. This is against a backdrop of international tax reform, led by the OECD, which threatens Ireland's ability to compete for FDI using our tax system. This international corporate tax reform could not only impact our tax take from corporations, but also the PAYE that is supported by multinational corporations (MNCs) into the future. Ireland's position is clear in response to this threat – it will work alongside the OECD in reaching a global solution to the question of global tax reform, but it wants recognition that tax needs to be a lever available for small, open economies that cannot otherwise compete with bigger countries. Our 12.5% corporate tax rate is a cornerstone of our economy. We want fair tax competition, where the interests of small open economies and not just those of large market jurisdictions are taken into account. 3. Digital skills Digitalising and upskilling Ireland is a national objective and Budget 2022 is a key opportunity to continue to support this journey. Many companies are digitising their businesses and people will require new skills to work in this new environment. The Government should continue investing in those skills by providing support to allow people to retrain and to assist employers to provide training for their employees. This would also help improve our competitiveness as a country. With more people working regionally post COVID-19, adequate infrastructure is crucial. Continuing the roll-out of broadband to all parts of the country will be critical. Additional tax credits and capital allowances for people working remotely would also be beneficial to support the digital and the green economy as well as tax supports for the development of regional hubs to create shared office spaces. 4. Boosting the 'green' recovery The Climate Action and Low Carbon Development (Amendment) Act 2021 introduced earlier this year charts our path to carbon neutrality by 2050 and is the most ambitious of any developed economy. Climate change is one of the greatest challenges of our generation, requiring wholescale transformation of every sector of our economy, unprecedented innovation and committed leadership. Tax policy can play a major role, not only by influencing behavioural change towards a sustainable economy (i.e., changing heating, transport and construction models, purchasing habits and packaging as we move towards a net-zero economy), but also by encouraging investment and creating jobs in the right areas while boosting a greener economic recovery. Susan Kilty is a the Head of Tax in PwC.

Sep 24, 2021
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What is the Housing for All strategy?

The Irish Government’s Housing for All plan is an ambitious document that seeks to address the challenges faced across the Irish housing sector. Jim Clery and and Carmel Logan explain the key goals of the plan and discuss how effective they will be. On 2 September 2021, the Government released its Housing for All plan – a comprehensive document that accepts the current challenges across the housing sector and sets out a roadmap for the transformation of Ireland’s housing system over the next 10 years. The plan is influenced by the overall objective that everyone in Ireland should have access to sustainable, good quality housing to purchase or rent at an affordable price in the right location. In total, Housing for All contains 213 actions under four pathways aimed at achieving the following objectives: Supporting homeownership and increasing affordability; Eradicating homelessness, increasing social housing delivery and supporting social inclusion; Increasing new housing supply; and Addressing vacancy and efficient use of existing stock. The breadth of these actions is noteworthy, encompassing areas across the whole sector from proposed changes to planning law and regulations to significantly increasing the role and responsibilities of local authorities, and tax measures aimed at improving affordability and incentivising housing supply. Moreover, all actions are set in a sustainable context and align with Ireland’s commitments under the climate change agenda. The ambitious scale of the plan will see a huge expansion of the State’s role in the Irish housing market. That is reflected in the investment the State has committed to its success – an average of €4 billion per annum to 2030. Importantly, the document has been prepared with a clear view of the need for collaboration, both across Government departments and between the public and private sectors, in achieving the objectives and resolving Ireland’s housing crisis. In addition, the plan acknowledges the need for the country’s housing market to meet demand across various tenures, including private rental accommodation as well as social, affordable, and private ownership housing. The implicit recognition that there is no ‘silver bullet’ to solving Ireland’s housing crisis – that different tenures require different models and that a holistic approach is required to overcome this challenge – is welcome. The publication of the Housing for All plan is, without doubt, a hugely significant first step in addressing the issues present in Ireland’s housing market. However, given the broad scope of the plan’s objectives and the ambitious targets it sets, it is understandable that specific detail regarding various aspects of the plan remains, at present, unclear. Jim Clery is Partner & Head of Real Estate at KPMG. Carmel Logan is Partner at KPMG. You can read more about this topic at KPMG.

