In this week’s Sustainability/ESG bulletin we cover developments in Ireland’s carbon budgets, the debate over net-zero emissions targets for Northern Ireland, and the controversial inclusion of nuclear and gas in the EU Taxonomy, as well as updates from our Technical Team, a new app, and upcoming events.

1. In the news
2. Technical updates
3. Resources
4. EventsEvents

 

In the news

Committee votes in favour of carbon budgets

Following discussions in January by the Oireachtas Committee on Environment and Climate Action, the Committee has this week voted in favour of approving the carbon budgets put forward by the Climate Change Advisory Council (CCAC) last year.

The carbon budgets are the total amount of emissions that may be emitted in Ireland during a five-year period, the first running from 2021 to 2025. They are part of a roadmap of actions under the Climate Action and Low Carbon Development (Amendment) Act 2021, which commits Ireland to reach a legally-binding target of net-zero emissions no later than 2050.

Once the carbon budgets are adopted by the Oireachtas, the Minister for the Environment, Climate and Communications will use each carbon budget to prepare ‘sectoral emissions ceilings’ for relevant sectors. It will then be up to the sectors to determine how to go about reducing their emissions. 

Tuesday 8 February is the deadline for receipt of response to a public consultation on the carbon budgets programme. Chartered Accountants Ireland will submit a response which will be available on our Sustainability Hub.

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Over 80 percent of European ETFs will have ESG focus

A global survey carried out by PwC of companies which provide exchange traded funds (ETFs) has shown that 80 percent of participants in Europe expect more than half of their product launches in the coming year to focus on environment, social and governance (ESG).

According to the PwC Report ETFs 2026: The next big leap, this is mostly in response to regulatory pressure as well as investor demand. The report notes that participants in Europe feel “the strongest pressure for change”, with providers facing regulatory challenges, such as the introduction of new reporting requirements under the Sustainable Finance Disclosure Regulation, and a “plethora of ESG designations and reporting requirements in different markets”. These regulatory requirements are also expected to increase following pledges made last year at the United Nations climate change conference COP26.

The report also pointed to challenges in securing reliable and consistent data and uncertainties in relation to ESG ratings and scoring.

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“Strong difference of opinion” on net-zero emissions 2045 target for Northern Ireland

The Climate Change (No. 2) Bill has been the subject of debate in the Northern Ireland Assembly this week. The Bill – the second climate bill put before the Assembly in 2021 – aims, among other things, to reduce the region’s contribution to the UK’s overall 2050 emissions-reduction target by 82 percent. This figure is aligned with what the UK government's climate advisory body, the Committee on Climate Change, says is ‘practically possible’ given Northern Ireland’s relativity large agriculture sector.

However, there is reportedly pressure from a coalition of environmental groups to set tougher net zero targets for the region, with Green Party Leader Claire Bailey calling for the introduction of a 2045 deadline for reaching net zero. This is in line with the Climate Change (No. 1) Bill, a Private Member’s Bill introduced in March 2021.

After the publication of the report on the Climate Change (No. 1) Bill on 10 December 2021, Committee Chairperson, Declan McAleer MLA, said “We recognise the strong difference of opinion on the net-zero emissions 2045 target with some seeing this as an ambitious pledge and others expressing concern about the damaging impact it could have on the agri-food sector. We were unable to reach a consensus on what the emissions target should be and this issue will no doubt remain central to the debate when the Bill moves to the next stage.” 

The report on the Climate Change (No. 2) Bill was published on 22 January 2022 and expressed similar sentiment regarding a consensus opinion on the overall emissions target, stating that it would “best be decided by the Assembly as a whole”.

However, this week an amendment was passed in the Assembly to change the 2050 target in the Climate Change (No.2) Bill from reducing emissions by 82 percent to committing to net-zero emission instead.  The Bill must also pass through two further stages before it goes for Royal Assent.

Read Chartered Accountants Ireland’s responses to public consultation on both Bills.

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“Ambitious and vitally important journey” for Northern Ireland

Also this week in Northern Ireland, Economy Minister Gordon Lyons issued a statement in which he invited all citizens and businesses to join what he describes as the “ambitious and vitally important journey” in the ‘Path to Net Zero Energy’ strategy. This recently launched energy strategy aims to ensure the security and affordability of clean energy for Northern Ireland, and plans to boost energy efficiency in buildings; increase consumption of energy from renewable sources; and double the size of Northern Ireland’s green economy. Minister Lyons also pointed to the 22-point Action Plan for 2022 which sets out some of the practical steps for how Northern Ireland can achieve those aims, which along with the Strategy will bring together the skills, technologies and behaviours needed to achieve the goal and the attendant economic benefits.

