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Tax must be considered as part of the Corporate Sustainability Reporting Directive’s double materiality assessment, explains Aidan Lucey The aim of the EU’s Corporate Sustainability Reporting Directive (CSRD) is to drive accountability and transparency by mandating companies operating in the EU to disclose information on material sustainability topics publicly. Even if companies have reported non-financial data in the past, they will likely need to expand the nature and extent of their disclosures. For some companies, tax could be considered a material sustainability topic, given the significance of tax contributions to society and heightened investor scrutiny. This means they will need to disclose information on tax publicly, too. Therefore, companies must understand the specific tax disclosures that may be required under CSRD. CSRD and double materiality Companies within the scope of CSRD are required to make disclosures on material sustainability topics in accordance with the European Sustainability Reporting Standards (ESRS). The ESRS covers sustainability topics across environmental, social and governance pillars and prescribe specific disclosure requirements. To determine the sustainability topics to be disclosed, companies must carry out a double materiality assessment. This involves assessing a company’s impact on the environment and society (“impact materiality”) and an assessment of how sustainability topics may affect the future performance of the company (“financial materiality”). If a sustainability topic is material to a company, but is not addressed by the ESRS, the company must still disclose information about it to enable readers to understand its sustainability-related impacts, risks and opportunities. Tax as a material topic Interestingly, the European Financial Reporting Advisory Group (EFRAG), which developed the CSRD standards, explicitly calls out tax as one of the topics on which organisations could make disclosures. In determining what sustainability topics are material for a business and its stakeholders, companies must consider many factors. While materiality considerations will differ for every organisation based on their specific sustainability and stakeholder profile, a range of factors could make tax a material consideration. These are outlined below. Social impact Tax is not just a cost of doing business, it is also a social responsibility. The taxes paid by an organisation, including those that it collects on behalf of governments, can represent its biggest monetary contribution to society. Those taxes fund public services, green infrastructure and community projects. Consequently, tax can be seen as a powerful indicator of a company’s societal impact. To assess this impact, stakeholders are demanding a greater level of tax transparency. They want to understand a company’s approach to tax, how tax matters are governed, and how much taxes are paid. Investors Tax is being factored into investor considerations when assessing the sustainability of a business. An organisation’s approach to tax can pose significant risks that affect investment returns in the medium and long term. To address these concerns, investors are taking steps to influence companies to make more comprehensive tax disclosures that will allow them to evaluate not only financial aspects but also governance and reputational risks associated with their approach to tax. Some investors have released codes of conduct encouraging transparency on tax from investee companies. Others have filed shareholder motions mandating tax disclosures under GRI 207, a specific tax standard released by the Global Reporting Initiative (GRI) to enable companies to disclose tax as part of their sustainability reporting. Tax disclosures under the CSRD can provide companies with an opportunity to build trust with investors, customers and society. Even where a company concludes that tax is not a material topic in its own right—possibly because other sustainability topics are viewed as higher priorities—tax disclosures could be considered under an existing ESRS. Tax disclosures required Where an organisation deems tax a material topic, EFRAG has indicated that GRI 207 could be used as the basis for its tax disclosures. GRI 207 consists of four categories of disclosures: Disclosure 207-1: Approach to tax. This requires an organisation to disclose details on its tax strategy, who oversees it, and how it aligns with its broader sustainability strategy. Disclosure 207-2: Tax governance, control, and risk management. This requires the disclosure of information about an organisation’s tax governance structure and how tax risks are identified, managed and monitored. Disclosure 207-3: Stakeholder engagement and management of concerns related to tax. This disclosure considers how an organisation engages with its stakeholders on tax matters. Disclosure 207-4: Country-by-country reporting. This disclosure requires an organisation to report on quantitative data, including its revenue, tax, and business activities on a country-by-country basis. A double materiality assessment is an essential step towards CSRD compliance. Full engagement between tax departments and sustainability teams will ensure that tax impacts, risks and opportunities are identified and considered in the double materiality assessment. Aidan Lucey is Tax Leader for CSRD at PwC Ireland

