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News
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Some clarity on the importance of transparency

Faced with the possibility of hefty fines, organisations are taking legislation such as GDPR (General Data Protection Regulation) seriously. But how clear are privacy and other transparency notices? Liam McKenna warns organisations about the perils of muddying the waters of transparency. As a fundamental principle of data protection and ethical business, transparency is a critical concept that must be constantly worked on and improved. From recent actions and regulations, we have seen that it is essential for organisations to implement the correct processes to deliver accurate and relevant information to individuals. Why is transparency important? From a data protection point of view, organisations must comply with GDPR. It is also essential for individuals to receive sufficient information to decide whether they want their personal data processed by those organisations. In addition, transparency has grown in importance in recent regulations, such as the gender pay gap and environmental and social governance, which require transparent reporting from organisations. One of the most important reasons for ensuring adequate transparency is trust. Consumers place more importance on their trust in organisations before deciding to purchase, set up an account, or share personal data. GDPR outlines the information we need to provide to individuals, including receiving their data from a third-party. The European Data Protection Board (EDPB) provides guidance on the correct methodology when presenting this information. The core concept is that we need to inform people: what we do; the data being used; why it’s being used; who the data is about; who the data will be shared with; how long the data will be kept; and how people can access their right to their data. This information must be provided using plain language, considering the target audience, and in a manner that is easy to access and navigate. Unfortunately, many privacy/transparency notices are very legal and use complex language that most people will not understand. They are also challenging to navigate, resulting in continuous scrolling before reaching the desired information.  How do we become transparent? Before creating privacy notices, you must be fully aware of all your processing activities. This means undertaking a Record of Processing Activity (RoPA) exercise. An accurate RoPA should contain most, if not all, of the information required in the privacy notice.  Once you have all the required information, you must choose the correct language for your privacy notice. It must be unambiguous but also targeted to your audience. If you anticipate that people under 18 will use your services, for example, younger people must understand the notice. Similarly, if you provide services for people to learn English as a second language, the language used in the privacy notice should be easy to understand. The EDPB has good guidance to ensure that your privacy notice meets GDPR requirements. It is available on the EDPB website. What happens if we are not transparent? Recent actions taken by regulators across Europe, especially the Irish Data Protection Commissioner (DPC), demonstrate the repercussions of getting this wrong. One example of this is WhatsApp, which received a fine of €255 million – part of which was for transparency violations. After an extensive investigation, the DPC found that WhatsApp had not met its obligations to provide the required information. Similarly, Facebook has been issued with a notice of intention to fine up to €36 million for similar infringements. Consumers are becoming more aware of their privacy rights and expect certain standards. For business-to-business organisations, having a bad privacy notice or other transparency information can result in consumers exiting the sales process. There is a risk that business may be lost before there is a chance to discuss it. Continuous compliance In 2018, there was a rush to push out privacy notices on websites and information booklets across the EU. Some organisations have not revisited these since; others have updated them but have not had them reviewed by a third-party. Transparency efforts must be continuous and form part of compliance monitoring processes and frameworks. Organisations should review their notices to meet the requirements and deliver value to their customer and stakeholders. Liam McKenna is a Partner in Consulting at Mazars.

Dec 10, 2021
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Sustainability
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The key business trends that will define 2022

2021 has seen organisations undergo digital transformations and a continued push for sustainable practices. Paul Browne examines the triggers driving major transformation programmes in Irish organisations and outlines some trends we can expect in 2022. Fuelled by digital transformation and a heightened focus on cybersecurity and data protection, 2021 has seen a significant increase in activity across the Irish business landscape. Disruptive trends are driving structural changes in the way organisations operate. Over the course of the year, we have seen a range of triggers driving major transformation programmes in the Irish market, such as a major focus on sustainability, millennials accelerating the adoption of tech-enabled products and services, and the reskilling of employees to make organisations more agile. As we close out 2021, we see several key trends emerging for 2022. Sustainability as a transformation driver Sustainability has evolved into a key priority for the technology profession. In recent months, we have seen sustainability emerge as the new driver of transformation, similar to digital, driven by the need to meet emerging challenges along with rising importance and visibility across society. The sustainability landscape is complex with multitudes of standards and metrics, and the ecosystem is ever-evolving. Software as a Service (SaaS) solutions in particular will evolve to include sustainability reporting and ratings. For example, power consumption or percentage of renewables used. Investors and capital markets now weigh environmental sustainability more heavily as part of ESG (environmental, social and governance) analysis of investment opportunities. Organisations must show how they are contributing positively to society and not just meeting financial performance metrics. KPIs will explicitly reference energy consumption, carbon output and climate ethical work practices. We expect that the phrase “verifiable claims” will be critical for executives in 2022 as they seek to deliver the transparency demanded by stakeholders. Initial conversations post-COP26 have highlighted the role for blockchain and its ability to provide immutable evidence across an end-to-end supply chain. A renewed focus on business resilience Organisations continue to struggle to protect themselves fully against the multitude of emerging cyber threats. Many of the world’s biggest and most technologically advanced organisations have suffered cyber events. The reliance on third parties in the supply chain has been a particular challenge. Proactive and predictive supply chain management with technology at its core has emerged. Organisations can no longer assume that users, systems, or services within the security perimeter can be trusted. Technology companies must embrace digital trust to develop consumer confidence and competitive advantage. They need to embed privacy and risk management into their products and offerings and ensure that integrity, transparency, and accountability are designed into their systems. Organisations are taking a proactive approach and continuously monitoring all system levels to react to threats effectively. They are planning and preparing for a breach, with many organisations now using cloud-hosted services to assist in reacting to a breach. It forms a vital part of their security defence within a comprehensive structure involving people, processes, and technology. Cloud-supplied security offerings provide a cost-effective solution with a lower cost of entry. The ‘pay per user’ and ‘pay as you go’ cloud model offers full enterprise-level security to organisations that were previously priced out of the market. These offerings will continue to evolve, with artificial intelligence built into technology platforms rather than being provided as an add-on. For example, AIOps (artificial intelligence for IT operations) will be embedded into IT Operations to help reduce, simplify, optimise and automate a wide range of tasks and processes needed to deliver effective IT incident identification, management, and resolution. Paul Browne is Director of Azure Cloud Engineering at EY.

