With a new UK prime minister in power and a major cabinet reshuffle, what lies ahead now for Northern Ireland? Gillian McAuley gives her take on what the region needs After a summer dominated by the Conservative leadership election, Liz Truss assumed the role of Prime Minister of the United Kingdom last week. For businesses in Northern Ireland, the prospect of a new UK Government represents an important step towards potentially restoring some political certainty in the region. At the British Irish Association Conference in Oxford last week, there were some cautious glimmers of hope for the Northern Ireland Protocol. We are hearing some encouraging noises from the new cabinet. If this opportunity is to be realised, however, all actors in the process must learn from past mistakes. The new UK government and European Union must together adopt a careful and sensitive approach to defining the issues to be addressed and, crucially, the process of resolution must include meaningful engagement with all relevant stakeholders in Northern Ireland, including businesses. The need for agreement could not be more apparent. One business told us recently that, for as long as Protocol issues remain outstanding, investment in the region will suffer. For this business, as inflation takes hold, there is no capacity to continue second-guessing what trade in Northern Ireland will look like six months or a year from now… This is not an isolated case. As inflationary pressures spiral, the need to resolve the Protocol becomes more urgent. To be sustainable, this resolution must be achieved by agreement. There are persistent rumours about an emergency budget in Westminster, suggesting that in the weeks ahead, a package of measures will be introduced to tackle inflation. Decisions also need to be made for businesses in Northern Ireland, however, and the people who live and work here — and, for this to happen, we need a restored Executive. NI Chamber has campaigned for many years for the introduction of multi-year budgets that would facilitate longer-term planning. The business networking group welcomed the move to a three-year budget cycle. Yet, almost halfway through its first year, we remain without a budget and an Executive to deliver it. This is not sustainable. We need urgent action from a restored Executive, with all policy leaders at the table tackling the challenges feeding this crisis – not least the urgent need to address business rates to free up cash flow, which is currently being absorbed by rising costs. Supporting businesses and protecting jobs must be at the top of the new Government’s priority list. Gillian McAuley is President of the Northern Ireland Chamber of Commerce and Industry 

Despite its potential benefits for businesses in distress, a relatively low number have so far availed of the Small Companies Administrative Rescue Process (SCARP) but that is likely to change in the months ahead, writes Hilary Larkin Given the economic headwinds facing businesses, the relatively low take-up thus far of the Small Companies Administrative Rescue Process (SCARP) has been surprising. This is perhaps because the impact of COVID-19 on individual businesses has been masked, to a large extent, by government supports, including Revenue’s debt warehousing scheme and other creditor forbearance. Similarly, Brexit is not fully implemented, and we have yet to feel the full impact of rising energy costs and interest rates on consumer spending and the broader economy. So far, there have been just 10 SCARPs with six having commenced in August. Insolvencies right now are at an artificially low level yet so-called “Zombie companies” continue to trade. It is likely that the level of insolvencies and restructuring cases (including SCARPs) will increase as the true impact of rising costs become apparent in the winter months, and Revenue’s plans to implement debt warehousing repayment plans take shape. What is SCARP? Introduced under the Companies (Rescue Process for Small and Micro Companies) Bill 2021, SCARP is a restructuring tool for SME’s who are facing temporary insolvency affording them the opportunity to restructure through a combination of a write-down of debt and new investment. SCARP is based on the key components of examinership and is subject to strict timelines and rules for meeting quorums and approvals. Careful planning and engagement with key creditors is essential, prior to commencing the process in order to achieve a successful outcome with the required creditor approval levels. Mazars acted as Process Advisor for the country’s first SCARP case in January. We have found that SCARP is ideally suited to small retail and hospitality operations. It is aimed at small and micro-companies and designed to act as a cost-effective restructuring option with limited court involvement. It is likely that many of these businesses will be heavily impacted by oncoming inflationary pressures and will require restructuring support if they are to survive. Process observations SCARP does have some notable limitations, such as no automatic stay on creditor action, and the fact that legal contracts (leases etc.) cannot be varied without court involvement. These issues can only be addressed in SCARP with legal representation and court supervision, adding substantial costs, which could price many small companies out of the process. Revenue can opt out of the process where there is a history of non-compliance with Revenue legislation. In our experience, however, Revenue has engaged constructively with the process to date, which can only positively impact the uptake of SCARP.  Nevertheless, SCARP can be a useful restructuring tool for small companies, allowing them to compromise legacy debt that would otherwise leave them with no option but to enter into liquidation. We would, therefore, strongly advise that all small companies concerned about their short-term solvency consider SCARP and its potential relevance to their circumstances. Hilary Larkin is a Financial Advisory Partner with Mazars

Budget Day is fast approaching, but this time against the backdrop of war in Europe. Neil Hughes gives his take on what the Minister for Finance should prioritise for 2023 The uncertainty the Russia–Ukraine war has brought about in terms of global inflation will undoubtedly add to the already difficult job facing the Minister for Finance in the lead-up to Budget 2023. But, the war is not the only issue.  The fallout from both Brexit and the pandemic has been hugely challenging for Ireland, our government and businesses — in particular, for SMEs and micro-enterprises. The government had to quickly bring in radical measures, such as subsidies, to deal specifically with the economic shock of COVID-19. Despite these measures, some companies needed additional help to prevent them going out of business. In December 2021, the Small Company Administrative Rescue Process (SCARP) commenced in Ireland and is already helping small companies that scraped through COVID-19 to pull through the recovery phase. Those companies that emerge successfully from SCARP will hopefully continue to provide employment and tax revenues in years to come. This shows how a process like this can protect businesses, jobs, and the economy. Now, however, Minister Donohoe faces the challenge of balancing the competing demands and priorities of government departments in Budget 2023. The housing crisis, inflation and energy independence are top of the agenda and, in a time of war in Europe, it is becoming increasingly apparent that incremental measures will not be sufficient. The pandemic has proven that emergencies require radical responses. Nudging tax bands or rates, small percentage increases in social welfare payments, or tinkering with subsidies, will appear lacklustre compared to the cost crisis unfolding in some households and businesses.  Now is the time for far-reaching initiatives that can influence and change the behaviours of people who are vital to solving the country’s problems.  This might involve radical measures that incentivise the development of housing schemes and speed up planning processes, and the introduction of headline-grabbing incentives to encourage both households and corporates to invest in renewable energies. Along with Scotland and Denmark, Ireland has some of the best renewable opportunities in Europe. In this upcoming Budget, the government must create a platform for those opportunities to be quickly exploited. Finally, those most vulnerable in terms of energy and commodity prices must be comprehensively protected as we face the prospect of energy rationing akin to World War II, when gas company-employed inspectors nicknamed “Glimmermen” went door-to-door in Ireland, seeking to catch anyone evading gas rationing.   It is extraordinary that, in 2022, the Minister for Finance must frame a budget that features the possibility of rationing energy in Ireland once again – but such is the scale of the task facing policymakers who must address the needs of an increasingly alarmed electorate. The best course to follow is clear. To borrow a phrase from the early 1990s: Minister Donohoe needs to be radical – or redundant.  Neil Hughes is Managing Partner at Baker Tilly and author of A Practical Guide to Examinership

