In this week’s Sustainability/ESG bulletin, read about Chartered Accountants Ireland’s coverage of COP28. Also covered are CSO figures on environmental subsidies, sustainability in ISME’s ‘Shop Local’ campaign, Ireland’s progress towards EU recycling targets, a Net Zero Accelerator Program announced for Northern Ireland, and a consultation on the UK Climate Change Agreements scheme. Also covered are sustainability developments in Europe, a new report into the role of the CFO and finance function in the climate transition, and the usual articles, podcasts, videos and upcoming events.   COP28 - the global climate summit   The United Nations’ annual climate change conference, COP28, began on Thursday 30 November in Dubai. Chartered Accountants Ireland has compiled useful resources about it on our COP28 page. We will publish a daily update and weekly round-up from the global summit.  White Paper on Enterprise Update Report: H1 2023  The Department of Enterprise, Trade and Employment has issued the first update report for the White Paper on Enterprise detailing progress made on the implementation of the White Paper during the first six months of 2023. This White Paper was published in December 2022, and set out Ireland’s medium- to long-term industrial strategy, with the vision for Irish-based enterprise to succeed and deliver rewarding jobs and livelihoods by increasing their sustainability, innovation, and productivity. Among other things, carbon abatement has now been integrated into the Oversight and Performance Delivery Agreements of Enterprise Ireland and IDA Ireland; work is underway on the development of a national strategy for offshore wind, with stakeholder groups established and a broad outline agreed; and efforts towards a more circular economy have progressed, including through the launch of the Food Waste Charter 2.0 under the EPA.  Environmental Subsidies and Similar Transfers 2022 – CSO   Figures published by the Central Statistics Office (CSO) in Ireland indicate that Environmental Subsidies and Similar Transfers figures for 2022 were €1.6 billion, an increase of €105 million, or 7 percent, when compared with 2021. Climate-related subsidies reached their highest value in current prices since 2000 at €396 million in 2022, up 6 percent on 2021. The increase in environmental subsidies in 2022 was mainly due to increases in funding for energy efficiency retrofitting schemes and wastewater infrastructure, which outweighed decreases in support for production of energy from renewable sources and protection of biodiversity. Commenting, Clare O'Hara, Statistician in the CSO’s Environment and Climate Division, said that capital transfers such as investment grants made up 56 percent of environmental transfers paid in 2022, while current transfers were 43 percent of the total and tax abatements, such as Vehicle Registration Tax relief on electric vehicles, accounted for the remainder.   Sustainability and ISME’s ‘Shop Local’ Campaign    The Irish SME association, ISME, has created two online portals to launch its 2023 Shop Local campaign, one for consumers and one for businesses. The campaign aims to, among other things, support the local community, reduce carbon emissions and transport costs, and promote goods and services that are sustainable and traceable. Businesses can access a directory of B2B products and services via the portal, such as corporate gifts, legal and financial services, IT and marketing, transport, training and more.  Report finds Ireland off track to meet key EU recycling targets  A report published this week by the Environmental Protection Agency (EPA) has found that Ireland’s waste generation levels are continuing to rise. Figures in the Circular Economy and Waste Statistics Highlights Report 2021 also indicate that Ireland is failing to make sufficient inroads towards key EU recycling targets that apply from 2025 onwards. To address this, the report state that Ireland must improve waste prevention, roll-out a brown bin service for organic waste to all customers, improve waste segregation by businesses and householders, reduce reliance on vulnerable export markets for waste, and fully implement Ireland’s Circular Economy Plan.   Net Zero Accelerator Programme announced for Northern Ireland   Northern Ireland’s Department of Agriculture, Environment and Rural Affairs (DAERA) has announced it will partner with Digital Catapult Northern Ireland to support the launch of their Tenfold NetZero Accelerator Programme. The programme aims to help in the delivery of greenhouse gas (GHG) emissions reductions locally as required under the Climate Change (Northern Ireland) 2022 Act, and so contribute to the UK Government’s target of zero carbon emissions by 2050. The programme, the first of its kind in the UK, will offer local business the opportunity to access the UK’s technology community to assist on their journey, and is a one-year pilot open to business in all sectors for which DAERA has policy responsibilities. Digital Catapult is now seeking to recruit up to six industry partners with whom they will work to scope and define a specific business challenge they face in reducing GHG emissions.   