Sep 17, 2021
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12 ways shy people can embrace networking

Shyness can strike at any time, especially when you’re in a new situation with new people, such as at networking events. Jean Evans explains 12 ways you can overcome your shyness and make the most of any networking opportunity. Networking can be intimidating even for the most seasoned networkers. Some days you just aren’t feeling great, aren’t in the mood, but you’ve got a commitment or networking meeting to attend. It’s more daunting when in a face-to-face environment, but the anxiety stills exist for online networking, especially if you’re shy. Here are 12 ways to overcome that feeling of dread, fear, panic, and sheer overwhelm when you have a networking event to attend. 1. Find a wing-person Find someone to attend your first events with you as they’ll give you that moral support to get you going. Let them know that you feel a bit shy and ask if they can introduce you to some people to make networking easier. However, don’t make the mistake of sticking with just one person. Set yourself a target of speaking to two or three new people at an event. Be realistic with targets, but do set a goal for yourself so you have a metric to measure your success. 2. Arrive early Whether you are networking online or in person, arriving early is an easy strategy to implement. If you arrive and people are actively engaged in a group conversation, it will be tough to ‘break in’ and join them if you are shy. By arriving early, you can welcome people into the room, which will help break the ice for the other person. 3. Smile The best-dressed person in the room is always smiling. Smiling can put you at ease, relax your body language, and put the people arriving after you at ease too. 4. Ask questions For shy people, launching into a speech or sharing an opinion can seem daunting and intimidating. Instead, try asking questions when you are in the group. It shows that you are interested in other people. You are then in the position of listening to the answer, and listening is easier than talking – particularly for shy people or introverts. 5. Be authentic If you are shy or a shy introvert, do not try to be an extrovert. If you are trying to be someone you are not, you’ll end up completely depleted of energy and resources. 6. Be prepared Prepare yourself with some questions and talking points. Take the time to gauge the conversation and get your bearings before contributing. A contribution that doesn’t make sense can end the flow of a conversation, which isn’t how you want to be remembered. On the other hand, if you actively listen, people will drop crumbs you can use to work into conversations. If you are at a business networking event, have your elevator pitch ready. 7. Reframe your mindset You need to have a positive mindset regarding the outcome of the event or networking meeting you are attending. If you think it will be negative, this will come across in your body language, making this belief a reality. 8. Networking is everywhere People tend to associate networking with formal events, associations, referral meetings and conferences. However, your local book, rowing, cycling and football clubs are all sources for meeting people and engaging in informal networking. Furthermore, having an interest in common provides an instant ice-breaker. 9. Learn names Everyone loves the sound of their name. It’s a good idea to say a person’s name out loud, as it acts as a sense of acknowledgement and inclusion. The person feels noticed, and repetition will help you remember their name. This all adds to your social capital and will stand you in good stead. 10. Embrace your passion When nervous, answer a couple of questions: What do you do? Why do you do what you do? When answering, people often forget about nerves and remember what they are doing and who they are serving. 11. Follow up It’s essential to follow up with the people you meet to ensure that you are seen as credible and trustworthy. It helps build up the future of your relationship. 12. Host A great way to get over your nerves is to act as the host of the event. Welcome people, smile and ask them if they’d like a cup of tea or coffee to make them feel at ease. Be on alert for people who might be standing alone, who arrived late and are feeling a little out of place. If you are the person to break the ice and start a conversation, this will go so far in cementing a solid relationship. There are myriad ways to learn how to network when you are shy. Learning to network will help you confidently develop personal and business relationships, and all of this will help you survive and thrive in business. Jean Evans is a Networking Architect and Founder at NetworkMe.