With a commitment to halve emissions by 2030 and net-zero emissions no later than 2050, Ireland needs to consider how best to transition to sustainable energy. Russell Smyth explains how R&D can help A renewed ambition for an emission-free future—sparked by the launch of the Irish government's Climate Action Plan in 2021—has led to a rise in sustainable research and development (R&D) in both the public and private sectors. This R&D explores innovation as a means to support our transition to a low-carbon economy and utilise surplus energy, and these projects are not just about increasing yield, but also improving sustainability. The energy sector is increasingly looking at ways to come up with greener alternative fuel solutions. Mechanical and electrical engineering firms are examining ways to reuse waste products from large-scale industries, for example, with one Irish company researching methods of heating homes by recycling the hot water waste product generated from cooling data centres. In agriculture, several companies are working on using hydroponic farming—growing plants without soil—to produce nutritionally dense food. Hydroponic farming has the potential to be a much more energy-efficient way of producing food while also tackling issues like species conservation, land usage, soil pollution and deforestation. R&D and Ireland's climate targets Agricultural emissions are one of Ireland's biggest climate challenges, with proven technologies already in use only achieving an estimated 20 percent reduction in emissions. Unlike other sectors, which have identifiable net-zero pathways, agriculture relies on R&D and innovation to achieve a credible net-zero journey. This makes it a high-priority area for R&D investment. Furthermore, Ireland has highly ambitious home retrofit targets, with the retrofit scheme aiming to bring 500,000 homes up to a minimum B2 standard by 2030. Progress to date suggests this target will prove challenging using existing labour- and capital-intensive retrofit models. Significant innovation and R&D is required here. Opportunities for future activity AgriTech Advances in technology in agriculture could substantially help to reduce greenhouse gases. Machine-learning algorithms are being applied to increase farming efficiency through yield prediction, weed and disease detection, livestock welfare and water management, for example. In Ireland, several companies are preparing to bringing concepts such as computer vision, edge computing and the Internet of Things into arable and livestock farming. Quantum computing Though a novel field, some thought leaders in quantum computing believe that carbon emissions could be reduced using two-state-based systems — specifically, creating new complex chemicals, drugs and enzymes to reduce industrial carbon output. Google CEO Sundar Pichai believes that quantum computing could be used to come up with a replacement for the Haber Process—an artificial nitrogen fixation process responsible for around two percent of global carbon emissions—within the next ten years. Agricultural gene editing and selective breeding As we face a radically changing climate, food shortages will become one of society's biggest problems. Gene editing and the selective breeding of plants could offer several potential benefits here, including greater yield, higher nutritional quality and improved disease tolerance. While the EU currently prohibits gene editing, the EU Commission launched a public consultation concerning plants produced using new genomic technology in April 2022. The results of this consultation could see the EU's stance on gene editing in agriculture change, opening Europe up to a new and rapidly expanding field of R&D. Russell Smyth is Head of Sustainable Futures at KPMG

Many of us take water for granted without considering the emissions associated with its treatment and distribution. Stephen Prendiville explores these hidden environmental costs and what we can do to mitigate them According to Irish Water, we use upwards of 133 litres of water a day. This consumption is facilitated by hidden infrastructure that takes fresh water to treatment facilities, cleans it, pressurises and then pipes it to our homes and businesses where it is used for drinking, cooking, cleaning, washing, and flushing. These processes and infrastructure have a hidden CO2 footprint, driven by the energy required to make it all work. Even before we click on our kettle or start up the electric shower, our water already has a significant carbon footprint attached to it. Some observers have noted that our water and wastewater systems, and the energy required to power them, could account for as much as five percent of our total carbon footprint (more than three million tonnes of CO2 equivalent). And – shockingly – this may be a conservative estimate. Mind your water With this in mind, we must be mindful of our water consumption. How much more are we wasting through our own behaviours? Is there scope to improve? Without water charges and metres, our domestic water use in Ireland is somewhat unknown and underappreciated. To complicate matters, the past two years have necessitated abundant running water for hand washing as the world’s attention has shifted from one public health crisis (climate change) to another (COVID-19). Changing habits Coming out of some of the hottest days on record during the summer of 2022, the importance of our water resource and infrastructure has never been more apparent. It is not an infinite resource, however, and we must find ways to manage and mitigate against wasting it. There is great scope for climate change mitigation in how we use water at home. It can be as simple as filling the kettle with one cup of water when only making one cup of tea, or washing our car with a bucket and sponge instead of a hose. It might surprise us to know how little comfort we can forgo to make a real difference. Stephen Prendiville is Head of Sustainability at EY 

When an employee leaves a company, they can take a wealth of knowledge with them. So, what can companies do to help keep this knowledge in-house? Angus Gregory explains. Collaboration and communication between different departments matters as much for accountants as it does all professions. Sharing knowledge can be powerful, but as a tool in business, it continues to be underutilised. This has been exacerbated by the ‘Great Resignation’, with more employees taking ‘un-shared’ knowledge with them when they leave their job. A recent survey of  752 executives in the US revealed that 88 percent have seen higher turnover than usual in their organisations than normal. This only increases the danger that vital knowledge is being lost when employees leave. Here are three ways organisations can safeguard company knowledge when their employees leave for new roles elsewhere. Overlap the exit and onboard process The onboarding process is vital in helping new employees to learn the lay of the land, disseminate business knowledge, and demonstrate to new hires that knowledge is better shared. By creating an overlapping onboarding process, new and existing employees can work together from the get-go, allowing the new starter to ask questions and the existing employee they are replacing to show them the ropes. Too often, onboarding packs are put together by people without experience in specific roles. As such, the resigning employees should be encouraged to share what they see as the most critical aspects of their job. This will give the new hire reference points that relate to the reality of their new day-to-day work. Centralise your knowledge base Employee knowledge cannot sit in in one person’s brain, which doesn’t hold information that can be accesses,  downloaded or backed up like a hard drive. Investing in an integrated system will help your company share necessary information with colleagues, at the same time ensuring employees don't take all their knowledge with them if they leave. An exit interview is another ideal opportunity to facilitate knowledge transfer. Many large companies hold exit interviews to help them understand why an employee is leaving. Resigning employees should also use this space to share vital knowledge about their job with their line managers. Without an integrated system that collates knowledge, however, there is a chance this vital information will be lost.  An official process for employees who are leaving can help organisations to gain valuable insight into the employee experience and collate knowledge articles that will help the person taking over in that role to do the best job possible. A cultural shift towards collaboration Establishing healthy knowledge-transfer practices early on is essential for new hires, but it can require a cultural shift. No one should be 'hoarding' knowledge. Creating collaborative working conditions will mean that employees feel more comfortable asking questions and more confident teaching and sharing with others. Challenges arise when teams operate in silos, unwilling to interact and share with other departments. It must be made clear to new hires from the outset that collaborative working benefits the business—and, not only that, but everyone will be rewarded for doing so. To combat this, designate a knowledge manager, responsible for keeping your knowledge database up to date. This will involve monitoring frequently asked questions for knowledge gaps, plugging these gaps with additional resources, and ensuring any leaver processes are working efficiently. Creating a strategy for preserving business knowledge can help short-term business resilience when employees move on and can lead to more robust staff engagement. Ultimately, the goal is to help employees exit smoothly and leave a strong knowledge legacy. Invest in knowledge-sharing technology, forge a collaborative culture and overlap staff onboarding with exits. Doing so will result in a win-win for the company and its employees. Angus Gregory is CEO of Biomni