Support measures for Northern Ireland businesses impacted by floods  Several support measures have been announced to help businesses in Northern Ireland impacted by recent flooding. The support measures include rates relief for flooded business premises and one-off grant payments of £7,500 for affected businesses to assist with the immediate response, clean-up costs, and to make properties more resilient to future floods. It is estimated that up to 200 businesses will be eligible for the grants, which will be administered by the local council areas affected.  £60 million joint funding for research into food sustainability and climate change  £60 million in joint funding for the Co-Centres programme has been announced this week to bring academics, industry and policymakers across the Irish government, UK government and Northern Ireland Executive closer together, to work on food sustainability and tackling climate change. The programme is funded over six years, with up to €40 million from Science Foundation Ireland (SFI), up to £17 million from Northern Ireland’s Department of Agriculture, Environment and Rural Affairs (DAERA) and up to £12 million through UK Research and Innovation (UKRI), and is co-funded by industry. The two new Co-Centres will formally commence activities on 1 January 2024, and will be funded to 2030.  UK launches consultation on new Climate Change Agreements scheme  The UK’s Department for Energy Security and Net Zero (DESNZ) has launched a consultation seeking views on proposals for a new six-year Climate Change Agreements scheme, to begin in 2025. The voluntary Climate Change Agreement (CCA) scheme, established in 2001, serves the dual purpose of making energy and carbon savings through energy efficiency targets while also helping maintain competitiveness by reducing energy costs in eligible industrial sectors. It does this by providing a significant discount to participating businesses on the Climate Change Levy (CCL) paid. The new scheme would add three new target periods running from 2025 to 2030, resulting in three certification periods running to 31 March 2033, as well as providing further reductions in the Climate Change Levy for eligible participants. Closing date for responses to the consultation is Wednesday 14 February 2024.   Sustainability Development in Europe   The European Commission has announced an Action Plan to make sure electricity grids will operate more efficiently and will be rolled out further and faster. Electricity consumption in the EU is expected to increase by around 60 percent between now and 2030, and interconnected and stable energy networks are key to enabling the green transition. The Action Plan aims to address the main challenges in expanding, digitalising and better using EU electricity transmission and distribution grids.   Separately, the EU and Greenland have also signed a strategic partnership on sustainable raw materials value chains. 25 of the 34 critical raw materials identified by the Commission as strategically important for Europe's industry and the green transition can be found in Greenland. The signature of the Memorandum of Understanding will contribute to the development of sustainable projects along the raw materials value chains, and to the deployment of infrastructure required to develop them.  The role of the CFO and finance function in the climate transition  Businesses are integral to the successful transition to a low carbon economy and society. However, a report published this week has found that nearly half of businesses surveyed have no carbon emissions plan, and of those, 70 percent have no intention of developing one. The report, The role of the CFO and finance function in the climate transition: driving value and sustainability, is the result of research by Association of Chartered Accountants (ACCA), the International Federation of Accountants (IFAC) and PwC and is based on a survey of 1,000 senior finance professionals around the world. Speaking about the report, IFAC’s President Asmaa Resmouk said: “The expertise of accounting and finance professionals in combatting climate change is absolutely essential if we are to make the progress the planet so desperately needs. This report corroborates IFAC’s prior research into corporate disclosures on emissions targets and transition plans for achieving them. Companies need to improve the decision-usefulness of their transition plans and how they communicate them to stakeholders.”   