Navigating the complexities of sustainability leadership demands a multifaceted approach, writes Catherine Duggan More companies are grappling with a rising regulatory burden and heightened stakeholder expectations regarding sustainability, presenting the need for a captain to lead the team. Here is a selection of the components that can help make this role successful. 1. Knowledge of the business The impacts, risks and opportunities sustainability presents for each business are unique. Understanding sustainability, along with intimate knowledge of your business operations, stakeholders and future strategic plans, is critical to ensuring the successful integration of the sustainability agenda. 2. Commercial mindset Perhaps more than other disciplines, sustainability tends to attract people who are passionate about the topic and driven by the need to be change-makers. While enthusiasm is certainly necessary, particularly on more challenging days, the ability to consider and incorporate commercial aspects into the wider conversation can prove more effective than passion alone. 3. Risk management While sustainability may be a developing area of expertise in companies, risk management is not. The risk posed by the transition – or failure to transition – to a more sustainable economy can and should be considered through existing risk management processes, enhanced skill sets and frameworks. Being familiar with the vocabulary and the approach that is being taken can help with the incorporation of sustainability considerations. 4. Communication management Many of the sustainability regulations that are being introduced focus on disclosing sustainability-related information to facilitate stakeholder decision-making. The implications of these disclosures must be understood in the wider context of any supervisory oversight. In addition, consistency of investor messaging and alignment with previous external disclosures, public commitments and marketing campaigns are crucial factors for the effective management of external communications. 5. Stakeholder management Getting internal stakeholders onside is the most fundamental skill required to develop and deliver a credible sustainability programme. The ultimate goal of a sustainability function is that it should become business as usual, part of everyone’s day job. Until that point, support is required from all parts of the business at a time when resources are often already at capacity. The ability to tailor messaging to specific functions, outlining the drivers, risks, opportunities and executive support, is critical. 6. Change management All parts of the business will eventually feel the impact of sustainability through the implementation of a new strategy, regulation, processes or responsibilities. Agnostic of sustainability, change management is required to embed this level of transformation and support into the culture of an organisation. 7. Resilience While sustainability aims to deliver long-term resilience for people, the planet and profit, a degree of personal resilience is required to chart the path. In a fluid regulatory environment, an organised and curious mind is needed to develop best practices. A support network is also important to ensure the workload is shared. Building a sustainable future together While the above list may seem unrealistic, it’s important to emphasise sustainability’s ‘team’ nature and the need for support from across the organisation. Identifying a resource proficient in all of the skills outlined above is a challenge. Securing someone with working knowledge of some or all of these areas – and who can upskill – is more achievable. Few people today began their career with the intention of becoming a sustainability professional, but there is now a growing community forging a new path for their companies, with the aim of highlighting the reality that we are all in the same boat and the water is rising. Catherine Duggan is Director of Sustainability at Grant Thornton

Ireland’s CFOs continue to prioritise cost control and efficiency over investment in AI but will they pay the price further down the road? asks Derarca Dennis As Ireland’s Chief Financial Officers (CFOs) step up to future-proof the finance function, their role in leveraging technology to improve efficiencies is becoming increasingly pivotal. According to the EY Ireland CFO Survey 2024, finance leaders are not just looking to elevate business performance, they are also actively seeking to tap into the potential of technology while simultaneously strengthening their collaborative alignment with Chief Technology Officers (CTOs). The continued focus on technology investment is unsurprising, considering that 47 percent of respondents identified manual processes and controls as an area where time is used least efficiently in the finance function. It is perplexing that such a high number of respondents continue to cite manual processes and controls as an area for improvement in the finance function. This suggests that organisations have some way to go in their automation efforts, and significant further investment in technology will be required over the coming years. AI and the finance function Despite the investment in technology, the survey results for artificial intelligence (AI) indicate that it is a low priority for organisations right now. Finance leaders in Ireland are still at the very early stages of Generative AI (GenAI) adoption and are firmly focused on using cost reduction and efficiency gains to realise growth. AI use remains modest, with just 26 percent claiming to have leveraged it for enhanced efficiency, automating manual tasks and risk detection, among other use cases. The uptake of GenAI is even lower at just 15 percent. This may come as a surprise to some. While GenAI has been commanding the headlines over the past 15 months, the technology is still not at the stage where it can be employed to carry out advanced functions in finance departments. CFOs are naturally exercising caution until they see some applications proving that GenAI can be trusted in terms of output and security. Just six percent of respondents say they will leverage advanced AI to enhance the finance function or acquire AI skills in the next two years. The figure for a longer five-year span is only moderately higher, with nine percent saying they will integrate AI and advanced AI into the finance function in that timeframe. The results of the survey indicate that organisations are still at the discovery and use case definition stage in relation to AI. Automation It is surprising that greater use has not been made of the technology for automation purposes, given the continued inefficiencies created by manual processes and controls in finance