Changing habits is not easy, but it can be done. Shay Dalton outlines some simple steps you can take to rewire your brain’s behaviours and get the most out of life We spend most of our time on autopilot. Much of what we do—from breathing, walking or eating, to having a conversation—occurs automatically. This allows or brain to preserve energy for (what it considers to be) more critical tasks. It is the subconscious mind at work. The three-level model of the mind developed by Sigmund Freud is often represented as an iceberg. The conscious mind is the tip, the subconscious lies just beneath the surface, and the unconscious is buried below. The subconscious mind makes up 95 percent of the brain, while the conscious mind is only five percent. If we can learn how to access our subconscious, we have the power to unlock our full potential, personally and professionally. The Reticular Activating System The Reticular Activating System (RAS) is a network of neurons that act as a filtering system between the conscious and subconscious parts of the mind. As our brains cannot absorb everything around us, the RAS controls the information that surfaces in our consciousness. It exists as a mechanism for survival. If we had to consciously think about every small action we take throughout the day, our energy would be depleted when we need to be alert. The RAS reinforces behaviours we have learned to do automatically, meaning that the neural pathways must be reprogrammed to create a new response to change behaviour. If we want to start waking up earlier but believe that we’re not morning people, for example, it will be difficult to suddenly start waking up earlier. We have to first become aware of the thought that may be holding us back—‘I’m not a morning person’—and shift to a narrative explaining why we might enjoy the mornings, and what we want to achieve by waking up Researchers have also concluded that, to truly change a habit, we must see the value of our new goal and the potential reward. So, how can we begin to bring the subconscious into awareness, shift our habits, and set ourselves on the path to success? Visualising success The first step is to visualise. In his New York Times article, ‘Olympians Use Imagery as Mental Training’, Christopher Clarey explained that visualisation has long been used by Olympic athletes to prepare for the day of their event. This process involves imagining the exact conditions you will be in—how it will look, sound, smell and feel — and then envisioning how you will succeed. In his June 2011 Huffington Post article, ‘How to Use Visualisation to Achieve Your Goals’, Dr Frank Niles explains: ‘visualisation works because neurons in our brains, those electrically excitable cells that transmit information, interpret imagery as equivalent to a real-life action. When we visualise an act, the brain generates an impulse that tells our neurons to “perform” the movement. This creates a new neural pathway that primes our body to act in a way consistent with what we imagined. In other words: if we see it, we can believe it. Take the time to pause Meditation is a powerful tool for helping to bring the subconscious into awareness. Studies have shown that practising mindfulness and meditation can help with depression, chronic pain, anxiety, and other mental and physical conditions. Meditation can also aid in rewiring the brain’s circuits by increasing the amount of grey matter, which can improve emotional regulation and impulse control. It gives us more control over our subconscious behaviours and leads to better decision-making aligned with our goals. Write thoughts down Since the subconscious mind absorbs information the conscious mind does not have the capacity to process, it contains a wealth of data waiting to be accessed. Many high-achieving individuals swear by morning pages (the daily practice of writing in the morning) before starting their day. As you write, it’s important not to edit or get caught up in spelling and grammar. This is the time to see what may come up without the conscious mind interfering. Journaling is also a great way to define our goals. Unlike morning pages, this is best to do at night before bed to clear the mind for sleep. By writing down what we want to accomplish, our goals for the future, and how we want to achieve them, we bring them into awareness.   Get adequate rest We often underestimate the value of a good night’s rest. Sleep is essential to giving our minds and bodies the time to reset. It is when the brain recharges and processes information from the day. In fact, studies have shown that having adequate sleep, seven to eight hours a night, improves memory, regulates metabolism, reduces fatigue, and improves cognitive and behavioural function. The subconscious mind is more likely to repeat old patterns if it’s running on empty. Consistent practice Tapping into the subconscious and rewiring neural pathways takes time. Change will not occur overnight. By becoming aware of our subconscious thoughts and behaviours, implementing techniques such as visualisations, meditation, journaling, and getting enough rest, we will soon begin to see the positive impact on our daily lives and careers. Shay Dalton is Managing Director of Lincoln

In an uncertain business environment, more business owners will be considering an exit. Colm Sheehan shares five tips to successfully manage the sale of your business. Selling a business is time-consuming and, for many, it can be an emotional endeavour. The process can be lengthy and stressful, as you need to be in control of each stage of the sale from start to finish to ensure you maximise your return.  Here are five tips to support a successful sale: 1. Find the right advisors To achieve a successful sale, you need to prepare for your exit. There are complex legal, financial and tax implications that need to be considered and planned for. It is paramount that you find the right professional advisors, who understand your requirements and strategic goals and can guide you through the steps involved. Buyers want as much transparency as possible and will typically perform detailed due diligence. Spending time evaluating and presenting your company’s financial and business history and future projections is crucial. As a seller, you can avoid red flags by working with your advisor to ensure that everything is in order and that the right information is provided at the appropriate time, to facilitate a smooth process.  2. Maintain momentum The importance of maintaining momentum cannot be underestimated. To successfully conclude a transaction, you must have the resources required to move efficiently through each stage of the transaction. It is vital to pre-empt buyer concerns and to respond to their queries promptly. This will help to ensure you are on the front-foot and in control of the process. Spend time before going to market refining and preparing for the process ahead. 3. Create competitive tension  By creating a competitive environment for the sale of your business, you could help to drive up price, achieve better terms and a faster transaction. You can create competitive tension through a carefully managed and well-executed sale process which attracts more than one potential acquirer. Even if you are dealing with one party, you can maintain a strong negotiating position by being clear that, if they don’t put their best offer forward, they won’t get the deal.  4. Protect your business To sell your business, you may need to provide sensitive data to interested parties regarding revenue analysis, key contracts, employees and operating structures. In most cases, the interested parties will include some of your competitors who are eager to expand their own business. Include how? To protect the inherent value in your business, ensure that information is shared only with qualified parties who have signed a non-disclosure agreement. You should withhold commercially sensitive data until late in the sales process when it is more probable that the transaction will complete. 5. Compare offers When selecting a preferred buyer, price will be a key criterion. It is important that you critically compare all aspects of competing offers to ensure that they are assessed on a like-for-like basis, however. Offers may contain earn-out provisions and contingent consideration. Equally, there can be working capital or cash- or debt-free adjustments. How robust is the buyer and how are they going to finance the acquisition? These are all relevant factors when weighing up competing offers.  Given the stakes, it is vital that you are clear on the specific terms of each offer and that you have all the necessary support and expertise to enable you to make a clear and objective decision.  Colm Sheehan is Director of Corporate Finance at Crowe

Recruitment and employee retention has changed dramatically in recent years. Gary Notley explains how organisations can meet the needs of Millennial and Gen Z professionals Gauging what younger professionals really want and aligning the needs of Gen Z and Millennial candidates to the strategic and operational needs of your organisation can be challenging, but there is also great opportunity. Skills and labour shortages will be among the top challenges facing business leaders in the 12 months ahead, according to the 2022 CEO Priorities Survey, and we are still hearing about the ‘Great Resignation’, the term coined by US academic Anthony Klotz in May 2021. Although challenging, however, the recruitment outlook for employers also holds opportunity, and a chance to turn the ‘Great Resignation’ into the ‘Great Reimagination’ by rethinking how we work and respond to the expectations of younger professionals, including: Gen Z: Those born in the late 1990s and early 2000s; and Millennials: Those reaching young adulthood in the early 21st century. Deloitte’s recent Millennial and Gen Z report identified four key attributes younger professionals look for in an employer. 1. Work-life balance Fifty percent of the millennials and 33 percent of the Gen Z candidates in the Deloitte report identified work-life balance as their main priority when considering an organisation’s offering. In fact, 25 percent of millennials left their organisations in 2022 because of burnout. Here are practical steps organisations can take to create a positive work-life balance: Have a clear and transparent culture with policies in place to help employees to switch off outside work hours; Leaders also need to ‘walk the talk’ by role modelling what good work-life balance looks like, and openly advocate the importance of getting this balance right; Leadership must listen to their employees and understand their challenges and needs when it comes to work-life balance. This will help them to evaluate and redesign key processes in the organisation to help improve the employee experience; Analyse the frequency and nature of repetitive tasks and identify those that can be automated, consolidated or reduced in frequency. 2. Flexible working The high demand for flexible working has been driven by several factors, including the rising cost of living. With less than a quarter of those surveyed believing that the overall economic situation will improve over the next 12 months, this remains a concern for workers and organisations looking at people retention. Most Gen Zs (75%) and Millennials (77%) said they prefer hybrid or fully remote work, but less than half currently have these options. Organisations can support employees here by: moving to hybrid working and introducing digital tools to ensure that employees have access to appropriate support structures; offering competitive benefits that can help alleviate the cost of living; and focusing on base pay increments as opposed to providing optional benefits to employees. 3. Mental health Nearly half of Gen Z respondents say they feel stressed all or most of the time. While they acknowledge that their employers are now more focused on workplace wellbeing and mental health, many do not believe this has resulted in any meaningful change for employees. Organisations can help employees by: fostering a culture of openness to encouraging employees to share their concerns so they can be provided with the appropriate support; offering mental health assistance and wellbeing programmes and enabling transparent communication; and creating new work opportunities for existing workers, helping them to identify learning and development initiatives and supporting career progression. 4. Climate action Over 90 percent of all Millennial and Gen Z respondents globally are now actively trying to curb climate change by making positive choices. In the near term, they are focused on small, everyday actions, but longer term, they see themselves increasing their civic engagement and bringing sustainability into larger purchasing decisions. Just 18 percent of Gen Zs and 16 percent of Millennials believe employers are meaningfully committed to the climate change cause. Gen Zs and Millennials in Ireland feel their organisations can do more, such as: banning single-use plastic products at work/office locations; committing to net-zero within the next decade; offering sustainability-orientated employee benefits; and renovating office locations to be greener. Today’s upheaval is challenging, without a doubt, but there is also an opportunity for leaders to reimagine their workforce, what the workplace means, and how work can be done. With the right approach, this could bring positive change that delivers long term value. Gary Notley is Director for Human Capital Consulting at Deloitte Ireland