In case you missed it   At Climate Finance Week Ireland 2023 Chartered Accountants Ireland’s event ‘You’re in Scope because They’re in Scope’ demonstrated the impact of the Corporate Sustainability Reporting Directive (CSRD) on value chains in Ireland, regardless of whether companies – such as SMEs – are directly in scope of the new Directive. Watch back here  Articles  Ageism in the workplace is proving costly for business (Irish Times)  Global tangle of climate disclosure rules risks causing ‘reporting fatigue’ (Financial Times)  Ireland ranked 12th most attractive market for green investors (Irish Times)  Accountants must redouble net zero efforts, A4S warns (ICAEW)  Climate risk analysis must be part of the audit process (Accountancy Age)  We have to balance outrage with optimism, says UN’s former climate chief (The Guardian)  Resources  5 reasons why sustainability matters for SMEs: The sustainable transition is a collective effort and a matter for society as a whole. SMEs, as the backbone of Europe’s economy, also have a key role to play. The transition poses challenges, but also offers opportunities. This paper details 5 reasons for why SMEs should not wait to start transitioning to more sustainable business models. Written in collaboration with Ecopreneur.eu – the European Sustainable Business Federation, and supported by the European Association of Co-operative Banks (EACB).  Watch   Climate correspondent George Lee’s summary of progress at COP28 for RTÉ1 (RTÉ Player)   Listen   An inspirating and energising interview with climate diplomat Christiana Figueres (On Being)  Upcoming Events   Accounting for Sustainability (A4S) at COP28  A4S, which aims to inspire action by finance leaders to drive a fundamental shift towards resilient business models and a sustainable economy, will bring the voice of the finance and accounting community to COP28 through a series of in-person and virtual events. Their first event is on 5 December. Find out more here.  Innovate UK's showcase for climate tech event in Northern Ireland  Innovate UK is delivering a series of 18 'showcase for climate tech' events across the UK until September 2025. Each event focuses on a specific net zero theme or technology area. The Northern Ireland event, run in partnership with Business in the Community NI, will take place in Belfast on 6 December 2023 and will focus on digital solutions for net zero.  In person: 6 December, Various Locations (See event listings)  DETE, Building Better Businesses   During 2023, the Department of Enterprise, Trade and Employment (DETE) has run a series of free Building Better Business events across the country to help businesses navigate the green journey and boost business performance through digital transformation.   In person: 7 December, The Convention Centre Dublin, 8.30am – 1.30pm.   Chartered Accountants Ireland CPD Blitz 2023- Dublin: Face to Face  Chartered Accountants Ireland’s 2023 CPD Blitz series offers 10 CPD hours each and provides the latest updates in Financial Reporting, Sustainability Reporting, Taxation, and UK Company Law. The Sustainability Reporting Update will be given by Catherine Duggan, Head of Sustainability, Financial Services Advisory, Grant Thornton and Dr Louise Gorman, Trinity College Dublin. Get up to date with the latest developments in sustainability reporting, including reporting standards internationally, and insights into developing and implementing necessary reporting systems. Emerging assurance considerations will also be considered along with the future evolution of the sustainability reporting landscape.  In person: 7 December, 9:30-1:30pm, Chartered Accountant House, Dublin.  Chartered Accountants Ireland CPD Blitz 2023- Dublin: Face to Face  Chartered Accountants Ireland’s 2023 CPD Blitz series offers 10 CPD hours each and provides the latest updates in Financial Reporting, Sustainability Reporting, Taxation, and UK Company Law. Sustainability Reporting Update will be given by Dr Louise Gorman, Trinity College Dublin.  In person: 7 December, 9:30-1:30pm, Chartered Accountant House, Dublin.  Accountancy Europe, ESRS Webinar   Co-hosted by Accountancy Europe and EFRAG, this event aims to assist stakeholders in the implementation of ESRS under CSRD.  Webinar: 12 December, 10:00 - 12:00 (Brussels time)  Network for Chartered Accountants working on ESG projects  Are you a Chartered Accountant working in ESG or working on ESG-related projects? Would you like an opportunity to engage with other Chartered Accountants working in this space to share insights, challenges and opportunities?  Chartered Accountants Ireland now has a network to allow members working in sustainability/ESG to meet and discuss all matters of interest re ESG and accounting.  3rd or 4th Wednesday of every month  Next: 24 January 2023   In person: Time and location tbc  If you would like to attend please email sustainability@charteredaccountants.ie  You can find information, guidance and supports to understand sustainability and meet the challenges it presents in our online Sustainability Centre. 