Sep 17, 2021
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How to be the radiator on your team

Being a positive influence on your team doesn’t have to be complicated. Anna O’Flanagan outlines a few actions you can take today to boost your team’s morale while enhancing your own wellbeing. Are you a drain or a radiator on your team? If you identify more with the former, could you be ‘radiating’ more to boost the morale of those around you while also improving your own wellbeing? Giving back – whether by volunteering, helping a neighbour, or simply offering kind words with no expectations – are proven to enhance overall wellbeing. Fill the tank Think about the members of your team as having an emotional tank. When the tank is full, they feel ready and able to engage. However, when their tank has been bled dry due to a mixture of circumstances, they are bound to struggle with motivation and enthusiasm. We can’t change some of the external factors affecting us right now, but let’s focus on what we can influence. Try being a ‘radiator’ and see how it makes you and those around you feel. Here are a few ways to make that happen: Use your active listening skills and properly give colleagues your attention. Use affirming non-verbal communications like smiling and attentive body language when in the office and working over video calls. Give your colleagues honest and specific appreciation and praise. It needs to be genuine, consistent and spontaneous. Don’t wait for a one-to-one meeting – just pick up the phone or pop them an email as soon as you think of it. Provide recognition for work done well and the behaviours that got them there. Remember, work well done is not all about the result. So, even when the team has a perceived failure, acknowledge what they did well in an environment of learning, not blaming. Maybe you are doing these things already, or perhaps you usually do them but have fallen off the wagon a bit recently. It’s important to accept that you won’t always be able to radiate. But, when you can, why not go out there and be someone’s radiator today? It could make be the difference between a colleague struggling and managing. Anna O’Flanagan is Founder and Chief Squirrel at Red Squirrel Team Building.

Sep 17, 2021
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Three tips to answering the most important interview question

Failing to give a good answer regarding your future career plans is a sure-fire way to ruin a great interview. Fionnán O’Sullivan explains how to fix this problem. It’s a question inevitably asked in every interview: where do you see yourself in five years’ time? Many people say that they’d like to be at a point in their career where they can take on a more senior role; maybe with a larger team and more responsibility. When you’ve interviewed as many people as I have, this answer is stock standard, and usually accompanied by a few ‘ahhs’, ‘umms’ and false starts. Not exactly impressive, and does not give the impression you’ve given it a great deal of thought. Sure, it tells me what you think I want to hear, without being too committed to one direction, but it leads me to one question: if this is how you plan your career, how will you run a department? There are a few ways you can make your answer and, therefore, your interview a success. Tailor it to the role for which you are interviewing The fact is, not many of us have clear career plans. We might have an idea of an end goal, but rigorous, self-directed career planning, although advised, is rarely done. Most of us rely on the organisation we work with to define this for us. If this is you, and you don’t have a clear ambition, you need to imagine a ‘future you’ within the context of the role for which you are interviewing. What has the interviewer told you about career progression, or the people you’d be reporting to? Is there a career path already defined you could use to shape your answer? If it’s a flat organisation with not much room for upwards progression, what potential lateral moves could you make? Is there a particular area that you don’t have experience but have a keen interest in? Base your answer around that information, such as: “You’ve told me quite a lot about your career pathways. What is important for me is that I am able to build a toolkit of skills to enhance my overall performance as an asset management or financial services manager. Therefore, in five years, I like to think that I would have proven my value and received the opportunity to move into a leadership role in asset management or financial services, an area that I currently have limited exposure to.” Take control: set your own milestones that speak to the needs of the business Think about the role you’re interviewing for. Does it entail a two, three or five-year plan? Will long-term planning be a part of the role? If it is, then ‘yourself’ in five years is you having delivered the objectives contained in the plan. Tailor it to the organisation you are interviewing for and their objectives. If they are talking about long-term change or business transformation, how does the role in question feed into these larger programmes, and how can you use this information to visualise the ‘future you’? For example: “This role clearly has an important mandate, which is to support the delivery and adoption of the three transformation initiatives you have spoken about, which you anticipate will take four to five years. I would like to think that nearing the end of this period, with regular communication with my superiors, I would be able to define my next career move, depending on the strategic priorities or needs of the business.” Above all, be clear, concise and confident Clarity and precision of thought is essential. There is little more unattractive than someone who shows a lack of ambition at an interview. Even if you are ambitious, fluffing this answer will make you appear like you do not care, or have not given your career enough thought – which may raise serious (if unjustified) questions about your your capacity as a leader. Ensure that however you decide to approach this question, you give it some serious preparation. If you feeling uncomfortable with the answer, practice. Whether you record yourself, get your partner or friend to role play with you, or write it out and learn it, become comfortable with your wording. And if you give a good enough answer – it might even come true. Fionnán O’Sullivan is Managing Partner with the financial services practice in Barden. 