As inflation tops 10 percent across the UK, Claire Daly outlines the steps businesses in Northern Ireland can take to manage costs and protect profits Despite the challenges associated with the pandemic, the Northern Ireland economy performed well in 2021 and in the first half of this year. Now, however, the effects of spiralling inflation are starting to take hold. With UK inflation rising to 10.1 percent in July, its highest rate in 40 years, businesses in the North of Ireland are grappling with a sharp spike in business costs. Added to this, they must contend with more localised pressures, including uncertainties associated with the NI protocol, the collapse of Stormont and the subsequent inability to agree a three-year budget. In response to rising inflation, the Bank of England has raised interest rates by 0.5 percentage points to 1.75 percent, the most significant increase in 27 years, and inflation is predicted to hit 13 percent by the end of the year. There is no doubt that some businesses will face challenging times in what is forecast to be a year-long recession, according to the Bank of England. At times like this, business leaders need to consider what their clients find most compelling when it comes to value. To understand this, you need visibility and insight into your operations, data to inform decisions, quick thinking, and most importantly of all, you need to strengthen client relationships. For any business feeling the current pressures, our advice is to take a ‘root and branch' approach – review, plan, communicate and act fast!  We have outlined below some actions businesses can take now to tackle the twin effects of inflation and recession. Cash reserves Cash may be a questionable investment in times of inflation, as rising prices lessen its buying power, diminishing its value. Cash can be a critical asset for small businesses facing inflationary pressures, however. Cash reserves can serve as a buffer, as costs often increase faster than a business owner can raise prices. "Cash is king" even during inflation, so it is crucial to build and hold appropriate cash reserves to buy time until you can pass higher prices to clients if required. Protect profits Look at growing and protecting profits, not just your sales. Taking stock of your pricing structure and knowing the finer detail behind your profit margins will help you understand how inflation will affect your ability to break even or hit certain profit targets. It may also influence decisions to focus on higher-margin services to protect bottom line profitability. Research the market You may have to consider price hikes aligned with rising costs in the market. Before increasing prices, analyse your competition, however. Let their prices be a guiding point. Be upfront with clients about price increases and why they are necessary. Transparency will help clients adapt to new situations and prepare their own budget without compromising their loyalty to your business. Review credit terms Managing your working capital is always crucial, particularly at times of rising costs. Review credit terms as cash flow comes under pressure and maintain an awareness of the increasing base rate of interest and its potential impact on your business. Manage debt collection Ensure that your debt collection is efficient and take steps to minimise any long-standing debt. Don't let clients manage their cash-flow challenges at your expense. Reassess your suppliers In terms of rising prices, you can also save costs by pricing around other suppliers to diversify your supply chain if needed. Efficiency and productivity Eventually, inflation will begin to create wage and salary pressures. Smaller businesses can see profits getting pinched as payroll costs rise. When this happens, focus on the efficiency and productivity of your workforce.  What goes up must come down. At some point, inflation will subside and businesses that have been disciplined around capturing cost increases and focusing on efficiency, productivity and customer-service will be in a much stronger position to take advantage in the long-term.  Claire Daly is a Manager at CavanaghKelly

The Great Resignation is ongoing even as the pandemic recedes, so what can employers do to keep their best people on board? Getting them to stay comes down to understanding why they leave, writes Patrick Gallen As has been stated many times and in many ways, the workplace has changed tremendously since the onset of the COVID-19 pandemic in early 2020. There has been a global shift in the labour market, putting employees in the driving seat and prompting employers to increase pay and boost incentives to attract and retain the talent they need. Given the current climate, how do employers keep hold of their workforce? Looking at some of the reasons people resign can be a useful starting point. Here are three areas in which employers often fall down, leading to higher staff turnover. 1. The value of feedback When feedback is sought and no changes are made, this can cause employees to become disengaged over time, leading to resignation in some cases. While it is unrealistic for employers to act on every suggestion an employee makes, encouraging feedback and, more importantly, listening to this feedback can have a significant impact on their morale and motivation. Analysing the feedback can also reveal useful patterns. If you respond to concerns and challenges voiced by more than one employee, you are demonstrating to the group that your organisation cares and you are willing to put words into action. Issuing anonymous surveys or conducting a Net Promoter Score (NPS) review can provide a useful snapshot of how your employees view the organisation and their working environment, as well as a nuanced understanding of what they want from the organisation. As the feedback is anonymous, employees can be honest without fear of repercussion. 2. The importance of recognition Being valued and recognised for their work and commitment can carry enormous weight for employees, boosting job satisfaction. Often, it is not just the monetary value placed on their work that motivates people and improves morale, but also the sense that their effort and contribution is recognised and appreciated. 3. Invest in employee growth Consider the ways in which employees can develop their career within your organisation. Giving them opportunities to gain valuable experience will contribute to their career aspirations and performance. They will be more likely to stay where they know they can thrive. A mentoring programme, opportunities for further education, and internal training programmes, all offer valuable growth opportunities for employees at all levels — and these actions can make a real difference. By learning about the root causes of employee turnover, organisations can implement the changes they need to reverse the trend and retain the talent they need to thrive and grow. Patrick Gallen is People & Change Consulting Partner at Grant Thornton Ireland

The Central Bank (Individual Accountability Framework) Bill 2022 seeks to give more individual accountability to those in the financial services industry. Sinead Ovenden outlines what the Bill will change and how firms can best prepare for it. The Central Bank (Individual Accountability Framework) Bill 2022 sets out changes to the Central Bank of Ireland's (CBI) powers to strengthen and enhance individual accountability in the financial services industry. This will be achieved by breaking the 'participation link', which requires wrongdoing by the firm to be proved before enforcement action can commence against individuals in that firm. The Bill also introduces amendments to the CBI's Administrative Sanctions Procedure to align with the Supreme Court's 2021 decision in Zalewski v An Adjudication Officer. The Bill will ensure greater transparency and accountability within financial service providers by requiring firms to: clearly describe where responsibility lies through statements of responsibility and management responsibility maps; confirm through an annual certificate of compliance that those performing controlled functions (CFs) are, and remain, "fit and proper"; introduce new common conduct standards for CFs, additional conduct standards for pre-approval-controlled functions (PCFs) and any other individuals exercising significant influence on the firm and business standards applicable to the firm; and impose on senior executive function holders (SEFs) a duty of responsibility to take "any step that is reasonable in the circumstances" concerning the business areas they are responsible for to avoid contravention of the firm's financial services obligations. This is a language change in the General Scheme of the Individual Accountability Framework Bill in 2021, which required SEFs to "take reasonable steps". But without specific examples, the practical impact of this change remains unclear. The Bill also includes an obligation on individuals performing CFs and PCFs to take any steps that are reasonable in the circumstances to ensure the conduct standards are met.  Where an individual acknowledges a contravention, an alternative procedure will be made available under the Administrative Sanctions Procedure (ASP). This will allow the CBI to dispense an enquiry and impose a sanction on the individual, which will not take effect unless the High Court confirms it. How to prepare The CBI will set out the details around key elements of the regime – specifically, statements of responsibility, management responsibility maps and reasonable steps – in a consultation paper once the Bill is enacted. Regulations will be finalised following this consultation. However, firms should commence their preparations now by considering the following points. Clarity around responsibilities and the overall governance framework Firms must produce responsibility maps and statements of responsibility for all SEFs. For example, in the UK, the regulator highlighted weaknesses in these documents about matters reserved for decision-making bodies (for example, boards versus board committees) and how individual responsibilities fit into the overall governance framework. Firms should review their current governance framework, committee terms of reference and individual responsibilities to identify gaps or areas of overlap and ensure consistency across their documentation. Individual and collective responsibility The increased regulatory scrutiny of individual responsibility should not be interpreted as undermining expectations around collective decision-making. How the board interacts to set the tone from the top, determine strategy and challenge the executive on its implementation will remain a key area of focus for supervisors. Individuals, however, will need to be clear on how key decisions are reached and whether challenges or alternatives have been given sufficient consideration. Communicating increased regulatory expectations to the board, and non-executive directors workshopping how reasonable steps may be demonstrated, and illustrating the complementary nature of individual and collective responsibility are all examples of activities that can be implemented now.  Implementation: business as usual Individual accountability is a journey rather than a destination. Aligning processes around conduct breach monitoring and reporting will require ongoing support, training and refinement. Considering how you will embed and test the desired culture and behaviours required to demonstrate that you are adhering to the requirements' spirit – not just the letter – will also be an iterative journey. It is never too soon to start thinking about how you can enhance your culture of accountability and articulate that the work doesn't stop once the project is complete, but is an ongoing process of review and refinement. Sinead Ovenden is Partner at PwC.