97% of parents surveyed by Chartered Accountants Ireland report that their career or working pattern has been impacted by childcare responsibilities. The findings show that 16% reduced their working hours, one quarter (27%) requested to work flexible hours, and one in five (19%) are currently considering adjusting their working hours. The survey, which gathered responses from chartered accountants in the Republic of Ireland has shed light on the significant challenges facing parents seeking childcare in Ireland. It highlights the crucial issues of cost barriers and their impact on career progression, while calling for increased childcare support. Chartered Accountants Ireland represents over 32,000 professional accountants, two thirds of whom work in business. When asked what they saw as the main barriers to securing appropriate childcare in Ireland, members highlighted both cost and capacity as being the biggest issues facing working parents. The financial burden is clear, with one third of members paying up to €1,000 a month per child on childcare, and one third paying between €1,000 and €2,000 per month. Commenting Cróna Clohisey, Tax & Public Policy Lead, Chartered Accountants Ireland said “The significant cost burden is one element of the problem, but even accessing places in childcare facilities in the first instance is a big barrier. As most of us know, this process begins long before a child is even born. Members are clear that both cost and the lack of available spaces need to be addressed by Government in order to better support working parents.”  This month’s Budget announcement provided for an increase in the national childcare subsidy (NCS) from €1.40 to €2.14 as well as extending the NCS to certain childminders, but the Institute argues that while this will help with the cost of childcare, it will not address capacity constraints within the market. Clohisey continued “A longer-term strategy for tackling ongoing capacity issues in the sector is critical – quite simply more places need to be made available but that can only happen with appropriate funding so that staff are adequately paid and therefore attracted and retained. We have an economy at full employment, and our members are overwhelmingly reporting childcare as a barrier to their full participation in the market. “While a government commitment was made to address supply issues through core funding, this funding must go beyond just keeping the sector from collapse. We are asking government to recognise that childcare provision is part of the critical infrastructure necessary for a functioning economy. The crisis needs to be addressed with a long-term strategy with children at the forefront, that adequately funds the sector, increases capacity, and supports working parents.”  

In this week’s Public Policy Bulletin, read about recently announced Government initiatives to support remote working in Ireland, a BearingPoint study which analyses 123 European banks and the recently released annual report on public debt in Ireland. We also cover Minister McConalogue and Northern Ireland’s Minister Lyons’ trip to Expo 2020 Dubai and a statement from Minister Lyons on the independent review of Invest Northern Ireland  Initiatives to support remote working announced by Minister Humphrey   This week, the Minister for Rural and Community Development, Heather Humphreys, announced a series of major initiatives to support Remote Working. Through the Connected Hubs 2022 Call, the Department of Rural and Community Development will provide €5 million to add additional capacity to the existing remote working infrastructure in Ireland by upgrading existing hubs and Broadband Connection Points (BCPs). €8.9 million has already been provided for 118 remote working projects across the country in 2021.  In May 2021, the National Connected Hubs network was launched with 60 hubs onboarded onto the connectedhubs.ie platform. There are now in excess of 200 hubs live on the connectedhubs.ie platform, with an aim to hit 400 hubs by 2025. The Connected Hubs mobile app has been launched to allow users to find their nearest hub facility and easily book a desk space using their mobile device.   Read the press release here.  Pandemic impact on European and Irish Banks   A BearingPoint study has found that Irish banks were hit harder than many of its European peers during the Covid-19 pandemic. The study looked at 123 European banks from 2013 to 2020 and found that Irish banks set aside significantly more capital for the impairment of loans during the pandemic (an increase of 1300 percent), when compared to their European counterparts (an increase of less than 120 percent).  In 2020, Bank of Ireland and AIB had impairment charges of €1.1 billion and €1.4 billion respectively due to Covid-19 concerns. Irish banks had a negative return of 6.3 percent in 2020, compared to a European average return on equity of 2%. 2020 cost income ratios for Irish banks averaged at 68.7 percent, higher than the European banks average of 64 percent and the optimum cost income ratio, which should be less than 55 percent.   Noel Crowley, the Financial Services Director at BearingPoint, shares his response to the report here.   Annual Report on Public Debt in Ireland 2021   The Minister for Finance, Paschal Donohoe released the fifth annual report on public debt this week. The report found that public debt increased by €33 billion during the two years of the Covid-19 pandemic, now approaching a quarter of a trillion euros. This is an estimated 106 percent of national income or €47,250 for every person in the country. These figures stood at 95 percent and €41,450 in 2019.  