functions. Interestingly, the survey shows a fairly significant budget increase is anticipated, albeit from a low base, for advanced AI (including GenAI) from one to 3.2 percent in the next two years. This suggests an openness to applying the technology as soon as use cases are identified and better understood. Not all AI solutions are expensive or require custom development. To get their organisations to accelerate the AI journey, CFOs can recommend adopting pre-built AI solutions that drive cost efficiency. Cybersecurity In their role as strategic business partners, CFOs must do more than just comprehend the organisation’s risk tolerance; they are also responsible for steering the budget towards areas that need more attention. Just 39 percent of the respondents in the EY Ireland survey say they have ramped up investment in security tools, compared with 60 percent in 2023. This may indicate a degree of complacency regarding cybersecurity, or it could be that investments have begun to plateau following significant increases in recent years. In a very welcome finding, 31 percent of the respondents say they instituted a cybersecurity task force compared with the eight percent in 2023. CFOs’ north star The relatively low priority given to technology-driven transformation and the low rate of AI adoption in finance functions is surprising given current talent shortages. Right now, cost control and efficiency remain the north star for finance leaders in Ireland. Derarca Denis is Assurance Partner and Sustainability Services Lead at EY Ireland 

Amid rising cyber threats, integrating cybersecurity into the due diligence process for business acquisitions is becoming increasingly important, writes Mark Butler With the recent rise in digital data breaches, cybersecurity’s critical role in due diligence engagements during business acquisitions cannot be underestimated. Embedding a cybersecurity-focused lens into the due diligence framework is an essential part of helping accountants and their clients tackle and manage potential vulnerabilities before investing proactively. This approach can strengthen defence against cyber threats, support informed, strategic decision-making and enhance a company’s resilience in the face of digital-age risks while ensuring full visibility of the purchaser’s potential exposure. The urgency of prioritising cybersecurity due diligence hinges on four key considerations: Assessing the business’s technological framework In today’s digital-driven business environment, a company’s technological infrastructure is integral to its operational success. Cybersecurity due diligence offers a deep dive into the resilience of the business’s networks, systems and software, revealing potential vulnerabilities. This critical assessment aids in understanding the implications and costs associated with securing or upgrading technological assets post-acquisition, facilitating strategic planning and integration efforts. Ensuring the security of sensitive information The acquisition process provides access to sensitive data, from client details and intellectual property to financial records and employee information. A focused cybersecurity due diligence process is crucial for evaluating how robust the target company’s data protection measures are. Early identification of security gaps enables the implementation of stringent safeguards, thus securing the integrity and confidentiality of vital data assets against potential breaches. Mitigating financial and legal exposures Cybersecurity breaches carry operational risks and significant financial and legal ramifications. A thorough cybersecurity due diligence process can uncover potential liabilities arising from data breaches, regulatory non-compliance and other legal challenges. Forearmed with this knowledge, acquirers can better negotiate the terms of the acquisition, allocate resources for addressing identified risks, and adjust the purchase price to reflect any investments needed to improve cybersecurity. Safeguarding business continuity and brand reputation Maintaining business continuity and reputation is paramount for a successful acquisition. Cyber incidents can severely disrupt business activities, erode customer trust and damage brands. By incorporating cybersecurity due diligence, potential threats can be identified and mitigated through comprehensive incident response planning. This proactive strategy ensures that appropriate measures are in place to minimise the impact of cyber threats on the company’s operational integrity and reputation. Prioritising cybersecurity within the due diligence framework is not merely a precautionary measure; it is a strategic business imperative that gives the purchaser adequate visibility of the acquired business. It can support a thorough assessment of technology-related risks, fortify the protection of sensitive data, mitigate potential financial and legal consequences, and protect the viability and reputation of the business. Finding expertise in cybersecurity can be difficult, however. I advise seeking out recognised specialists offering comprehensive assessments that adhere to international standards. This approach during the due diligence process can help accountants and their clients to understand and proactively address the cybersecurity challenges that come with business acquisitions, laying the groundwork for long-term success. Mark Butler is Managing Partner at HLB Ireland