Money can be a difficult and awkward matter to discuss, for both employer and employee. So what is the best way to negotiate pay on both sides? Concepta Cadogan offers some helpful tips. Negotiating a salary for a new role and then, later, a pay rise once in the role is something many of us try to avoid, or don't know how to handle. Likewise, when this subject is broached in an interview or a review, an employer often doesn't know how to respond. Here are a few tips to assist you when dealing with these situations from all angles. Salary negotiation for employees Prepare to fail; fail to prepare Pre-salary negotiation, benchmark your salary against others in your industry.  Salary guides are a great way to assess the industry average for any given role. Otherwise, speaking to an expert consultant in your field is another great way to determine how much your peers earn in similar organisations. Ask about benefits and compensation Compensation and benefits are an often-overlooked part of an employment offer. However, they can be beneficial when helping you make your decision or attempting to negotiate salary. Opportunities such as further qualifications and study via your employer are options that could help you in the long run and may make up for a slightly lower salary. Be honest about your previous salary The hiring managers are likely to be experts in their field, and they'll have a ballpark figure in mind of what you earned in your previous roles. Therefore, it makes sense to be as truthful as possible when speaking about your past salaries to negotiate an honest and fair offer based on your experience.  Pay raise for employees Only ask for what you think you deserve It's essential to be realistic with your expectations when asking for a pay raise. Keep in mind how long you've been in your role at your current pay, and review the work you've been doing and projects you have contributed towards in that time. When making your request, remind your employers of all these points. Coming to your manager with a realistic expectation will make the negotiation smoother. Be prepared to take on more responsibility With more money generally comes more responsibility. Be prepared to be asked to take on more tasks on top of your existing workload and discuss your future targets and goals with your manager. You must be sure you can match the workload required to deserve the additional compensation you are set to receive.  Pay raise for employers Do your research Benchmarking salaries against other companies or organisations in your industry is imperative. This is also important for making offers to potential employees and equally important when an employee comes to you looking to negotiate a salary. If not possible, offer an alternative Inflation is on its way up, and many people are looking to be compensated to ease the burden. If this is not feasible within the company's budget, see if there are other perks or benefits which could be offered aside from salary which would make a difference to the employee. Don't make the decision alone There can be immense pressure and uncertainty when deciding on remuneration. Reach out to human resources or leadership and ask for advice. The company may already have a policy regarding pay or a pay scale that you can follow to make things easier. Negotiating pay can be a tricky situation for anyone involved and at every career level, but it can be navigated through with the right mindset and information. Concepta Cadogan is Director at Lincoln Recruitment.

In a world where uncertainty lies around every corner, the only constant in our lives has been transformation. Laura Flynn and Katie Flood explain. Business transformations have driven organisational change amid continued disruption to help deliver efficiencies and growth. For transformation programmes to be successful, there is a need to pay close attention to the human aspects. Human emotion – of both leaders and employees – determines and impacts the success or failure of business transformation. EY research, conducted with the University of Oxford’s Saïd Business School, suggests that 85 percent of senior leaders have been involved in two or more significant transformations over the last five years. And 67 percent of those senior leaders have experienced at least one underperforming transformation during this time. The impact of transformation failure can lead to negative emotions, burnout, and stress for the employees impacted by the change. Research has shown that the emotional strain on the workforce increases by more than 130 percent during an underperforming transformation, with subsequent impacts on motivation, productivity, and employee engagement. What drives transformation success? There is no one straight route to the success of an organisation’s transformation. It is a systematic change with its share of twists and turns. The key is to create a culture of experimentation, accept its non-linearity, and use technology to realise the transformation vision. The predictive model of the EY study identified six key drivers which can increase the success rates of business transformations. Lead In the survey, employees ranked leadership as the top driver regardless of the success or failure of the transformation. Similarly, leaders identified its leadership as the number one driver in successful transformations—but underestimated the role that leadership had to play when a transformation underperformed. Those who are leading transformations need to be completely honest about their fears and self-doubt, as well as being open to ideas from others. Inspire The vision for the transformation needs to come from the top. Nearly half (48 percent) of survey respondents said the transformation they were a part of succeeded partly because leadership clearly articulated why the organisation needed to change. In comparison, only 25 percent of respondents in low-performing transformations said the same. There needs to be clear communication on why the change is necessary—not just what needs to be done. It is essential to have clear measures of success identified earlier, and KPIs tracked throughout the programme will give confidence that those targets and outcomes will be met. So, it is not just about measuring the results but the indicators of success as well. Care To keep transformations on track, leaders need to keep employees motivated and engaged by creating a space where people can express their views. Processes must be put in place to manage concerns, look for solutions, mitigations and clear actions to help the programme move forward, with people’s needs at the centre. Organisations must be prepared for transformations, and leaders must harness the right emotions by keeping anxiety and burnout at bay. EY’s predictive model indicates that providing the required emotional support improved the average likelihood of transformation success by 17 percent. Collaborate For transformations to be successful, leaders need to provide a safe space where new digital and agile ways of working can help nurture innovation and employee engagement. According to the study, 44 percent of respondents in high-performing transformations said that their organisation’s culture encouraged new ways of working, compared to 28 percent in low-performing transformations. It is important to create interdependencies across teams to foster meaningful change management consciously. Empower Transformations are not linear; there are likely to be ups and downs and stops and starts. Therefore, leaders must provide the required structure to take a transformation programme forward while leaving room for creative freedom. Autonomy to execute is also a critical factor. In the study, 52 precent of respondents in high-performing transformations said that employees were assigned clear roles and responsibilities. Leaders need to instil the “fail fast” mindset and foster a culture of experimentation to help realise opportunities. During and following a transformation, leaders should empower employees to be part of the change and involve them in the process. Leaders must be accountable and emphasise a ‘we, not me’ approach by fostering collaboration, driving consensus, and creating two-way communication.   Build Encouraging a digital-first mindset is a step towards seamless transformation. Using the right technology is critical to facilitating the transformation process. Respondents to the survey ranked effective use of technology as the number two driver of success and ineffective use of technology as the number two driver of underperformance. Organisations should instil an innovative culture where employees can share their ideas and are encouraged to bring them to management. This requires a safe space where new digital and agile ways of working can help nurture innovation and employee engagement. Laura Flynn is Partner and Head of People Consulting at EY Ireland Katie Flood is Head of Transformation Execution and Business Consulting at EY Ireland

Julia Rowan answers your management, leadership, and team development questions I manage a team of six people and rely on two of them a lot. They are quick, thorough, and committed. It would be difficult for me if either of them left the organisation. How can I hold on to them? When I read this, my mind went, not to ‘how do you keep your two high performers?’ but to ‘what is it like for the other four?’ It is so easy to rely too much on ‘good’ people, and unconsciously ignore others, but this can lead to a pattern of leadership neglect that disengages the team members getting less attention.  I have two strands of advice here. For your high performers, think about how you can help them to build their skills, and consult with them about the work they are doing. Include them in decision-making, give them more responsibility, and coach them.  Be proactive about rewarding them for the work they do – not just financially, but in terms of their visibility and professional development.  For the other four, practice ‘conscious inclusion’. Reflect on the skills and attitudes you want these team members to develop and build a strategy around that.  Take time on Friday afternoons to plan the following week’s activity and think about how you can best work with this group — individually or in pairs, for example — so that you can help them to develop their skills and commitment.  Demonstrate that you value them by spending time with them. Remember that conversation both reflects and shapes the relationships we have with people, so be very thoughtful about your conversations. It is worth exploring the concept of ‘Situational Leadership’ — see this issue’s book recommendation.  I was recently promoted to manage the team I had been a part of. Two of my colleagues also applied for the role. One is supportive, but the other — whom I used to get on well with — barely acknowledges me. She does her work, but never speaks at team meetings. She is the longest serving member of the team. What can I do? Learning to manage a team you used to be on is one of the hardest challenges a professional can face – especially when it is your first management role.  Becoming the boss does lead to a change in relationships. You need to move from ‘friend’ to ‘friendly’.  It is particularly important here that you have support from other people in your organisation (your boss, HR, and other colleagues). How you manage the situation really comes down to choices, however unconscious, about behaviour.  It sounds like your non-supportive report feels upset and humiliated and she may need a little time to lick her wounds. Your behaviour choice needs to be to deal with her in a friendly, fair, and professional manner.  If, after two months, your report has not changed her behaviour, you need to talk to her – and bear in mind that you may be entering risky territory. You need to share what you are noticing and ask for what you want instead.  The danger is that, in return, you may get passive-aggressive ‘politeness’ and letter-of-the-law-compliance. If this does happen, you may need to link in with HR for more support. If you read one thing… Leadership and the One Minute Manager by Ken Blanchard, Patricia Zigami and Drea Zigami, is about Situational Leadership. This is the theory that the leadership we offer depends on the situation (the employee’s level of responsibility, the complexity of the task at hand, etc). Situational Leadership offers managers a framework, which allows them to be very conscious about the management style they adopt and the conversation they have (directing, coaching, or empowering, for example). The book is written in ‘fable’ style, making it an easy read. 

