ESG issues increasingly recognised as key determinants of company’s future value creation potential

Jun 22, 2020

The latest edition of EY's Renewable Energy Country Attractiveness Index (RECAI) considers the potential impact of the COVID-19 pandemic and looks at the resilience of countries in the index. It sees COVID-19 having a short to mid-term impact, but the long-term drivers for investment in renewables remain strong, making the sector a safer haven for investment.  

Ireland is now 12th out of 40 countries in the latest Renewable Energy Country Attractiveness index, which ranks the top 40 countries in the world on the attractiveness of their renewable energy investment and deployment opportunities to those investing in renewable energy activity and projects.

The EY report highlights how climate change and other environmental, social and governance (ESG) issues are being increasingly recognised as key determinants of a company’s future value creation potential.

Institutional investors are demanding that businesses not only deliver financial performance, but also show how they make a positive contribution to society. As a result, companies are having to re-evaluate their corporate strategies to curb their emissions, enhance their governance, and improve their climate-related disclosures. This has resulted in institutional investors increasing the capital they are allocating to renewable energy infrastructure as a means to hedge their climate exposure, according to EY's analysis.

As Anthony O'Rouke,  EY Ireland Government and Infrastructure Advisory Director, says: "Investors are looking for reassurance that companies understand this link between the non-financial performance of the business and the successful delivery of the business strategy.”

EY anticipates a growth in Ireland’s renewable energy capacity by 30% over the next three years. This will contribute to Ireland’s efforts to reach its 70% renewable energy target by 2030 across the solar and onshore/offshore wind sectors. 

Despite the global slowdown caused by COVID-19, the renewable energy sector is expected to bounce back quickly as the long-term drivers for investment remain strong, according to the 55th EY Renewable Energy Country Attractiveness Index (RECAI). 

Ireland’s strong performance this year is also attributed to the significant 46% reduction in the use of coal and oil in generating power since 2015.

Read the full report here: ey.com/recai