Sep 10, 2021
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The problem with unconscious bias training

Organisations strive for inclusion but is unconscious bias training the answer? Dawn Leane suggests there might be a better way. Humans can be an irrational bunch. On the one hand, we know that we shouldn’t smoke, we should exercise more, eat less sugar and start a pension when we’re young – yet, while knowing that our behaviour is self-sabotaging, we still do all the wrong things. And therein lies the challenge for unconscious bias training; while it makes sense at a logical level, its potential to impact behaviours and attitudes is limiting. Bias is a tendency, inclination, or prejudice towards or against something or someone. We all have them – they are the product of our life experiences and hark back to a time when such bias was imperative for our survival. Our brains are primed to make split-second decisions that draw on a variety of assumptions and experiences. The problem is that when those assumptions are based on both positive and negative stereotypes, they lead to poor and often discriminatory decision making. Without the right context, training may only serve to make people compliant. It can even breed resentment and cause more problems than it solves. This is especially true when such training is mandated for employees, as if the responsibility to remedy the situation is theirs, yet fundamental flaws in an organisation's culture or system go unchallenged. So, how does an organisation create the right climate for unconscious bias training to be effective? Re-wiring Negative stereotypes arise from ignorance or anxiety over not understanding differences. Therefore, the best way to challenge such stereotypes is direct exposure to the subject of our preconceptions. Neuroplasticity – the ability of our brain to reorganise itself throughout our life due to our experiences – suggests that the way we categorise others is more malleable than we imagine. With the right stimuli – such as getting to know people as real people rather than ethnicity, age or gender – we can effectively re-wire our brain. In practical terms, that can mean actively hiring or promoting more diverse candidates. Research shows that when we can recategorise others according to shared features or characteristics, we are more likely to see them as part of our tribe and are less likely to experience prejudicial thoughts. Research from MIT suggests that organisations with meritocratic values are often the worst offenders of bias, specifically as it relates to gender; favouring men over women who perform equally, particularly in terms of bonus or career opportunities. Conversely, organisations that value individual autonomy showed no such difference, leading researchers to conclude that merit-based pay practices, in particular, may fail to achieve race or gender-neutral outcomes. Ironically, it appears that when managers work for meritocratic organisations, they believe they are more impartial, but instead unconsciously act on their biases. While it is very difficult to entirely eliminate our bias, we can make it easier for our biased minds to make fair decisions. The best approach is to limit the opportunities for bias to be triggered by engineering it out of systems and processes. Most people have heard of the blind orchestra auditions, in which candidates auditioned behind a screen. Even when the screen was only used for the preliminary round, it had a powerful impact – researchers have determined that this step alone makes it 50% more likely that a woman will advance to the finals. Unconscious bias training has its place, but it is not a silver bullet to solve challenges of diversity within organisations. It is far more successful in environments where diversity already exists and aims to highlight our tendency to stereotype rather than make us more open to embracing diversity. Dawn Leane is the Founder of Leane Empower.