Tapping into the all-Ireland economy could hold the key to continued growth for businesses in a challenging market, writes Colin Kerr Businesses that fail to build on the opportunities on offer in the all-island economy risk losing out on a market rich with potential, according to Feargal McCormack, Managing Director of FPM, the Newry-headquartered business advisory firm. “The island is small, relatively speaking, but there is immense potential for expansion in a market where we have a well-educated English-speaking workforce and a highly tech-enabled business environment.” Founded in Newry in 1991, FPM today employs 120 people at its headquarters in the town, as well as Belfast, Tyrone, Antrim, and Dublin, recording annual revenues of £9.5 million (€11.2 million).  Following its recent merger with Anderson Anderson & Brown (AAB), the Scottish advisory firm, McCormack is looking forward to further all-island expansion for FPM. “We were one of the first firms in our sector to implement an all-island focus strategically from day one,” he said. “Our business has been very resilient. The current political uncertainty poses challenges to us and the sooner it gets resolved, the better. “All-Ireland trade has benefited from good relationships between everybody on both sides of the border. We also face global challenges, but we have faced these in the past and we have overcome them, and I am confident in the long-term.” As McCormack sees it, a long-term strategy and ‘big picture’ outlook is crucial to ensuring lasting success in business. “You must look at the bigger picture. You would not recognise Northern Ireland, or the island of Ireland now, compared to 20 years ago,” he said. “Our educational infrastructure has been hugely beneficial to businesses operating on the island and it continues to help us benefit from Foreign Direct Investment as we develop technology transfers and digital transformation.  “This is a wonderful place to do business. If you are fortunate enough to have a good job on the island of Ireland, where else would you want to live?” Establishing FPM as an all-island business has been something of a personal crusade for McCormack and one of the big drivers behind the decision to merge FPM with AAB. “One of the biggest challenges for any business is the ability to embrace change,” he said. “There are always risks attached when you expand, but, if you look at the historical context of business in Ireland, Glen Dimplex and Ryanair both started in times of recession. I am confident that this is a step in the right direction for FPM and we see this as a unique opportunity.” McCormack was drawn to AAB by the Scottish group’s established global connections and experience working with high-growth SMEs and large corporations internationally. “The synergies across our teams, service provision and sector specialisms, will provide a fantastic platform for future growth. In the evolving business of accountancy in Ireland there is going to be much more consolidation. We must increase our competencies—in a consolidated market, you need to have a breadth of services and capabilities.” Headquartered in Aberdeen, AAB Group has three offices in Scotland and two in England. The merger with FPM gives AAB an immediate reach across the island of Ireland from FPM’s five existing offices in Northern Ireland and the Republic. “AAB Group has grown rapidly in the last 12 months, following three M&A transactions and investment from August Equity in October 2021,” McCormack said.  “Our complementary geographic presence will enhance the wider AAB Group as a key player in the UK and Irish accountancy and business services markets.” FPM’s nine shareholder directors will remain with the business post-merger. “There are strong opportunities in the market for corporate finance, HR services and consulting in wealth management,” said McCormack.  “Our focus initially will be on consolidation, but this merger does create opportunities for our combined businesses on the island. FPM would be ‘the hub’ on the island of Ireland for the group, which would be looking for opportunities to potentially add niche businesses to its offering, McCormack explained. “AAB has a strong corporate finance presence and that will complement FPM’s existing capabilities,” he said. A past President of Chartered Accountants Ireland, McCormack’s personal philosophy is that business is ultimately about “people and relationships.” “In 1991, when I addressed the Chartered Accountants Ireland Student Society, the title of my paper was: I Don’t Care How Much You Know, Until I Know How Much You Care. “FPM has been, and always will be, focused on a people-centred approach and that is a core value that has not changed and will not change in the future.  “The key to any business is your team and I have always recognised that you have to build a team that facilitates the growth of talent and provides the opportunity for people to step up and develop. “I am confident that the people I am working with can bring the business forward. I have always been motivated by the creation of excellence and that is really important.”

It’s holiday season but switching off when you clock off for that well-earned summer break isn’t always easy. Liz Riley talks to three members about what helps them switch from work-mode to holiday zen Ronan Dunne Strategic Advisor at Verizon Chair of Six Nations Rugby I don’t tend to think about work when I’m not working – and I’ve found this easier to do over time – but I also need to be responsive.  I check-in regularly on work emails and messages to make sure no one is having their own work-life balance disrupted because they are waiting for me to respond or advise. When I have trouble switching off from my workday, I tend to take one of two approaches:  Technology: I have found that new tools on mobile devices allow you to set them to sleep mode or switch from work to personal mode, because they help to reduce ‘device distraction’. These options also let your contacts know if you have notifications switched off. Personal: I have a few go-to distractions that help me switch off. I like to watch sports (any sport – live or on TV) and I also like playing sports, mostly golf and tennis. I think the pandemic helped ease me into a better transition from work to home-life. It has enabled me to be more flexible about where and when I work.  I spent eight weeks during the summer of 2020 living in Dublin while working US hours. This meant I could see my parents every morning “before work.” Luckily, this summer I was able to get away and spend a lovely week in West Cork where I took part in a board meeting one afternoon from my room – a great advertisement for the importance and impact of good rural connectivity. Roseann Heavey Partner at Noone Casey  In finance, I think it can be difficult to find a work-life balance, but I also believe that work-life balance means different things to different people.  In private practice, servicing many clients across a range of industries, all with different needs, means there will be times when even the best planned-out day takes a change of direction.  For me, I look at my work-life balance over a month or a quarter. If I can look back over this time and know that I prioritised correctly, while meeting my deadlines and goals, I feel I’m on the right track.  This can be challenging at times. You can’t be everywhere at once and there are only so many hours in a week. If you can prioritise, manage time well and stick to your goals, the balance will come over time. To help myself disconnect, I document my workday and schedule, and ensure I can cross items off my to-do list. This allows me to be in control knowing that – at a minimum – the plan for the week must be completed.  This way, once the workday is over, there is nothing more I can do until the next day. I can switch off and focus on what is important to me outside work. The pandemic has, without a doubt, helped me to separate my work and home life. Even though I am working the same number of hours, there is more flexibility. Saving time commuting or travelling across the city and country for meetings allows me to have a more productive week and still deliver a high-quality service.  Face-to-face meetings are still important, but it is about finding the right balance for the firm and our clients. Edel Hayes  Founder of Accelerate  Accounting Solutions For me, the most challenging aspect of work-life balance is setting and maintaining boundaries. This is a skill a lot of us have had to learn over the last few years as the lines between work and home have become blurred.  I tend to set clear boundaries with clients and team members as soon as we engage with each other. I’m upfront about the hours I work, so that my clients are clear on what days and times I will be available to take calls and respond to emails.  The challenge comes in maintaining these boundaries when they are pushed by other people. I find the key is to be unapologetic.  A lot of my clients work in industries that require them to work outside traditional office hours. The expectation that someone should be sitting at a desk all day has lessened in recent years, however. I don’t have too much trouble switching off from work at the end of the day, but I’ve developed good practices to help me. My laptop stays at my office unless it’s a busy time of the year. I don’t take calls or check emails after 5pm. When I’m working, I’m 100 percent at work and, when I’m home, I try to be 100 percent at home. At the beginning, the pandemic did hinder my ability to separate my work and home life. It takes a certain set of skills and habits to maintain the boundaries we need for a healthy balance.  I took three weeks off from my business this year to visit family in the US we hadn’t seen since 2019. While I did bring my laptop with me, I can honestly say I didn’t open it once.  This was down to a lot of planning beforehand and making sure my clients and my team were all up to speed before I left. It really did feel amazing.

