Eva Sheehy explores how Irish businesses are leading in ESG readiness, with CEOs confident in meeting 2025 deadlines and reaping financial and strategic benefits
As deadlines for environmental, social and governance (ESG) reporting rapidly approach, Irish businesses are intensifying their focus on robust ESG programmes.
In the EU, reports are due to start appearing from the largest companies in early 2025, and this reporting wave will require independent assurance on ESG and human rights matters.
Recent findings from the KPMG CEO Outlook 2024 illuminate the critical importance of these initiatives, highlighting a strong conviction among Irish CEOs that ESG practices hold financial benefits.
Global context vs Ireland's position
Globally, the situation is challenging. KPMG research has found that only 29 percent of companies worldwide have the ESG policies, skills and systems in place to be ready for independent ESG data assurance despite looming deadlines.
The gap between leading companies and those in the early stages of assurance readiness is also widening, with skills and resources seen as the single biggest challenge for all levels of maturity.
However, here in Ireland, we are in a much stronger position.
Recent findings from the KPMG CEO Outlook 2024 highlight that 60 percent of Irish CEOs report that their organisation possesses the necessary capability and capacity to meet these stringent reporting requirements – preparedness that is crucial as companies navigate the complex landscape of ESG reporting, which demands transparency, accuracy and accountability.
The clock is ticking. In preparing for ESG assurance, businesses are discovering that as they advance, there’s always more to understand and accomplish.
This commitment is worthwhile – boards are placing greater emphasis on ESG assurance and leaders are noticing a broader array of benefits as practices associated with it become integrated into their businesses.
Robust ESG reporting also provides a framework for continuous improvement as companies set ambitious targets, monitor progress and make informed decisions that drive long-term value creation.
Assurance services play a critical role in this process, providing independent verification of ESG data and enhancing the credibility of the reported information.
The business case for ESG initiatives
The business case for ESG initiatives is increasingly well-defined.
Recent research from KPMG also shows that 63 percent of organisations in Ireland are fully embedding ESG into their strategies to create increased value.
The return on investment is also predicted in the relatively near future, with 66 percent of CEOs in Ireland believing such robust ESG programmes will enhance their financial performance over the next five years.
This integration reflects a broader trend towards sustainability and ethical governance, which not only meets regulatory requirements but also aligns with investor and consumer expectations and underscores the growing recognition of ESG’s vital role in business strategy and its potential to drive value and sustainability for stakeholders.
The critical role of robust ESG reporting and assurance
As reporting deadlines loom, the importance of robust ESG reporting and assurance cannot be overstated. Accurate and transparent reporting is essential for building trust with investors, customers, and employees. It demonstrates a company’s commitment to sustainability and ethical practices, which are increasingly important criteria for stakeholder engagement.
Skills and resources a key challenge
Obtaining appropriately skilled and experienced people will also be a challenge. Many businesses are looking for the same skillsets at the same time, and those skills are very specialised.
On top of that, the further businesses advance in the process, the more skills requirements they discover they will need to reach full ESG reporting and assurance maturity.
This often involves not only hiring new talent, but also investing in extensive training for existing employees to ensure they are up-to-date with the latest standards and practices in ESG reporting.
Ultimately, Irish businesses must remain adaptable and proactive as the landscape evolves, requiring a dynamic approach to skill development.
This is essential to meet the stringent requirements and to achieve the long-term benefits of robust ESG practices.
Eva Sheehy is Director in the ESG Reporting and Assurance team at KPMG
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