Nov 26, 2021
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Public Policy
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​Assessing your pension scheme value proposition

Many trustees are planning to ensure that their occupational pension schemes will fully comply with IORP II regulations by the end of 2022. Munro O’Dywer explains how companies, as sponsors, should use the remainder of 2021 to strategically assess their existing pension value proposition and determine if they should consider a different approach. Pensions represent a significant component of the employee benefit value proposition. However, employees often do not see the actual value in their pension arrangements due to their inherent long-term nature. Those companies who can convey the value of their pension structures to their employees, both in the short- and longer-term, will drive increased loyalty. But what does value mean in the context of the pension scheme for the employee? This should not simply be viewed as the level of employer contributions being made. Adequate contributions are only a small part of the overall retirement planning jigsaw. Other aspects that should come into consideration include: scheme participation; investment options; investment performance; charges; member outcomes at retirement; member support to make optimal decisions; and the use of technology. The changing needs of employees Delivering a pension scheme that meets the needs of all five generations that exist in today’s workplace is by no means easy. Each generation has its own set of preferences. In addition, many will have different pension makeups (e.g. defined benefit only; a mix of defined benefit and defined contribution; and defined contribution only). Defined contribution pension schemes are becoming the norm. There is a greater focus on the adequacy of retirement savings and broader financial wellness. Employees can also have multiple pension sources, potentially across different countries. This creates added personal portability and taxation challenges. Furthermore, how employees expect to be supported on their retirement savings journey varies. There are different preferences around communication channels and the level of support (self-guided, group, or one-to-one). Achieving the right mix of pension components – structure, contributions, employee support and communications etc. – to maximise their effectiveness for all employees is more critical than ever. The market evolution In the same way generational needs and preferences differ, the pension providers, their propositions and the regulatory and taxation environment in which they operate continue to evolve. Operational changes, technology enhancements, investment thinking, and member engagement innovations are only some of the areas providers continue to adapt to, each of which has a knock-on impact on costs. For companies, it is essential to benchmark existing structures relative to the broader market. This will likely become a feature of the new regulatory regime, as outlined in the draft Code of Practice. The impact of the new regulatory regime The past ways of governing and managing trust-based pension schemes are expected to change under IORP II regulations. There will be a greater focus on risk management, value for members, and the ongoing monitoring of outsourced arrangements. As well as the culture and the ability of the trustees to look after member interests, risk, time and cost will increase when it comes to operating a single trust-based pension scheme. Many pension schemes can spend a disproportionate amount of time on regulatory compliance. This can come at the expense of those aspects that are likely to be valued higher by employees. This imbalance has the potential to be heightened by the new regulations. Areas include the adequacy of contributions, achieving strong investment returns, and making the right decisions at the right times before, at, and after retirement. What employers should consider before 2022 Companies have until the end of 2022 to be compliant with the new regulations. 2022 will be a year of pension changes. Companies need to ensure that their changes in 2022 are well considered in the context of the broader pension value proposition and look to enhance, rather than diminish, it. An effective way for companies to use the remainder of 2021 is as follows: Document your existing pension value proposition for employees (benefits/costs) Companies should document all benefits that employees receive from the pension scheme (e.g. employer contribution, tax relief, strong governance, investment options, help and support etc.) and the associated costs. Understand your employee needs and how these will evolve The next stage is to consider your employees and their particular needs. This will help companies understand if the employees’ views on what is valuable to them about their pension scheme are consistent with the benefits/costs documented and, if not, where the gaps lie. Consider the impact of the new regulatory regime IORP II regulations will mean more time and cost spent on regulatory compliance. This could affect the employee pension value proposition, where the elements most valued are neglected due to regulatory pressures. Consider how the existing proposition can be adapted or modified Companies should explore alternative pension structures (e.g. consolidation of pension schemes or master trusts), which will help mitigate the regulatory impact but where the employee pension value proposition remains intact or is indeed enhanced. Munro O’Dwyer is Pension Partner at PwC.

Nov 19, 2021
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News
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What is changing in the world of IFRS?

The IASB is proposing changes that may be of interest to finance leaders. Emer Keaveney takes a deep dive into who will benefit from them. To date, the International Accounting Standards Board (IASB) has focused on the requirements for publicly traded entities rather than group companies or standalone statutory financial statements. My interest was piqued by two recent publications from the IASB, which suggest a change in this focus. Widening scope to include group restructuring In November 2020, the IASB issued a discussion paper proposing how to account for business combinations under common control (BCUCC). A BCUCC is one in which all the combining entities are ultimately controlled by the same party, before and after the combination. This type of transaction is sometimes called a group reorganisation or a restructuring. Who will this affect? In today’s dynamic business environment, group reorganisations are very common across all sectors, from large public entities to small and medium-sized enterprises. They can be structured as transfers of shares or transfers of trade/business. There are a number of reasons for a group to restructure. It could be to facilitate the sale of a part of the business, for succession planning, for banking or tax purposes, or to simplify the legal structure. There is currently no International Financial Reporting Standards (IFRS) that address how to account for BCUCCs. In fact, common control transactions are specifically excluded from the scope of IFRS 3 Business Combinations. This has caused a great deal of diversity in practice, making it difficult for users of financial statements to understand the effects of these transactions. It certainly drives the need for more clarity. Currently, there are two allowable methods of accounting by the entity receiving the transfer of shares or trade/business: the ‘acquisition method’ and the ‘book value’ method. There is no consensus on which method is appropriate in which situation. This discussion paper aims to reduce this diversity in practice. IASB’s view is that there is no single method that can be applied to all scenarios. The discussion paper proposes detailed prescriptive rules, reducing the scope for policy choices and bringing clarity to which method should be applied in each scenario. A new take on reduced disclosures In July 2021, the IASB issued the exposure draft that proposes to allow eligible entities to elect to apply reduced disclosure requirements while still applying the recognition, measurement, and presentation requirements in IFRS. The board’s aim here is to reduce the cost of preparing IFRS financial statements for subsidiaries that are not publicly accountable while maintaining the usefulness of the information provided. The election is optional and can be revoked at any time. So, which entities will benefit from the proposals? This will be any entity which, at the end of the reporting period: is a subsidiary as defined in IFRS 10 Consolidated Financial Statements; does not have public accountability. That is, “its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market” or it “holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses”; and has a parent that prepares consolidated financial statements available for public use that comply with IFRS. If you work with entities meeting these above criteria, I encourage you to provide feedback to the IASB through comment letters until 31 January 2022. The intent of this proposal is similar to the existing FRS 101 reduced disclosure framework applied by many group companies in the UK and Ireland. FRS 101 differs significantly in the details from the proposals in IASB’s exposure draft, and it is currently unclear how the two will interact in practice. Globally, a number of national standard-setters have implemented different national IFRS-based reduced disclosure regimes. However, IASB’s exposure draft has the potential to enable a radical streamlining of the preparation of statutory financial statements for organisations operating across multiple jurisdictions – for example, in a shared service centre environment. Emer Keaveny is an Associate Partner in Financial Accounting Advisory Services at EY.