Start-ups and SMEs have a unique edge when it comes to reaching customers who care about ethical business, writes Emma Jones Mention the word ‘sustainability’ to a small business and it will conjure up a couple of reactions. The word ‘sustainable’ has, of course, become common parlance for businesses that are watching their environmental footprint. In its widest sense, however, building a sustainable business means building a strong business that has resilient revenue streams, a team with a shared vision and, dare I say it, scope to survive and thrive should its founder depart.  These days, as sustainability becomes increasingly important to consumers concerned about climate change, start-ups that are kind to the planet are more likely to succeed over the longer term. In the UK, we are seeing many young people setting up ventures to right a wrong or deliver a product or service in a more sustainable way. These ethical entrepreneurs are a bright light for the future.  For established small businesses, becoming more sustainable may be a slightly more ‘forced’ practice whereby larger clients might be demanding change in their supply chain, for example.  As part of a pledge to cut its carbon footprint by a third by 2025, M&S last year announced plans to ‘grow carbon literacy’ among its buying, sourcing and operational partners, and to select 100 of these partners as Carbon Champions to help drive its net zero delivery.  Elsewhere, the environmental charity Hubbub partnered with Starbucks to launch a £1 million competition providing grants of up to £300,000 for alternatives to single-use packaging in the food and drink industry. The UK Government has also launched an online climate hub for SMEs with a database of practical tools and resources to help them develop a climate strategy, curb emissions, and build business resilience. At the end of the day, there is no more compelling reason for a small business to take action than in response the needs of their clients. Being a strong and sustainable business is good for the planet, and good for business, with growing evidence showing that more consumers are seeking out purpose-led and sustainable brands.  This trend suits small businesses well because it is often easier for them to be more human in how they approach their customers and their market. Entrepreneurial businesses can actively share the story and authenticity of why their founder started the business — Who are they? What inspired them to start their own venture? What do they care about? What do they want to achieve?  This personal approach, and the authenticity it imparts, can really help to draw in customers who want to buy into something that, not only delivers, but also has meaning.  Emma Jones is the founder of Enterprise Nation

We are at the dawn of a new era in sustainability reporting and better ways of doing business for people and planet. Derarca Dennis and Nicola Ruane give their advice and insights on the road ahead for companies and accountants  There has been a significant shift from voluntary to mandatory sustainability or environmental, social and governance (ESG) reporting in recent years.  The European Commission’s Action Plan for Financing Sustainable Growth directly targets ‘Strengthening sustainability disclosures and accounting for rule-making,’ as one of 10 key areas of focus. This has resulted in the enactment of the Corporate Sustainability Reporting Directive (CSRD). In tandem with the trend towards mandatory ESG reporting, more and more companies are choosing to voluntarily disclose ESG information to satisfy stakeholder demands.  So, why is all of this so significant for the accounting profession? There are numerous reasons, all of them important, and outlined below:   Climate risk tops priorities One of the key purposes of the CSRD is to curb ‘greenwashing,’ which is an attempt by a company or organisation to mislead the public about its level of positive ESG impact.  Mandating standardised reporting provides for increased comparability in the public domain. This means that organisations can be held accountable by their stakeholders.   Assessing the impact of climate change and broader ESG impacts on a company’s bottom line has become the remit of the International Financial Reporting Standards (IFRS) Foundation under its recently launched International Sustainability Standards Board (ISSB).  With the oversight of the IFRS Foundation, the relevant ESG reporting standards and frameworks are converging under the ISSB.  One specific issue the accounting profession should examine, in the first instance, is climate change and, specifically, climate-related financial risks.  This is particularly important right now because of the adoption of the Task Force on Climate-related Financial Disclosures (TCFD) across nations, with many opting to make it mandatory for companies to report how their operations are being impacted by our changing climate.  The TCFD requires four key areas to be addressed in relation to climate risk: strategy; risk management; governance; and metrics/targets.  Although this is not yet mandatory in Ireland, leading organisations are starting to actively manage and report both physical and transitional risks.  With climate risks and disclosures moving swiftly up the business agenda, it is becoming a part of everyone’s job in an organisation to integrate the relevant considerations into their function, be it procurement, marketing or finance.   There is a lot to think about, so where is the best place to start? When it comes to playing your part in tackling climate change, we recommend that you first ask these three questions—of yourself, your team, and the wider organisation: Have we identified the climate change risks that may affect our revenue, P&L and balance sheet?   Do we have a strategy in place to manage and measure climate risks?  Do we need to report to investors or other stakeholder groups?   Climate change and financial statements With the advent of the ISSB, we can expect the robustness of financial accounting standards developed over decades to become applicable to the measurement and disclosure of climate change risks.  One question our clients are asking is: ‘Should we be disclosing the extent to which climate change affects our financial statements under IFRS?’ Although there is, as yet, no single explicit standard on climate-related matters under IFRS, climate issues may impact several areas of accounting.  The immediate impact to financial statements may not at first appear significant from a quantitative point-of-view. However, there is growing expectation among stakeholders that entities preparing financial statements must explain how climate-related matters are considered. This expectation is such that climate-related matters can be viewed as material from a qualitative perspective. Significant effort and judgement will be required to assess them and we recommend that you read EY Global’s Applying IFRS — Accounting for Climate Change (Updated May 2022) for further guidance found at ey.com. CSRD: what it means for your organisation Some 49,000 companies will now be in scope for the  mCSRD, up from the 11,600 that had been in scope under its predecessor, the Non-Financial Reporting Directive (NFRD).  One key shift worth noting from the NFRD regime to the CSRD concerns assurance. ESG reports must be certified by an auditor or independent certified assurance provider to ensure compliance with the framework. The timelines laid down are:  large corporates, currently subject to NFRD, to report in 2025 for 2024 data;  large corporates, not subject to NFRD, to report in 2026 for 2025 data.  For SMEs, requirements under the CSRD will not come into effect until 2026. There is an opt-out option to 2028. This is only applicable to listed SMEs across regulated European markets, however.  The Commission will make simplified reporting standards available to small companies in due course.  SMEs and reporting requirements While there is strong consideration that SMEs are not subjected to adverse reporting requirements, a step change is needed to ensure that this community is supported adequately through the process of reporting on sustainability impacts.  Given the critical role SMEs play in bolstering the Irish economy and in helping to reach targets laid out in the National Climate Action Plan, it is important that ESG impact is considered and embedded throughout their operations without the requirement for undue or excess reporting.  Separate standards may be developed for non-listed SMEs. This option is currently under discussion and, if introduced, would be voluntary in nature, as per the current proposal.    For all SMEs, the guidance is to start small. Select a limited number of material metrics — say, three to five — to measure and report.  Our recommendation would be to span these metrics across different pillars of focus aligned to the World Economic Forum (WEF) Framework. Example metrics under each pillar include:  Prosperity: employment, economic contribution, tax paid;  People: diversity and inclusion, pay equity, training provided;  Planet: GHG emissions, climate risk (TCFD), water consumption; and    Governance: board composition, setting purpose, anti-corruption.  This framework will in time become the leading framework globally for measuring non-financial impact.  Pressures beyond regulation   Whilst the regulatory agenda is driving the need for greater transparency and focus on an organisation’s ESG impact, other drivers may emerge even sooner and from other sources. So, beyond regulation, what are the biggest drivers of ESG reporting?   The supply chain: customers and clients want to know what a company’s impacts are and whether it is building this into tenders with a view to including the relevant data in its own reporting. One example here is the Scope 3 Greenhouse Gas (GHG) emissions.   Talent: millennials and Generation Z candidates are more aware of ESG than previous generations and increasingly keen to work for, and buy from, companies that actively manage their climate impact.  The board: more and more ESG-competent boards are challenging management to produce non-financial data.  Capital providers: keen to meet green lending targets, capital providers are more likely to require suitable disclosures from their customers’ borrowing funds. One reason for this is so that they can aggregate this data, where applicable, into their own ESG reporting.    Four key steps in ESG reporting   Reporting is not just a data collection exercise, and it is vital to bear this in mind. Our experience with clients has shown us that there are four key components to consider.  While we might start with the end goal in mind — the ESG report — here are the steps needed to get there:   Research and select an appropriate framework, ensuring that due diligence discovers all mandatory disclosures;  Build an ESG strategy; Measure performance and collect data;  Publish a transparent report combining qualitative with quantitative data and communicate with stakeholders. To comply with the CSRD, companies will need to submit data digitally through a single access point. This is to deliver on the objective of the CSRD to standardise the data, enable comparability across companies and avoid ‘greenwashing.’ A true differentiator in business ESG reporting can be viewed as a true differentiator for winning business. We expect publicly communicating ESG impact to become par for the course for businesses in the years ahead.  Another advantage is that it can support a company’s brand reputation as a leader. An organisation that is seen to be at the forefront of sustainability will be regarded as one that takes responsibility for minimising its negative impact, and actively fosters positive impact.  In summary, the accountancy profession is ideally placed to contribute to building a more holistic picture of an organisation’s performance and future potential.  Past performance is not a measure of future success, but, by marrying financial and non-financial performance, you will get a more accurate picture of an organisation’s potential future success.  The challenge for many businesses now is the transition they will need to make from the sustainability data processes and frameworks currently in use, to the higher and more rigorous standards the accountancy profession already adheres to for the reporting of financial data.  Accountants are crucial in the development of detailed sustainability reporting and the fight against greenwashing. As accountants, you can play a vital role in future-proofing your business through ESG reporting.     Derarca Dennis is Partner, Climate Change and Sustainability Services at EY Ireland Nicola Ruane is a senior manager in EY Ireland’s Climate Change and Sustainability practice

