EY’s new State of Sustainability report shows businesses have reached a tipping point on sustainability, revealing a significant shift in sentiment and behaviour, writes Derarca Dennis
The EY State of Sustainability 2024 report has reveals an important shift in how Irish businesses view sustainability.
Eighty-one percent of respondents reported a heightened focus on sustainability within their organisations over the past year, marking a 19 percent increase from the previous survey in 2022.
This is the largest percentage increase noted in the study, indicating a growing commitment to sustainable practices among businesses in Ireland.
Sustainability efforts and industry leadership
The findings suggest that progress is being made, with 74 percent of respondents rating their sustainability efforts as 'established or better', up from 61 percent in 2022.
Fifteen percent consider their efforts 'industry-leading', meanwhile, doubling the corresponding seven percent recorded in 2022.
There is still room for improvement, however, with 35 percent of this year’s respondents noting their organisation is not doing enough, up significantly from 17 percent in 2022.
Fear of greenwashing influences communication strategies
Awareness of the negative impact and reputational risk associated with misleading sustainability claims is growing.
Thirty-five percent of the respondents in the EY State of Sustainability 2024 report indicated that fear of greenwashing is influencing their communication strategies, a significant increase from 13 percent in 2022.
Key motivations for sustainability
Rising stakeholder interest, regulations and perceived bottom-line benefits are key motivating factors driving sustainability in organisations.
Close to two-thirds (65%) of businesses reported wider stakeholder enquiries about sustainability impact, up from 49 percent in 2022.
More than half (58%) believe demonstrating a greater commitment to sustainability is necessary for access to capital.
Interestingly, 30 percent indicated they are increasingly assessing the sustainability status of target companies when considering a merger or acquisition.
Regulatory concerns
Navigating complex EU regulations is the leading sustainability-related concern for organisations, according to EY’s research, with the EU Emissions Trading System cited by almost two-thirds (65%) as a key concern.
Supply chain due diligence, driven by the Corporate Sustainability Due Diligence Directive (CSDDD), is a concern for 62 percent of respondents.
The EU Deforestation Regulation and plastic packaging-related measures were cited by 54 percent and 46 percent of respondents, respectively.
Supply chain responsibility
Sustainability regulations such as the Corporate Sustainability Reporting Directive (CSRD) and CSDDD are designed to make organisations more sustainable by holding them accountable for their supply chains.
Sixty-two percent of respondents cited supply chain due diligence as their biggest sustainability-related concern.
Engagement levels with supply chains on ESG reporting vary, with 26 percent having not engaged at all, while 50 percent have technology solutions in place to gather data for compliance purposes.
Long-term resilience
The findings show that the link between sustainability and profitability is becoming an increasingly important factor in corporate strategies. As companies embrace this agenda, they must engage with all stakeholders to create a more resilient and sustainable business.
Irish businesses are moving toward sustainability, with growing stakeholder interest, regulatory pressure and bottom-line benefits driving this shift.
The report shows that more companies are embedding sustainable practices. Despite this, concerns about greenwashing and regulatory compliance remain challenging.
Notably, many companies are scrutinising the sustainability of potential mergers and acquisitions, signalling a commitment to change.
While progress is evident, there is still work to do, especially in supply chain accountability. For sustained impact, continued engagement with stakeholders and a proactive approach to regulation will be essential for long-term resilience.
Derarca Dennis is Assurance Partner and Sustainability Services Lead at EY
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