Sep 10, 2021
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Ireland’s strategy for the EU Clean Vehicles Directive

The EU Clean Vehicles Directive could benefit Ireland’s emission targets, but what are the best steps to take to ensure alignment across public bodies? Suzanne Cloak, Alan Dickson and Terence McGovern lay out a possible roadmap. Road transport accounts for nearly one-quarter of Europe’s total greenhouse gas (GHG) emissions. The energy transition from fossil fuels to sustainable sources of energy requires changes across all sectors. To accelerate this transition, the EU member states will lead the way, driving implementation and demand of low and zero-emission vehicles. The EU Clean Vehicles Directive was passed into Irish law on 2 August 2021. This Directive sets targets for public procurement of clean vehicles in each member state by increasing the share of low and zero-emission vehicles in contracts tendered by public authorities. Ireland has agreed to adopt the maximum target of almost 40% for cars and light trucks, and 10% for heavy duty trucks that will be procured from August 2021 to be clean vehicles. For buses, the target is even higher, with 45% procured to be green vehicles and half of those to be zero-emission. Certain vehicles, however, do not come under the purview of this Directive, such as special vehicles used by armed services, civil defence or fire services, and vehicles designed for use on construction sites or mobile machinery. Fuelling demand This Directive sends a positive signal to the market as it stokes demand for cleaner vehicles and is a move towards decarbonisation of transport across EU member states. The targets give manufacturers the confidence to ramp up production for low and zero-emission vehicles, thereby encouraging the price of clean vehicles to fall. Ireland still has a long way to go, with 36% of new cars sold this year being diesel powered and 31% being run on petrol. This Directive will also encourage EU member states to further develop their own refuelling and recharging infrastructure. The emergence of new technologies on a bigger scale would usher in important changes to road transportation infrastructure that would include depots, workshops, charging stations, access to electric grids, etc. It would also require training and creating teams of personnel with the required skill sets. Through these high-priced (compared to cars powered by fossil fuel) cleaner vehicles, we could potentially see increases in procurement budgets. Therefore, it will require financial schemes in place to cover additional costs for cleaner vehicles and infrastructure. However, lower operational costs would contribute to a competitive total cost of ownership. This Directive will see EU member states lead by example in the ramp-up of low and zero-emission vehicles through their public procurement policies, thus setting a pathway of lower entry points to the market for private individuals. But are public authorities prepared for the switch to cleaner vehicles with increased requirements for specific infrastructure, financing for more expensive vehicles, and do they have strategies to achieve the targets? Roadmap for tomorrow The scope of this Directive is not prescriptive in its implementation and each member state will need to define their own strategy. To ensure public authorities, state and semi-state bodies are in alignment with the Directive, there needs to be consideration of, or at least some, of the following: Start preparing your procurement structures now. The Directive came into play this year, which means new contracts will need to factor in the targets. Define how and where the clean vehicles will be procured and where those will be used across different public bodies, regions and departments.  Plan out the roadmap for moving to low and zero-emission vehicles. Review and decide on technologies to develop and introduce in respect of future purchases, maintenance, repairs and skilled labour. Be cognisant of purchasing power. Go beyond compliance as there will be incentives/cost avoidance benefits in the long run. Set up future infrastructure and be cognisant of the future marketplace and requirements. Create a plan to operationalise the introduction of clean vehicles across the organisation. Start small and scale up, identify metrics and KPIs while setting out new operating processes to best manage and monitor the fleet performance, and work out a plan to get the best out of new technology. It is important to keep in mind that a one-size-fits-all approach to the Directive will not work as different entities and organisations will have different needs. There will be a need to tailor the responses to suit individual requirements. The EU Clean Vehicles Directive will speed up the switchover to low and zero-emission vehicles. As Ireland moves in this direction, the country will need to decide on technologies for future purchases, maintenance, repairs and skilled labour. Suzanne Cloak is a Supply Chain Manager at EY. Alan Dickson is a Director of Consulting and Procurement and Supply Chain in EY. Terence McGovern is a Senior Manager at EY.

Sep 09, 2021
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