Nov 12, 2021
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Sustainability
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Ireland’s CO2 performance and what COP26 cannot fail to deliver

While people from around the world gather in Glasgow to attend COP26, what is the state of Ireland’s CO2 emissions and how can we strengthen our commitment? Kim McClenaghan explains. The Environmental Protection Agency (EPA) provides the estimates of greenhouse gas emissions in Ireland. Its latest data shows that overall greenhouse gas emissions in Ireland decreased by 3.6% in 2020, and energy industry emissions decreased by 7.9%. The decrease was primarily driven by economic restrictions imposed in response to the pandemic, reduced peat use in power generation and an increase in renewable generation. Despite the decrease in emissions, the EPA warns that Ireland is still not on the pathway required to meet future targets and a climate neutral economy. To achieve permanent emission cuts in line with the Paris Agreement, it will be vital that this decrease is not an isolated occurrence, but rather part of a long-term trend as economic activity fully resumes. In the past year, Ireland’s long-term climate ambition has been restated, and the Climate Action and Low Carbon Development (Amendment) Bill 2021 has been passed into law by the Oireachtas. The Bill sets out the ‘national climate objective’ to achieve a climate-neutral economy no later than 2050. This target is consistent with the Paris Agreement and other international obligations. Carbon budgets To realise this ambition, the Climate Change Advisory Council has been tasked with proposing economy-wide carbon budgets, which will then be applied across relevant sectors by the Minister for the Environment and approved by the Government. The first carbon budget will see emissions reduced by 4.8% on average between 2021 and 2025. The second budget, running from 2026 to 2030, will see emissions reduced by 8.3% on average. The first two carbon budgets will provide for a 51% reduction in greenhouse gas (GHG) emissions by 2030 relative to 2018 levels, resulting in a cut of almost 35 million tonnes of CO2. The scale and pace of the economic and societal change and investment needed to achieve these targets are significant, but they will be necessary to reduce our emissions consistently and achieve the 1.5°C goal set by the Paris Agreement. Raising ambition The overarching aim of the climate summit in Glasgow – COP26 – is to mobilise stronger and more ambitious climate action from governments to keep the 1.5°C Paris Agreement goal within reach. This will require a significant strengthening of climate commitments from all countries, and especially from the G20 as without concerted action from this group, the chances of limiting warming to 2°C, let alone 1.5°C, will all but disappear. Converting climate pledges into action Governments have a pivotal role to play in creating the enabling environment for the transition to net-zero through policy and regulatory reform and investment. National targets need to be underpinned by policies that will deliver change at the pace and scale required. These policies will vary by nation, depending on the socio-political and economic context, but need to set the regulatory environment that businesses and individuals operate within, and encourage capital to be deployed to the right places. This requires clear overarching strategy and ambition, long-dated policy mechanisms, and the removal of fiscal or other disincentives. Private sector execution We have seen an unprecedented number of net-zero commitments by the private sector in the last 18 months. Over 3,000 businesses are now part of the Race To Zero Campaign, joining 733 cities, 31 regions, 173 of the biggest investors, and 622 higher education institutions. Alongside 120 countries, they form the largest ever alliance committed to achieving net-zero emissions by 2050 at the latest, collectively making up nearly 25% of global CO2 emissions and over 50% of GDP. Over half of the sectors that make up the global economy are now committing to halve their emissions within the next decade and achieve near-term emissions reduction targets. In each of these sectors, at least 20% of the major companies by revenue are aligning around sector-specific 2030 goals in line with delivering net-zero emissions by 2050. Time for all businesses to commit, plan and act Making the transition to a more environmentally and socially responsible world is now an urgent business imperative. We have less than two business cycles left to deliver the necessary changes. Working alongside governments, and providing the mandate and impetus for them to go further and faster, is vital if we are to keep warming to 1.5°C and avoid catastrophic climate change. By taking firm and decisive action now to halve global emissions by 2030 and reach net-zero emissions by no later than 2050, we have a chance to succeed. Kim McClenaghan is a Partner in Consulting and Head of the Energy, Utilities & Sustainability Advisory team at PwC.