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Gas and nuclear to be included in EU Taxonomy

This week the EU Commission reached a political agreement on the criteria under which natural gas and nuclear power can be included in the EU Taxonomy.  

The EU Taxonomy is a labelling system. It identifies certain economic activities as ‘green’ so investors can identify eco-friendly investments.  As enormous private investment is needed for the EU to become climate neutral by 2050, the EU created this labelling system to guide private investment to activities that are needed to achieve climate neutrality.

The decision to include nuclear and gas power energy in the taxonomy, however, has caused controversy. Many oppose the inclusion of both nuclear and gas, while others oppose nuclear but support the inclusion of gas as a ‘transition fuel’ to replace coal until renewable energy can replace both gas and coal.

EU Commissioner for Financial Services, Mairead McGuinness, in her remarks this week described the EU Taxonomy as “a tool for the financial sector, not energy policy” and described its purpose:

“It also does not prohibit investments in the sectors it covers. It does not prohibit investments in sectors. And really an important point to remember is the Taxonomy remains a voluntary tool.”

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“Two sides of the same coin”

The climate and nature crisis has reportedly been described as “two sides of the same coin” in a report on finance for nature in the G20 countries. The report, The State of Finance for Nature in the G20 report, looks at how wealthy nations can better tackle the planet’s climate, biodiversity and land degradation crises, such as by promoting sustainable farming and supply chains, or creating green spaces in cities to tackle rising heat.

The report’s co-author, Ivo Mulder, who heads the climate finance unit at the United Nations Environment Programme (UNEP), commented that “Companies and financial institutions should fully disclose climate and nature-related financial risks while governments should re-purpose agricultural subsidies that harm nature, introduce trade-related tariffs on similarly damaging goods, and set a floor for forest carbon prices.”

Find out more about biodiversity on the Institute Sustainability Hub here.

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Technical Updates

The IFRS Foundation, CDP and the Climate Disclosure Standards Board (CDSB) have completed the consolidation of the CDSB into the IFRS Foundation. Resources from the CDSB will transfer to the IFRS Foundation and provide intellectual property and technical assets which will support the International Sustainability Standards Board (ISSB). Read more here.

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Resources

Supply Chains and Accountants – Market Insights

Accountancy Europe has co-published a paper on supply chain due diligence and assurance. They found that accountancy firms – including small and medium-sized accountancy networks and associations – are increasingly prepared to review the sustainability of supply chains. Read more.

App

A new app set up to reduce food waste has introduced a borrow feature allowing users to list commonly used household items (such as drills, board games, bread-makers) available for their neighbours to borrow. The app makers, OLIO, also found from a recent survey in Ireland that almost a quarter of Irish consumers want to reduce their impact on the planet - with many planning to borrow more and reduce the volume of products they buy this year.

Call for submissions on tools to account for nature

The Transparent Project is calling for submissions from those who have developed a tool, methodology or resource that can help measure, account for and/or value natural capital impacts and dependencies in business. Find out more here.

From ICAEW: How Burberry is keeping check on sustainability

Read about how corporate responsibility plans are already in full flow but the British retailer will further integrate sustainability incentives, targets and KPIs this year. Read more

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Events

Wednesday, Feb 9, 1pm-1.20
‘Ask the Expert’ Interview  - Climate
Chartered Accountants Ireland’s first ‘Ask the Expert’ series of sustainability interviews will kick off with an interview with climate expert, Brian O’Kennedy from Climate Disclosure Project (CDP) Network Ireland. Brian will be answering all your questions on what accountants need to know about climate, such as 'what are scope 3 emissions?', 'what are offsets?' and 'how to I reduce my carbon footprint?' Join us on the day or email questions in advance. 

Thursday, Feb 10, 3:00-4.00
Leinster Society - The importance of ESG for business 
An overview of the current ESG landscape with Deloitte’s Sustainability Reporting and Assurance team.

Wednesday, 23 February, 12.30-1.30pm
Ulster Society - Public Sector Webinar: Climate Change and Sustainability Reporting
Debbie Caldwell, Belfast City Council; Dr Judith Wylie, University of Ulster Business School; Keith Scott, NI Water will examine how organisations can meet their sustainability obligations, act responsibly and play their part in addressing climate change.

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