Public Policy Bulletin, 26 March 2021

Mar 26, 2021

 

In this week’s Public Policy news, read about the key features of the Climate Action Bill and the revised ESRI forecasts for Ireland’s economy and unemployment; the injection of £16 million investment capital into Northern Ireland’s economy; the UK government’s plans for mandatory climate-related financial disclosure; and a historic change to how the UN will measure economic prosperity and human well-being.

'Hugely ambitious' Climate Action Bill approved by Cabinet

The Cabinet this week approved a revised Climate Action Bill which commits Ireland in law to reducing carbon emissions by 51 percent by 2030, and to becoming ‘net zero’ (climate neutral) by 2050. The Climate Action and Low Carbon Development (Amendment) Bill 2021 contains several key elements:

  • it embeds into law ‘carbon budgeting’. This requires the Government to adopt a series of economy-wide five-year carbon budgets, starting in 2021.
  • each sector will have legally binding targets. These targets will be proposed by the Climate Change Advisory Council, strengthened and expanded in size to widen its range of expertise and improve its gender balance.
  • the relevant Government Minister will be responsible for achieving these sectoral targets, and for accounting before an Oireachtas Committee each year.
  • Ministers not reaching their targets will have to ‘comply or explain’ before the Climate Change Advisory Committee. They will need to outline what corrective measures they will take and respond to any recommendations made by the Committee within 3 months.
  • if Ministers exceed their carbon budget emission ceiling, all exceeded emissions will be carried forward to the next budget period, which will be reduced accordingly.
  • actions for each sector will be detailed in a new Climate Action Plan, which will be updated annually, and a National Long Term Climate Action Strategy will be prepared every five years.
  • each local authority will also now have to prepare its own Climate Action Plan, which will include both mitigation and adaptation measures, and which will be updated every five years, and aligned to their Local authority Development Plans.
  • Public Bodies will also be obliged to perform their functions in a manner consistent with national climate plans and strategies and furthering the achievement of the national climate objective.

Speaking about the Bill, Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, TD, described the Bill as ‘hugely ambitious’, while Taoiseach Michael Martin, TD, spoke about the  opportunities this transition can bring our economy, our society and our country. Minister for the Environment, Climate, and Communications, Eamon Ryan TD, advised that the new Climate Action Plan now has be created to begin the journey to net zero by halving our emissions over the next ten years.

The preparation of this 2021 Climate Action Plan will involve a major public consultation, which is open from now until 18 May 2021.

ESRI revises growth and unemployment predictions for Ireland for 2021

The Economic and Social Research Institute (ESRI) expects to see growth in the Irish economy in 2021, but it has moderated the forecasts it made last winter in its Macroeconomic Forecasting March 2021, published this week. It cites the longer-than-expected Level 5 restrictions as the reason for the 0.5 percent reduction in its forecast for growth in Ireland’s GDP, and now predicts that the economy will  grow by 4.4 percent in 2021 and by 5.2 per cent in 2022.

The predictions, however, are based on assumptions about the lockdown measures and the vaccination programme. It also anticipates that unemployment will peak at 25 percent in Q1 2021, fall to just over 10 percent by Q4, and not return to  pre-COVID rates until late 2023. This, it expects, will lead to a deficit of just under €19 billion in 2021 or 4.7 per cent of GDP. 

Northern Ireland’s economy to receive £16 million investment capital

Northern Ireland’s Economy Minister Diane Dodds this week announced that the Co-investment Fund (Co-Fund) NI will receive additional funding of over £16m to support Northern Ireland SMEs. Co-Fund NI is an equity fund managed by Clarendon Fund Managers, and, along with private investors, provides growth capital to early stage, high-growth potential SMEs.

Speaking about the announcement, Minister Dodds described local SMEs as “the backbone of our economy” which need to secure funding to grow. Further commenting, Minister Dodds said that “The additional £16m funding will inject further investment capital into the Northern Ireland economy. The increase is expected to directly leverage additional funding of more than £20m from private investors over the next three years, opening up new growth opportunities for local businesses.”

The additional £16m funding is a combined investment between Invest NI and the Regional Angels Programme.

Developments in the sustainability disclosure landscape

The UK’s Department for Business, Energy and Industrial Strategy (BEIS) this week published a consultation seeking views on proposals to mandate climate-related financial disclosures by publicly quoted companies, large private companies and large limited liability partnerships. The proposals are part of the UK government’s ambition for the UK to be the first G20 country which mandates disclosures in line with the Task Force on Climate-related Financial Disclosures (TCFD).

The TCFD was created in 2015 by the Financial Stability Board to develop consistent climate-related financial risk disclosures for use by companies, banks, and investors in providing information to stakeholders. Accounting for Sustainability provides some background, guidance and other resources for accountants and finance professionals wishing to discover more about the TCFD.

The move comes in the same week as the Trustees of the International Financial Reporting Standards (IFRS) Foundation announced the formation of a working group ‘to accelerate convergence in global sustainability reporting standards. The Trustees had issued a consultation page in September 2020 on whether and to what extent it should contribute to the development of global sustainability standards. The responses confirmed an urgent need for global sustainability reporting standards and support for the Foundation to play a role in their development. The working group now set up to deliver this will prepare a potential international sustainability reporting standards board under the governance of the IFRS Foundation. Engaging with the working group will be the:

  • (SASB) and the (GRI) (merging to becoming the ‘Value reporting Foundation’)
  • Climate Disclosure Standards Board (CDSB)
  • Carbon Disclosure Project (CDP)
  • Task Force on Climate-related Financial Disclosures (TCFD)
  • World Economic Forum (WEF)
  • International Organization of Securities Commissions (IOSCO) which will participate in the group as an observer. It had issued a statement in February calling for the coordination of work to drive international consistency of sustainability-related disclosures with a focus on enterprise value creation, and it will have an essential role in evaluating and endorsing standards issued by a new board. 

UN to include nature when measuring economic prosperity and human well-being

The United Nations has officially adopted the SEEA-EA system (System of Environmental Economic Accounting-Ecosystem Accounting) as the new global standard of economic reporting.

SEEA-EA includes contributions of nature when measuring economic prosperity and human well-being. Its formal adoption by the UN marks a major step in going beyond the commonly used statistic of Gross Domestic Product (GDP) to ensure that natural capital is recognised in economic reporting, and isconsidered when it comes to policy and planning decisions.

SEEA-AE was developed by IDEEA Group's Carl Obst and pioneered in Australia by Mark Eigenraam, both of whom are part of a pilot project INCASE (Irish Natural Capital for Sustainable Environments), run by Natural Capital Ireland

You can find information, guidance and supports to help members understand sustainability and meet the challenges it presents in our Sustainability Centre.

 

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