Nov 05, 2021
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News
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Employer considerations for the return to the workplace

With the requirement to work from home soon expiring, employers must be proactive in their approach to the return to the workplace. As restrictions lift and the vaccination rollout continues, planning and preparation are needed to ensure a seamless return, says Dera McLoughlin. With the successful rollout of Ireland’s vaccination programme against COVID-19, many Irish employers and workers are now preparing to return to their physical workplace after a considerable period of working from home. To ensure that the return to work aligns with current Public Health advice and measures to keep workplaces safe, the Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD, has published an updated Work Safely Protocol. It will help ensure that employers and workers continue to contain and prevent the spread of COVID-19. While many retail and hospitality sectors returned to work in May 2021 in line with Government advice at the time, a phased return to the office and workplaces for those currently working from home will now take place from 22 October 2021, when the requirement to work from home will be removed. This will allow employees to return to physical attendance in the workplace on a phased and cautious basis appropriate to each sector. Lead worker representative A key component for ensuring adherence to the Protocol is the role of the Lead Worker Representative (LWR) in the workplace. Employers are required to appoint at least one LWR who will work with the employer to assist in implementing and monitoring adherence to the Protocol to prevent the spread of COVID-19 in the workplace. LWRs should be trained appropriately by their employer and be the conduit between workers and the employer for any concerns about the implementation of the Work Safety Protocol. Guidelines within the Work Safely Protocol The Work Safely Protocol sets out comprehensive steps for employers and workers to reduce the risk of exposure to COVID-19 in the workplace, including: Updating the COVID-19 response plan; Implementing and maintaining policies and procedures for prompt identification and isolation of workers who may have symptoms of COVID-19; Developing, updating, consulting, communicating and implementing workplace changes or policies; and Implementing COVID-19 Infection Prevention and Control (IPC) measures. The Protocol also provides guidance on workplace and community settings, occupational health and safety measures, and a library of resources for employers and workers. Considerations for employers Through many workplace surveys carried out in the past year, it is evident that many office-based employees wish to avail of some form of remote work in the future. Many companies also indicate that they want to adapt and accommodate their employees and continue to offer a degree of flexibility. A recent survey from CIPD Ireland outlined that one in two businesses in Ireland plans to adopt remote working in some form permanently in the future. When organisations consider their working arrangements, any decisions made must be based on several factors such as business objectives, employees’ wishes, potential office space adaptations and associated costs. Here are some key considerations. Health and safety requirements Before any employee returns to their workplace, the work environment must be safe and compliant with all relevant Government and HSE guidelines and in line with the Safety, Health and Welfare at Work Act requirements. Companies are advised to create and/or update policies that reflect the environment, health and safety, and emergency protocols to align with HSE guidance. It is also essential that the organisation establishes clear protocols for returning to the building, provides the requisite training on accessing shared workspaces and equipment, and the measures in place if an employee displays symptoms of COVID-19 while in the workplace. The price of returning to work Before returning to the workplace, an organisation must evaluate and understand the costs of bringing people back to the office. There will likely be costs such as reconfiguring office space and seating, increased cleaning costs, and potential PPE costs. Types of work and phasing the return to work Before returning to the workplace, each role and team should be reviewed strategically to identify which roles need to be on-site and which roles use technology or machinery. When determining which teams should be prioritised, an organisation will plan a phased return to ensure maximum productivity. The voice of the employee The difficulties that employees have faced over the past year while remote working cannot be understated. Therefore, before employees return to the workplace, employers must assess and understand employees’ needs, personal situations, welfare, and mental health. Where possible, businesses must understand such employee concerns while ensuring productivity is maintained. Tax Hybrid working is the future, and while employers can provide certain benefits to staff tax-free (e.g. specific office equipment, mobile phone etc.), these are limited. Employers must be conscious of published Revenue guidance on what expenses and benefits the employer can provide tax-free to remote working employees. If the employer inadvertently provides benefits not addressed in Revenue guidance, the benefit would be considered a taxable benefit, resulting in a payroll exposure for both the employer and employee. Employers should look for any potential new measures that may be announced in Budget 2022. Dera McLoughlin is Partner, Head of Consulting at Mazars.

Oct 08, 2021
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Central Register of Beneficial Ownership of Trusts (CRBOT)

Trustees should be aware of their obligations to register details of the beneficial ownership of their trust with the Central Register of Beneficial Ownership of Trusts (CRBOT) on or before the 23rd October. That deadline is fast approaching and trustees should be reviewing their internal registers and preparing to register if they have not already done so. The obligation to register with CRBOT was introduced under the 4th and 5th Anti-Money Laundering Directives which require each EU Member State to establish a Central Register of Beneficial Ownership of Trusts. Legislation was introduced on 23 April 2021 (Statutory Instrument 194 of 2021) to transpose those requirements into Irish law. The purpose of this legislation is to provide transparency both in Ireland and the EU around who ultimately owns and controls Irish trusts. This will help to identify and tackle circumstances where trusts are being used to fund criminal and terrorist organisations. The legislation also assigned the responsibility for CRBOT to the Office of the Revenue Commissioners. Trustees (or their agents, advisors or employees) can register for the CRBOT through the ‘Trust Register’ portal on Revenues Online Service (ROS). For individual trustees who do not have ROS access, the ‘Trust Register’ is available on MyAccount. Revenue.ie also contains a series of Frequently Asked Questions which should assist trusts and their agents, advisors or employees to determine whether they are obliged to register and how they can meet their obligations. Further information can be accessed at the link below - https://www.revenue.ie/en/crbot/index.aspx Any queries regarding the Central Register of Beneficial Ownership of Trusts (CRBOT) can be sent via MyEnquiries on ROS or MyAccount. For direct contact to the CRBOT team please ensure the relevant titles below are selected for both drop down menus: Select ‘Trust Register (Central Register of Beneficial Ownership of Trusts)’ from menu ‘Enquiry relates to’ Select ‘General Query’ from menu ‘More specifically’

Oct 08, 2021
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News
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What’s next on the climate agenda for business?

