In this week’s sustainability/ESG bulletin, we cover how executive bonuses are increasingly linked to environment, social and governance goals, Ireland’s new Sustainable Mobility Policy, the coming into force of new regulations requiring UK businesses to include climate risks and opportunities in their regulatory reporting, news that the EU has greenlighted a proposal to create European Green Bonds, and what the latest IPCC report means for business.
In the news
Executive bonuses increasingly linked to environment, social and governance goals
Bonuses for executives in 75 percent of the top companies on the Irish stock market are now reportedly linked in some way to environment, social and governance (ESG) targets.
This represents a marked difference from the position two years ago, a change which is attributed to increasing demands from international investors for action on ESG metrics. Executive pay in Ireland and elsewhere still remains mainly tied to financial measures, although an increase in ‘shareholder activism’ means that the trend of linking ESG with executive remuneration is likely to continue in the coming years. In the US companies face “an unprecedented wave of shareholder resolutions focused on ESG themes” for 2022, as pressure intensifies on companies disclose information on their carbon footprint reduction, employee wellness and retention, and human rights protection.
Ireland launches Sustainable Mobility Policy
The Department of Transport this week launched Ireland’s Sustainable Mobility Policy, which sets out a national framework for active travel and public transport to 2030.
As transport is central to Ireland’s decarbonisation effort, this policy will play a key role in supporting Ireland’s goal to halve greenhouse gas emissions. It’s action plan to 2025 contains key actions areas around safety, accessibility, transition to zero-emissions public transport vehicles, and improving rail infrastructure, services and fares.
Speaking at the launch, Minister for Transport Eamon Ryan, T.D., described the policy as “central to ensuring that we meet our ambitious climate targets. It is all about getting people moving in a greener way, by choosing walking, cycling or public transport over fossil-fuelled vehicles, and helping people choose more sustainable options. Sustainable mobility also helps improve our quality of life and bring life back into our cities, towns and villages.”
The Sustainable Mobility Policy, which will be implemented in collaboration with other government departments, the National Transport Authority, Transport Infrastructure Ireland, the regional assemblies, local authorities and other stakeholders, and can be found here.
1,300 UK organisations to be affected by new reporting regulations
Over 1,300 large companies and LLPs in the UK are expected to be directly captured by climate reporting regulations which came into effect on 6 April. The regulations require UK businesses by law to include climate risks and opportunities they face in their regulatory reporting. The disclosures are to be aligned with the Taskforce for Climate Related Financial Disclosures (TCFD). Business will be required to disclose this information in strategic reports starting from 2023. Read more here.
Similarly, in the U.S. a new measure announced by the Securities and Exchange Commission (SEC) will require U.S. listed companies to report detailed disclosures on climate risk. The proposed rules would require companies to report on how their operations affect the climate and the formation of carbon emissions.
EU agrees position on European Green Bonds
As part of its strategy on financing sustainable growth and the transition to a climate-neutral, resource-efficient economy, the EU has greenlighted a proposal to create European Green Bonds.
Environmentally sustainable bonds are one of the main instruments for financing investments related to green technologies, energy efficiency and resource efficiency as well as sustainable transport infrastructure and research infrastructure. Issuers of bonds wishing to use the designation ‘European Green Bond’ or ‘EuGB’ for their environmentally sustainable bonds will have to comply with uniform requirements laid down by the regulation, which also establishes a registration system and supervisory framework for external reviewers of European green bonds.
The European Council will now start negotiations within the European Parliament in order to agree on a final version of the text.
‘Now or never’ - what the IPCC report means for business
The latest report from the Intergovernmental Panel on Climate Change (IPCC) released earlier this month focused on climate change mitigation, i.e. avoiding and reducing emissions of heat-trapping greenhouse gases like CO2 in order to limit global warming. Emissions reductions in all sectors of the global economy must be “rapid and deep”, the report warns; however, it noted that despite progress and pledges to reduce global greenhouse gas emissions, emissions have continued to rise – albeit at a slowing rate.
“It’s now or never, if we want to limit global warming to 1.5°C (2.7°F),” stated IPCC Working Group III Co-Chair Jim Skea. “Without immediate and deep emissions reductions across all sectors, it will be impossible.”
A report from Carbon Intelligence describes what this means for business, as does Carbon Brief’s indepth Q&A.
Technical Updates
Resources
- A worthy read is SustainabilityWork's newsletters (you can subscribe to them). Their latest issue covers, among much else, SustainabilityWorks’ EPA-funded research report on climate risks and opportunities for Irish businesses is published and available here.
- Shareholder greenwashing backlash targets directors
This article describes how a growing backlash by activist shareholders against greenwashing has moved on from corporate criticism to direct action against directors. (ICAEW)
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What does mandatory TCFD disclosure mean for CEOs and businesses?
In this article TCFD experts shares insight into how TCFD disclosure can be used as a strategic planning tool designed to drive internal change and allow better decision-making in the context of climate risk scenarios and the transition to net-zero. (Carbon Intelligence)
You can find information, guidance and supports to help members understand sustainability and meet the challenges it presents in our online Sustainability Centre.
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