The Gender Balance Working Group, a sub group of the Diversity & Inclusion Committee, focuses on issues related to gender equality, advocates for and supports the female members of Chartered Accountants Ireland The need for advocates for women in the Irish workforce stretches right back to the marriage bar in the Republic of Ireland.  The marriage bar required women to leave the labour force once they were married and the consequences of this legislation have lived long in the Irish psyche, affecting all women.  As Ireland strives to achieve greater equality for women, the Gender Balance Working Group is ideally placed to advocate for female Chartered Accountants in the profession. As a voluntary member-led working group, our personal and professional experience plays a central role in shaping our ongoing dialogue.  Raising awareness of the need for equitable opportunities for women – including equitable access to employment, compensation and development opportunities – comes at a pivotal moment, following the Government’s introduction of gender pay reporting metrics designed to close the gender pay gap in Ireland.  The Gender Balance Working Group supports Chartered Accountants Ireland’s recognition of International Women’s Day (IWD), celebrated annually on 8 March both nationally and internationally.  This year’s IWD celebrations marked the launch of the Women’s Mentoring Circle, an exciting new career support service, providing a space for women in the Chartered Accountancy profession to connect and collaborate. The first Mentoring Circle will take place at Chartered Accountants House, 47–49 Pearse Street, Dublin 2, at 5pm on Thursday, 18 April. The Gender Balance Working Group also seeks to address issues ranging from the need to break down biases impeding women’s ability to climb the career ladder, to the challenges women face when trying to balance professional and personal responsibilities and ambitions. Ultimately, we want to do all we can to improve the representation of female diversity in the Irish workforce.  Our working group has run a series of events, both in-person and virtual, inviting female Chartered Accountants to share their experiences: why they have chosen the profession; the career challenges they have faced; and their advice for the next generation coming behind them.  A recurring series in Accountancy Ireland called ‘My Story So Far’ continues to feature the stories and insights of a range of established and successful female Chartered Accountants. Its aim is to demonstrate to others that they should never feel as if they are taking on challenges in isolation.  The Gender Balance Working Group will continue to listen, and respond to, the needs, views and priorities of the female members of Chartered Accountants Ireland.  Equality is a journey, not a destination. It is important that the work this group is doing today sets a precedent for the next group of advocates to take on and advance further.  To find out more about the Gender Balance Working Group and other D&I resources, visit: charteredaccountants.ie/diversity-and-inclusion  

Nóra Cashe explains the obligations, compliance, and acceptance and rejection procedures for employers outlined in the Work Life Balance and Miscellaneous Provisions Act 2023 Code of Practice The Code of Practice (the Code) for the right to request flexible and remote work has been released. Now that these two rights are in effect, employees can request these entitlements. So, do you know your obligations as an employer, and do you understand how to comply with the new legislation? What are the rights to request remote and flexible work? The right to request flexible working and the right to request remote working are the last two of five statutory parts to come into effect within the Work Life Balance and Miscellaneous Provisions Act 2023. While many of the same guidelines apply to these two entitlements, they are separate. ‘Flexible working’ is defined as the adjustment of an employee’s working hours or working patterns. This includes flexible working schedules, reduced working hours, or even remote working. The right to request flexible working only applies to parents and to those acting in loco parentis or guardians as defined by the Act. Meanwhile, ‘remote working’ is an arrangement between employer and employee in which the work is carried out at a location other than at the employer's place of operation. This is done without any change to the employee's ordinary working hours. What is the Code of Practice? Drafted by the Workplace Relations Commission (WRC), the Code provides practical guidance for businesses and their staff regarding flexible or remote work requests. It is separated into three sections. The first two sections are Flexible Working (FW) and Remote Working (RW), which lay out guidelines for employees and employers to follow when requesting or receiving requests for flexible or remote working arrangements. The last section consists of policies and templates. Here, employers can find templates to use for relevant documentation, such as a Work Life Balance Policy, a Flexible Working Request application, and a Remote Working Request application. Staying compliant The Code defines flexible and remote work and provides the details on who can apply and when. The Code also contains important timelines and procedures for employers and employees to follow when a request is made and the consequences for not doing so. Failure to follow the timelines and procedures and to keep records could result in an award of up to 20 weeks of remuneration and/or a costly fine/summary conviction. Additionally, the Code of Practice includes information on situations such as: the abuse of any new working arrangements; the need to modify new working arrangements; and the need for the employee or employer to terminate the new working arrangements. Acceptance or rejection procedures Employers are not obligated to accept requests for remote or flexible work but it’s important to remember that a response must be delivered to the employee in writing within four weeks of their request. The three responses an employer can give are: Extension: the employer may request up to four more weeks to consider its decision, which it must also do in writing. Refusal: the employer must lay out its reasoning in writing. Acceptance: the employer must produce a written document with the relevant details for the employee to sign. Overall, employers are advised to weigh their employees’ circumstances and rationale for these requests against their own business needs. In addition, the Code provides tangible questions that employers may ask themselves when deciding whether to approve or reject a request. Nóra Cashe is a Litigation Manager at Peninsula