With Ireland putting its climate goals into law, businesses will find it tough to meet their targets. Although it will undoubtedly be a challenge, says Michael Hayes, there are ways Irish companies can act now – not only for themselves but for their stakeholders too. One of the key objectives of COP26 is to provide a forum to create a globally co-ordinated climate response, where all nations commit to ambitious emissions reductions plans (also known as Nationally Determined Contributions or NDCs). Achieving this globally co-ordinated response, including the creation of an internationally agreed carbon market (which COP25 failed to achieve), will be one of the key measures of the success of COP26. Ireland has joined a select few countries in enshrining its climate goals in law. The Climate Bill, ratified this summer, commits to a 51% reduction in emissions by 2030 relative to a baseline of 2018, with the Climate Action Plan and the first round of sectoral carbon budgets due in the final quarter of this year. Nonetheless, Ireland remains an outlier in pollution with the third-highest emissions per capita in the EU. Where carbon leakage is a concern, partnerships and collective action across governments, businesses, and civil society are essential. Why does climate matter to business? Too often, we think of far-off impacts of climate change such as wildfires in California or Australia – but Ireland is not immune to the climate crisis. The EPA’s recent Status of Ireland’s Climate study showed that the decade between 2006 and 2015 was the wettest on record, while 15 of the top 20 warmest years on record have occurred since 1990. Meanwhile, KPMG’s most recent CEO survey shows that in both the Republic of Ireland (40%) and Northern Ireland (44%), a noticeably higher percentage of respondents than the global average (27%) are concerned that not meeting climate change expectations will result in public market investors shying away from their organisation. Financial risk Businesses and listed corporates, in particular, are getting it from all sides in terms of ESG. Companies face a genuine and immediate financial risk if they don’t address ESG concerns. Investors may walk away, customers may not buy their products and services, consumer sentiment is changing rapidly, and employees want to work for companies with purpose. Companies that do not address the climate change and ESG agendas in a meaningful way will suffer. This has become even more serious in the aftermath of the IPCC report and its ‘Code Red for the Planet’ warning, and regulators and governments will force the agenda. Businesses that don’t appreciate the scale of new policies and regulations coming down the tracks run a real risk of being left out in the cold. Meanwhile, the most immediate pressure comes from investors who often manage other people’s money. Government stimulus required CEOs in Ireland and worldwide indicate that a multifaceted approach will be required to address climate change. Over three-quarters of leaders surveyed globally (77%) believe that government stimulus is needed to turbocharge their goals of reaching net-zero. This figure is even higher in the Republic of Ireland (80%) and Northern Ireland (82%). That so many CEOs say government stimulus and assistance will be required to help their organisations reach climate targets is interesting. There is a clear message there that most corporates believe they will not get to net-zero alone. No one should be under any illusions about how difficult it’s going to be.  What can business do? The same research showed that 84% of business leaders in the Republic of Ireland and 76% of their counterparts in Northern Ireland are focused on locking in the sustainability and climate change gains made during the pandemic. Companies with huge air miles before the pandemic simply stopped flying, with resulting cost savings and environmental gains. COVID-19 provided a unique test-bed for accelerating and testing new ways of working, and it’s hard to see how we could revert completely to where we were before. Furthermore, many organisations will be consciously working to ensure that they don’t slip back to old ways of working. Measure the gains Companies that wish to hold onto gains made during COVID-19 must know what they want to lock in. They need to set out clear KPIs and metrics for those gains. Many companies implemented good ad hoc climate initiatives during COVID-19, but the absence of a structured framework or programme means many of the gains are unlikely to persist. Creating frameworks and programmes now will help companies bed down those gains and build on them in the future. However, it should be noted that gains from climate action tend predominantly to be long-term in nature. Therefore, organisations should put governance structures in place to recognise such long-term gains. Michael Hayes is the Global Head of Renewables at KPMG.

Oct 01, 2021
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News
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Combatting virtual fatigue

After 18 long months of remote working, many people are feeling fatigued at the thought of attending yet another virtual meeting or event. Patrick Gallen gives us top tips on how to cope in these virtual settings. Do you find yourself avoiding, cancelling, or rescheduling virtual meetings, virtual coffee or virtual team events? When you do attend such virtual meetings or events, have you noticed that during the meeting you’re not present or focused, and afterwards you’re incredibly tense or tired? These are all potential signs that virtual fatigue has set in and you’re not alone. It is reported that 38% of workers say they’ve experienced virtual fatigue since the start of the pandemic, and anecdotal evidence would suggest that this trend is growing. Virtual fatigue is the feeling of exhaustion that often occurs after attending a series of virtual meetings or other virtual events such as webinars or training. Stanford researchers identify four causes for virtual or ‘zoom fatigue’ and found that not only is it more fatiguing seeing ourselves in real-time, but the cognitive load placed on our brains is much higher in virtual settings. But why does this happen more so than the typical in-office meetings we are used to? Our focus is diminished When we’re at home and in a video call, it’s easier to lose focus or get distracted. We tend to try to do things simultaneously, like answering emails or sending texts while attending a virtual meeting. The home environment also lends itself to other distractions, particularly if we do not have access to a private working space.  It is more difficult to ‘catch up’ In a face-to-face meeting, it is easier to ask clarifying questions, pick up on non-verbal cues, and help the meeting stay on track. In a virtual setting, if we miss something, have people speaking over each other or if there are technological challenges, it becomes more difficult to stay engaged. Looking at a camera is exhausting In a virtual setting that involves cameras, we feel obliged to appear engaged by looking into a camera for extended periods. This can lead to extensive scrutiny of our own performance and appearance which can have negative, long-term impacts on our self-esteem. Now that we know how to identify virtual fatigue it is important to consider how to reduce it with a few handy tips. Meeting structure Keep meetings short and try to limit the number of people present on calls. Where possible, avoid scheduling consecutive video meetings. Don’t forget the real world Take regular and structured breaks during the day from your workspace, and take time outside in fresh air and sunlight. Avoid multitasking Try to be ‘in the here and now’ when engaging in virtual activity. Avoid emails, texts, and external distractions where possible. Turn your camera off If it’s appropriate and you need a break, then turn your camera off – but don’t be tempted to use this as an opportunity to do other things. Instead, use it to really start listening to what people are saying and engage meaningfully Switch up your communication method Is a meeting really required? Would a phone call or email suffice? Think about the most effective communication method for your messaging and how you can get this across. Pay attention to how you’re feeling, and take these steps to prevent fatigue before it becomes a problem. Patrick Gallen is the Head of People and Change Consulting at Grant Thornton.