Minister Donohoe highlighted the major fiscal challenges that lie ahead, including a likely fall in corporation tax receipts, an aging population and the large fiscal costs that will be required to finance the journey to “net neutral”. In a press release issued by the Department of Finance, Minister Donohoe concludes “This is why we need to rebuild our fiscal buffers, including by steering the public finances to a more balanced path. We can do this while continuing to make significant capital investment, as outlined in the National Development Plan. This will help to lay the foundations for future growth while protecting against the future fiscal challenges that lay ahead of us.”   Read the full report from the Department of Finance here.     Dubai’s Expo 2020  Minister for Agriculture, Food and Marine, Charlie McConalogue opened a Board Bia celebration of Irish food at the Irish pavilion at Dubai’s Expo 2020, with the current year theme “Island of Inspiration” highlighted when he remarked “that spirit of inspiration and creativity reflected in the Irish food producers, large and small, who are innovating and finding routes to premium markets in the Gulf region”.  Northern Ireland’s Economy Minister Gordon Lyons also attended the event during his two-day visit program to the UAE. Speaking from the UK Pavilion at the Expo, under the UK’s theme of “Innovating for a shared future”, Lyons said “Today, Northern Ireland is centre stage at the world’s largest live international event. We are here to bring a flavour of Northern Ireland to the world and showcase our innovations within business, tourism, food and education to a global audience."  Invest Northern Ireland independent review  Northern Ireland’s Economy Minister Gordon Lyons made a statement to the NI Assembly this week in relation to his decision to commission an independent review of Invest Northern Ireland (Invest NI). He pointed out the fantastic track record Invest NI has in making Northern Ireland the most attractive location in the UK, outside of London, in respect of foreign direct investment.   The statement from Lyons can be read here.   Dame Rotha Johnston DBE and Ms Maureen O’Reilly have been appointed as panel members to work with the panel chair, Sir Michael Lyons for this independent review. The report of their findings is expected in September 2022.   Invest NI’s offers of financial assistance to companies beyond March 2020 is currently on pause, as they await clarification on their potential 2022/2023 Budget sign allocation from its parent Department for the Economy 

Oireachtas Committee responds to the final report published by the Commission on Pensions In its response to the Report of the Commission on Pensions, the Oireachtas Joint Committee on Social Protection, Community and Rural Development and the Islands has recommended that Ireland’s State Pension age remain at 66 years. This rejects the proposal put forward by the Commission on Pensions last year that the qualifying age is increased from the current 66 years by three months every year from 2028, reaching 67 in 2031.  To fund this, the Committee recommends that the Commission on Welfare and Taxation examine potential changes to Employers’ PRSI contribution rates.  Among the 13 proposals put forward, the Committee also recommends banning the mandatory retirement age for both new and existing employment contracts. Chartered Accountants Ireland issued a statement following the response this week, welcoming the recommendation to leave the state pension age unchanged at 66 years, while recognising that the shortfall in funding the State Pension long-term needs to be addressed. The Institute said that asking employers to pay increased rates of PRSI cannot be a long-term solution and the fact that employers are already paying high salaries to compensate workers for high personal tax rates must be recognised. The Committee also recommended that funding auto-enrolment should not be prioritised over retaining the current State Pension age. Chartered Accountants Ireland however believes that reforms to enhance the sustainability of the State Pension cannot take place without parallel reforms to increase private pension coverage in Ireland to enable workers to avoid living their retirement in poverty.    Calls for coherent Government policy were also made to enable workers to adequately plan for their retirement. Bank of Ireland’s recent economic pulse survey indicates pay rises this year    According to the most recent Bank of Ireland economic pulse survey, 50 percent of firms are pricing in pay rises this year. 56 percent of people surveyed indicated that it is now easier to find or move jobs, with a third of firms reporting a struggle to fill open positions. 