The increasing polarisation of American politics and recent Supreme Court decisions suggest the onset of a new age of conservatism, and Europeans should be worried as the centre fast erodes. Judy Dempsey explains why  First came the US Supreme Court decision to overturn Roe v Wade, the ruling that declared abortion a constitutional right in 1973. Then came its decision to limit the authority of the Environmental Protection Agency to set standards on climate-changing greenhouse gas emissions for existing power plants—it is up to Congress to set the norms, the Supreme Court concluded.  Both of these decisions—evidence of the increasing polarisation of American politics—will feed into the agendas of politicians standing in the mid-term elections in November.  Pro-life supporters will be encouraged by the statements of Supreme Court judges who mentioned banning contraception. Climate change opponents will push the ‘denial button’, despite the evidence to the contrary.  And the polarisation of American politics is only set to deepen as the centre fast erodes.  President Joe Biden, saddled with rising inflation, the war in Ukraine, and working out how best to deal with Russia and China, does not have the executive powers to overturn these Supreme Court rulings.  So, what does this all mean for Europe, America’s main ally? Europeans seem perplexed and inured to what is happening in the United States, a country that played such a pivotal role in getting Europe back on its feet after the Second World War ended in 1945. Washington actively supported the creation of today’s European Union and, for over seven decades, the US has provided a security umbrella to Europe. The era of shared values and commitment to democracy and security is waning, however. The trends emerging in the United State—polarisation, isolationism, and an increasingly dysfunctional political system—should worry Europeans. For one thing, the conservative swing in the US could encourage the mobilisation of populists and their leaders in Europe, who believe the European Union is becoming too liberal and too obsessed with imposing its values on citizens.  One example is the Polish government, which has made systematic moves to control the appointment of judges as well as banning abortion. A right-wing win in 2022 could embolden Warsaw to take further steps to curb women’s rights or put a chokehold on judicial powers.  In Hungary, Prime Minister Viktor Orban has clamped down on the courts, the media and non-governmental organisations. Orban is hoping for the return of a Republican administration in the US in 2024, urging them to take the same steps against the media as he has. In France, Marine Le Pen’s National Rally now dominates the far right in the French National Assembly.  Then there is the state of democracy across Europe. According to the Economist Intelligence Unit, Europe (alongside North America) is host to the worst-performing democracies since 2006. These trends are bad news for pro-democracy activists in authoritarian countries. They look to the United States and Europe as models of tolerance, integration, prosperity, and hope.  In a nutshell—though not as drastic as what is happening in the United States— the centre and culture of consensus in Europe is weakening.  Without a centre that fosters listening, tolerance, dialogue, and leadership, from top to bottom and vice versa, democratic structures will become degraded.  China and Russia could only capitalise on a decline that would weaken the influence of the West.  The question is: are European leaders heeding the warnings? Judy Dempsey is a Non-Resident Senior Fellow at Carnegie Europe and Editor-in-Chief of Strategic Europe

The glorious era of falling inflation has come to an end as we enter a concerning new cycle of spiralling prices, so what now for the global economy? Cormac Lucey looks ahead to the potential implications of tightening monetary policy and second-round psychology Recent spikes in inflation were initially described as “transient,” and attributed generally to one-off supply chain problems. The comforting implication was that high inflation readings would swiftly retreat once supply arrangements returned to normal.  This has not come to pass, however, and successive central bank forecasts predicting inflation would soon retreat have  failed to materialise. Instead, price hikes have accelerated.  The most recent inflation readings are 8.6 percent in the euro area, 9.1 percent in Ireland and 12.7 percent in the UK. These inflation rates compare to central bank base rates of a mere 1.25 percent for Sterling and 0.5 percent for the euro.  In fact, real base rates of interest have never been this low — so, have central bankers fallen behind the curve? Whether we wish to accept it or not, the reality is that we are currently experiencing inflation regime change. Zoltan Pozsar has observed: “It’s blatantly clear that this is not an average business cycle. This is not an average inflation backdrop. And this is not an average hiking cycle.” The post-1980s era of steadily falling inflation rates has ended. From a financial perspective, it was a glorious era as ever-falling inflation rates permitted ever-falling interest rates that spawned ever-rising asset prices.  Following an unprecedentedly large economic stimulus to combat the pandemic-induced economic slowdown, that era culminated in record stock, property, and bond prices. With the return of inflation, all of this is at risk.  The danger is that inflation expectations rise and second-round effects kick in as companies, unions and workers seek to raise their prices, not just to recoup past cost increases, but also in anticipation of future increases.  As the Bank of International Settlements noted in its recent annual report: “Ultimately, the most reliable warning indicator is signs of second-round effects, with wages responding to price pressures, and vice versa. These can be especially worrying if they go hand in hand with incipient changes in inflation psychology.”  The report also points out that “the degree to which the general price level becomes relevant for individual decisions increases with the level of inflation. When inflation rises, price changes become more similar.”  With inflation at nearly 10 percent, this danger is now very real. What can the authorities do to squeeze the inflation genie back into its bottle?  In a nutshell, central banks need to tighten monetary policy to slow down the economy. If inflation is a form of economic cancer, monetary tightening represents economic chemotherapy.  While its aim may be to treat only those parts of the economy that are diseased, however, monetary tightening risks unleashing unpleasant side effects, including recession.  The economic downturns in the US over the past 50 years were  preceded by tightening monetary policy. It was the ECB’s steady raising of interest rates after July 2005, however, that finally pricked Ireland’s property and banking bubble.  As Pozsar notes: “We have never achieved a soft landing, so let’s not pretend that the fastest pace of [interest rate] hikes in a generation, and an unprecedented shrinkage of the [central bank] balance sheet, will yield one.” In my opinion, the monetary conditions for recession are now present. Even before central bank interest rate hikes really get going, the growth of real money has turned negative in both the US and the eurozone.  And, as was stated in the March 2019 issue of the ECB Economic Bulletin, “The leading and pro-cyclical properties of real M1 with respect to real GDP in the euro area remain a robust stylised fact.”  Previous chairs of the Federal Reserve, Alan Greenspan and Ben Bernanke, drove asset prices up. Jerome Powell is driving them down, and he could keep pushing against stock price rallies until he succeeds. Cormac Lucey is an economic commentator and lecturer at Chartered Accountants Ireland