Sep 24, 2021
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News
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What you should know about gender pay gap reporting

To be prepared for this new legislation, eligible employers need to start analysing their data and planning accordingly. Aoife Newton tells us what needs to be done before 2022. Gender pay gap reporting legislation was recently signed into law in the Gender Pay Gap Information Act 2021 (the Act). However, when and how the information will need to be reported is as yet unknown. In this regard, the regulations to give effect to the Act are eagerly awaited. The Act amends the Employment Equality Act 1998 by requiring regulations to be made by the Minister for Children, Equality, Disability, Integration and Youth as soon as reasonably practicable after the commencement of the legislation. The regulations will place reporting and publication obligations on private and public sector employers regarding their gender pay gap. They will contain much of the detail on the practicalities of the legislation. Which employers are affected? The legislation will not apply to all employers. Only employers that satisfy certain employee thresholds will be in the scope of the legislation. Where an applicable employer reports that a gender pay gap exists, the employer will be required to explain why the gender pay gap exists and detail the measures being implemented by the employer to reduce or eliminate the gap. Both private and public employers will be affected by the mandatory reporting obligations, but they will initially only apply to employers with 250 or more employees for up to two years after the commencement of the regulations. The scope of the mandatory reporting obligations will widen further to include employers with 150 or more employees on or after the second anniversary of the regulations and those with 50 or more employees on or after the third anniversary. Employers with less than 50 employees will not be required to report on their gender pay gap. What is required? Applicable employers will be required to report on the difference in remuneration between male and female employees, as set out below: the difference between both the mean and median hourly pay of male and female employees; the difference between both the mean and median bonus pay of male and female employees; the difference between both the mean and median hourly pay of part-time male and female employees; and the percentage of male and female employees who received bonuses and benefits-in-kind. Employers will also be required to simultaneously publish the reasons for differences in pay in the context of the above and the measures being taken or proposed to eliminate or reduce such disparities. In addition to the mandatory reporting requirements, other requirements may be contained in the regulations once published, including: the class of employer, employee and pay to which the regulations apply; how the number of employees and remuneration is to be calculated; and the form, manner and frequency with which information is to be published. The information will not be required to be published more than once per year. Enforcement An aggrieved employee can make a complaint to the Workplace Relations Commission (WRC) if an employer is not reporting on its gender pay gap. On receipt of a complaint, the WRC will investigate the complaint’s merits and may order the employer to take a specified course of action to ensure compliance with its reporting obligations. However, the WRC does not have the jurisdiction to order the employer to pay compensation to an employee or impose a fine on an employer. The Act provides for the Irish Human Rights and Equality Commission (IHREC) to apply to the Circuit Court or High Court seeking an order forcing an employer to comply with its reporting obligations. Employers that do not comply with such a court order may be held in contempt of court. The Act also provides that the IHREC, on receipt of a request from the Minister, can carry out (or invite a particular undertaking, group of undertakings, or the undertakings making up a particular industry or sector to carry out) an equality review or create and action an equality action plan. What to do now Minister Roderic O’Gorman has confirmed his intention to have the regulations in force by the end of 2021. He has also indicated that employers may be required to submit their information through a central website. Given that the regulations will likely be in force by the end of 2021, the legislation will probably apply to applicable employers from some date in 2022. Employers can prepare by collating and analysing their remuneration data to assess the extent to which gender pay gaps exist. This will help plan how to remove or reduce any such gaps before they are publicly obliged to report, the reasons for them, and what they are going to do about them. Aoife Newton is the Head of the Corporate Immigration and Employment Law team at KPMG.

Aug 05, 2021
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Sustainability
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Sustainability: How Directors Can Make a Difference

It is clear why sustainability matters. Added to its obvious importance are the climate action plans rolled out by governments, the global sustainability initiatives lead by agencies such as the UN and NGOs like the World Economic Forum. There is also the increased emphasis on sustainability among deciders of capital allocation, including investors, financiers, grant providers and donors, and the rising environmental awareness in society, which expects higher standards of ethics and governance from institutions. If, as a director, you occasionally feel overwhelmed by the volume of information regarding sustainability, then you are not alone. If you wonder how sustainability is relevant to your role and what difference you can make, take assurance from Socrates that “wonder is the beginning of wisdom”. How Sustainability is Relevant to Your Organisation Whatever an organisation does, regardless of its size, sustainability will impact: its legal and regulatory requirements, how it provides a service or produces a product, whether it retains or attracts talent, whether it is attractive to customers, or whether it is perceived as a viable prospect for banks or investors. The fiduciary duties of directors require them to act in the best interests of the organisation and have regard to other stakeholders. Addressing sustainability issues and looking after the organisation’s business are clearly relevant to these duties. Sustainability may be the ultimate disrupter for businesses. Even if an organisation does nothing to address sustainability issues it will still be impacted by them. For example; What is the risk of a change in regulations challenging current business models? What is the risk of more sustainable technological advancements displacing current products, service offerings or production processes? To what extent can carbon tax increases be passed on to the consumer? What impact will phasing out of oil and gas have on residual values of assets or cost of replacement in the future? Standing still is not an option if an organisation wants to manage the impact of sustainability. Directors, acting as the mind and will of an organisation, have a key role to ensure it is appropriately identifying and responding to relevant sustainability risks. How You Can Make a Difference If you are a director or a member of a board sub-committee wanting to raise the issue of sustainability (even if this is not currently seen as a priority), consider the following approach: Get informed: Find out more about the type of sustainability issues that impact your industry. Sustainability will affect regulatory requirements, consumer demand, availability of resources and all the necessary components of the ability to do business. You do not have to become an expert on sustainability, but a little knowledge or awareness can prompt the right questions. Find Allies: Engage with other board members. Discuss how sustainability impacts the business and how the board might address the issues. You may find that you have more support than you expect. Be Honest: It is important to be pragmatic and constructive as to the reasons why the organisation should address sustainability and how it does so. There may be some immediate measures the organisation can take (‘quick wins’), but more substantive measures may be required to be taken to achieve lasting long-term benefits. Collaborate: Lasting change cannot be achieved alone. If your organisation is not clear on what to do or what direction to take in relation to sustainability, consider collaborating with other organisations on similar journeys. Be curious: Ask questions about sustainability, explore alternatives and respectfully challenge traditional assumptions. Invite others to discuss the issues and embed sustainability objectives in the organisation’s strategy. Questions beginning with ‘What if?’, ‘How?’ or ‘Could we?’ will spark curiosity and give rise to more possibilities and sustainable solutions. Sustainability cannot be achieved alone.  Strategy and know-how shared among organisations and individuals will inform, create awareness and provide confidence for the journey ahead. Directors must be confident to ask advice and seek help from others. If we agree that we all have a stake in sustainability, then we all have a stake in finding solutions to the key risks of our time.     Niall Fitzgerald Head of Corporate Governance & Ethics at Chartered Accountants Ireland 