46 percent of those surveyed expect to see a 3 percent average increase in wages in the next year. According to Bank of Ireland’s chief economist Loretta O’Sullivan, “As businesses look to retain and attract staff, and workers find it easier to get or change jobs, upward pressure on pay is likely” with a shortage of workers helping to drive the pay increases. The survey also indicated that 77 percent expect houses prices to rise in the next 12 months, with 70 percent also expecting a rise in rent. The Economic Pulse is based on a series of monthly surveys of households and firms where they are asked for their views on a wide range of topics including the economy, hiring activities, business plans, personal spending and financial situations among others. Tánaiste intends to strengthen remote working laws   We highlighted the draft Bill to give employees the right to request remote working published by Tánaiste Leo Varadkar. The proposed legislation will set out a legal framework to apply for remote working, the reasons the request could be refused and outlines the process for appeals. The Tánaiste discussed the draft Bill with the Select Committee on Enterprise, Trade and Employment this week, indicating his plans to strengthen the legislation and his intention that “employers cannot just tick a box to say no”. The Tánaiste also reiterated that the Bill is in draft form and that “there can’t be an absolute right to remote working”. Chartered Accountants Ireland has written a letter to the Tánaiste to request clear and comprehensive guidance, including practical examples, to assist our members to implement the legislation when it becomes law. Read the Draft Scheme of the Right to Request Remote Working Bill 2022. Enhanced Illness Benefit (EIB) extended The Minister for Social Protection, Heather Humphreys TD, has secured Government approval to extend the EIB payments until the end of June 2022. Almost €230 million has been paid in EIB to date, supporting over 374,000 people. The €350 weekly payment is available to people diagnosed with Covid-19 or told to self-isolate. This is available to employees or self-employed people. For more information, and to apply, go to MyWelfare.ie. Northern Ireland Business Demography Statistics 2020 released Northern Ireland Statistics and Research Agency (NISRA) recently released the latest business demography results for Northern Ireland which looks at births, deaths and survival rates of Northern Ireland businesses by Industry and District Council Area. 6,375 businesses were born in 2020, a decrease of 3.8 percent on the previous year. 4,900 businesses closed during the year, a decrease of 9 percent from 2019. The number of businesses births was greater than the number of business deaths for all district council areas across Northern Ireland.   Retail saw an introduction of 780 businesses in 2020, a 47 percent increase on 2019 and the highest number of births for the sector since the series by industry began in 2009. Importance of Traineeships as part of economic recovery in Northern Ireland This week, Northern Ireland’s Economy Minister Gordon Lyons highlighted the importance of traineeships to enable economic recovery in the region stating that “developing the local skills base is a key priority for me and a cornerstone of the recovery”. As part of the Department for the Economy’s 10X Economic Vision, the goal is “to equip people with the skills they need for the constantly evolving jobs market and build on Northern Ireland’s successes on the global stage”. The £180 million NI Traineeship program, launched in September 2021 as part of the economic recovery package, intends to fund 20,000 Traineeship places over the next seven years.

To look forward and create a better business environment to restore employment and the economies on the island of Ireland, Chartered Accountants Ireland have published a landmark position paper called “The Next Financial Year: Making Irish Business More Competitive”. It draws on problems encountered by members and member firms in handling the Covid-19 crisis to propose how this can be achieved. From members working at the coalface of both economies, we know that businesses, particularly SMEs, are fighting hard to survive.  For the next financial year, we propose how government can help by simplifying processes and removing red tape, and by going fully digital.  We also call for a range of targeted tax measures and supports for businesses in Ireland and Northern Ireland, as well as emphasising the importance of excellent corporate governance and professional ethics. “The Next Financial Year: Making Irish Business More Competitive”, a position paper with alternative approaches and proposals informed by extensive engagement with members, for a better business environment post-pandemic be read or downloaded from our website.

  On June 23 IFAC responded to the European Commission’s review of the Non-Financial Reporting Directive (NFRD). In this review IFAC urged the Commission to adopt a global mindset by engaging input from a broad range of international stakeholders in determining the best way forward.  Steps taken must “fit within” a global system and avoid regional regulatory fragmentation.  Non-financial reporting answers the call from investors and other providers of capital for better, broader information about company performance and prospects for value creation, while also helping identify opportunities to support sustainable—and less carbon-reliant—business models. In the post-COVID world, corporate reporting that reflects the needs of a broad range of stakeholders will be particularly important to communicate on an organization’s performance and priorities.     As a Network Partner of the B20, IFAC calls on global bodies—including the G20—to encourage policy-makers, standard-setters, and regulators to facilitate harmonization towards a globally-acceptable approach to reporting ESG metrics and disclosures.