Apr 09, 2021
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Tax
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The race for global tax reform

With international tax reform progressing at unprecedented speed, Susan Kilty explains why Irish businesses must continue to participate actively in the discussion. With all the global uncertainty that Ireland is facing due to COVID-19 and Brexit, there is a risk that the OECD global tax reforms – the other major threat to Irish business and the economy – will be pushed further down the corporate agenda. But to do so would be very risky. Ireland must engage with this process now, at both the political and corporate level. The world of international tax is in a state of extreme flux as governments grapple with changes in the way multinationals do business. It is worth reiterating that Ireland has attracted healthy levels of foreign direct investment (FDI) over the past 30 years, and the multinational community has contributed significantly to our economic success. According to the OECD, Ireland received more foreign direct investment in the first half of this year than any other country. Along with Ireland’s near-iconic 12.5% tax rate, a crucial element in our continuing ability to attract international investment is the stability and transparency of the corporate tax regime here. Investors from abroad who establish activities in Ireland tend to be quite sensitive to changes in the taxation system. They like certainty and stability in a tax code, which is why Ireland presents such an attractive proposition. Ireland cannot afford to lose FDI as a result of turbulence in the global tax landscape at this time. As corporation tax accounts for almost 18% of Ireland’s total tax take, any change to the regime threatens to seriously undermine the attractiveness of our FDI model and negatively impact our revenue-raising ability. The crux of the matter is that we, and many other countries, apply 20th century tax systems to 21st century e-commerce business models. Businesses have an increasingly digital presence, and many no longer trade out of brick and mortar locations. This is not limited to so-called technology companies, but can be seen across industries and in businesses of all sizes. Businesses sell freely across borders without ever needing to set up operations abroad. This new digital way of trading is not always captured in our analogue tax rules, and the rules must be realigned with the reality of modern e-commerce. However, to tax a multinational business, you need a multinational set of rules. This is where the OECD comes in, but the uncertain shape that the new rules might take brings more uncertainty for businesses at a time when it is least needed. Many clients cite the changing international tax environment as one of the top threats to potential revenue growth. And although countries now face enormous bills for COVID-19, one sure thing is that BEPS, OECD and tax reform will not go away. International corporate tax reform is happening, and it will impact many businesses and our economy. Companies need to stay on top of these changes and prioritise the issues that will affect them. OECD proposals The OECD proposals offer a two-pillar solution: one pillar to re-allocate taxing rights and ensure that profits are recorded where sales take place, and a second pillar to ensure that a minimum tax rate is paid. At the time of writing, a public consultation is open for stakeholders to share their views with the OECD on the proposals that were recently summarised by way of two “blueprint” documents, one for each pillar. Pillar One seeks to give market jurisdictions increased taxing rights (and, therefore, increased taxable income and revenues). It aims to attribute a portion of the profits of certain multinational groups to the jurisdictions in which their customers are based. It does this by introducing a new formulaic allocation mechanism for profits while ensuring that limited risk distributors take a fair share of profits. Several questions remain as to how the Pillar One proposals, which constitute a significant change from the current rules, will be applied. Pillar Two, on the other hand, seeks to impose a floor for minimum tax rates across the globe. This proposal is very complicated. It is much more than a case of setting a minimum rate of tax. It is made up partially of a system that requires shareholders of companies that pay low or no tax to “tax back” the profits to ensure that they are subject to a minimum rate. At the same time, rules will apply to ensure that payments made to related parties in low-tax-paying or no-tax-paying countries are subject to a withholding tax. Finally, it can alter the application of double tax treaty relief for companies in low-tax-paying or no-tax-paying countries. Agreeing on the application and implementation of this pillar will be incredibly difficult from a global consensus point of view. Several supposed “safety nets” in Pillar Two are also likely to be of limited application. For example, assuming that the minimum tax rate is set at 12.5%, this does not mean that businesses subject to tax in Ireland will escape further tax. Similarly, assuming that the US GILTI (global intangible low-taxed income) rules are grandfathered in the OECD’s proposal, this does not mean that the US GILTI tax applies as a tax-in-kind tax for Pillar Two purposes. Pillar Two poses a significant threat to Ireland, as it reduces the competitiveness of our 12.5% rate to attract FDI and, coupled with the Pillar One profit re-allocations, could reduce our corporate tax take. The OECD estimates that once one or both of the pillars are introduced, companies will pay more tax overall at a global level, but where this tax falls is up for negotiation – and this is why early engagement by all stakeholders is critical. While the new proposals will undoubtedly have an impact, it is not certain that Ireland’s corporation tax receipts will fall off a cliff. Ireland has already gained significantly in terms of investment from the first phase of OECD tax reform, and this has helped to drive a significant increase in corporate tax revenue. But the risks must nevertheless be addressed. There is, of course, the risk that the redistribution of tax under the rules directly under Pillar One and indirectly via Pillar Two will impact our corporate tax take. But even if the rules have no impact on a company’s tax bill, they could still impose a considerable burden from an administrative perspective, and the complexity of the rules cannot be overestimated. At a time when businesses are grappling with other tax changes, led by the EU and domestic policy changes, this would be a substantial additional burden on the business community. The OECD is progressing the rules at unprecedented speed in terms of international tax reform. The momentum behind the process comes from a political desire for a fair tax system that works for modern business. However, does this rapidity risk the international political process marching ahead of the technical tax work? This is where Ireland, both government and corporate, needs to play a vital role. While the consultation period on both pillars is open, the focus for stakeholders should be on consulting with the OECD on the technical elements of its plan. Considering the OECD’s stated objective to have a political consensus by mid-2021, this could be one of the last opportunities for stakeholders to have a say in writing the rules. The interplay between the OECD and the US Treasury cannot be ignored when considering the OECD’s ability to get the proposals over the line. The US Treasury decided to step away from the consultation process with the OECD for a period in mid-2020. This, of course, raised questions around whether the OECD proposals could generate a solution that countries would be willing to implement. Added to this, the OECD has always positioned Pillar One and Pillar Two as an overall package of measures and has stressed that one pillar would not be able to move forward without the other. The “nothing is decided until everything is decided” basis of moving forward is a risky move, but the OECD recently rowed back on this stance. If the OECD fails to reach a political consensus by 2021, we could very well see the EU act ‘en bloc’ to introduce a tax on companies with “digital” activities. This could result in differing rules within, and outside of, the EU. It would also increase global trade tensions, all of which would not be good for our competitiveness. As a small open economy, Ireland will always be susceptible to any barriers to global trade. A multilateral deal brokered by the OECD therefore remains the best option – the last thing we want to see is the EU accelerating its own tax reform or, worse still, countries taking unilateral action. For the Irish Government, providing certainty where possible about the future direction of tax is critical. Where we have a lead is in how we provide that stability and guidance where we can. The upcoming Corporate Tax Roadmap from the Department of Finance will be an opportunity to give assurances in these uncertain times. Next steps for business The public consultation will be critical for businesses to have their say in shaping the rules. Ireland Inc. must continue to engage constructively with the OECD to try to shape the outcome so that we maintain a corporate tax system that is fit for purpose, is at the forefront of global standards, and works for businesses located here. Doing so would ensure that we articulate the position of small open economies like our own. Each impacted business must take the opportunity to comment on the proposals, as this may be the last chance to have a say. Indeed, what comes out of the consultation period may be the architecture of the rules for the future. We know that difficult decisions must be made at home and abroad in terms of the new tax landscape, and made with additional pressures we could not have foreseen 12 months ago. Although it may seem that much is out of our control, Irish businesses must continue to participate actively in the discussions and ensure that their concerns are heard. The game may be in the final quarter, but the ball is in our hands. Susan Kilty is a Partner at PwC Ireland and leads the firm’s tax practice. Point of view: Fergal O'Brien Since the start of the BEPS process in 2013, Irish business has recognised the importance of the work to our business model and the country’s future prosperity. At its core, BEPS has seen a further alignment of business substance and tax structures at a global level. This has resulted in an often under-appreciated surge in business investment, quality job creation and, ultimately, higher tax revenue for the Irish State. With its strong history as a successful location for foreign direct investment, and substance in world-class manufacturing and international services, Ireland was well-placed to benefit from the new global order. The boom in business investment, which last year reached over €3 billion every week, and increase in the corporate tax yield from €4 billion in 2013 to €11 billion in 2019, are evidence of the further embedding of business substance in the Irish economy. The current round of BEPS negotiations will have further significant implications for the Irish economy, and particularly for the rapidly growing digital economy. Ibec is working directly with the OECD to ensure that any further changes to corporation tax recognise the central role of business substance and locations of real value creation. Fergal O’Brien is Director of Policy and Public Affairs at Ibec.  Point of view: Norah Collender The OECD’s proposals to address the challenges of the digitalised economy will have a disproportionate negative impact on small, open exporter economies like Ireland. Earlier consultation papers issued by the OECD on taxing the digitalised economy suggested that smaller economies could benefit from international tax reform emanating from the OECD. However, the OECD now openly admits that bigger countries stand to benefit from its proposals more than smaller countries, and the carrot has turned into the stick in terms of what will happen if smaller countries do not support the OECD. Ireland is acutely aware of the dangers ahead if countries take unilateral action to achieve their vision of international tax reform. But that does not mean that countries like Ireland should be rushed into accepting international tax rules that fundamentally hamstring Irish taxing rights. Genuine consensus must be reached to ensure that international tax reform is sustainable in the long-term. Likewise, the new tax rules must be manageable from the multinational’s perspective and from the perspective of the tax authority tasked with administrating the rules. A rushed outcome to the important work of the OECD will make for tax laws that participating countries, tax authorities, and the all-important taxpayer may not be able to withstand in the long-term. Norah Collender is Professional Tax Leader at Chartered Accountants Ireland. Point of view: Seamus Coffey How Pillar One and Pillar Two of the OECD BEPS Project will ultimately impact Ireland is uncertain. One sure thing, however, is that there will be changes to tax payments. This will be a combination of a change in the location of where taxes are paid and perhaps also an increase in tax payments in some instances. But there will likely be both winners and losers. From an Irish perspective, there might have been some comfort in that the loser could have been the residual claimant – the country at the end of the chain that gets to claim taxing rights on the profits left after other countries have made their claim. As US companies are the largest source of Irish corporation tax revenue, it might have been felt that most of the losses would fall on the US. However, significant amounts of intellectual property have been on-shored here. Ireland, therefore, has become a residual claimant for the taxing rights to some of the profits of these companies. At present, Ireland is not collecting significant taxes from these profits as capital allowances are claimed. If BEPS results in a significant reallocation of these profits, we might never collect much tax on them. Seamus Coffey is a lecturer in the Department of Economics in University College Cork and former Chair of the Irish Fiscal Advisory Council.

Dec 01, 2020
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