The European Commission (EC) has adopted the European Sustainability Reporting Standards (ESRS) on 31 July 2023. This marks a significant milestone in the development of European Sustainability Reporting Standards and is the culmination of great effort from the various parties tasked with its development- including the EFRAG Sustainability Reporting Board, the EFRAG Sustainability Technical Expert Group, its initial Project Task Force and respondents to the recent consultations on the ESRS. The EC has also published a press announcement and Q&As and have indicated that additional implementation guidance will be prepared and made available over the coming months. The standard will enter into force following its publication in the Official Journal of the European Union and the first wave of entities will report under the ESRS for periods commencing on or after 1 January 2024. The reporting requirements will then be phased-in over the subsequent years to various company types and sizes. If you wish to find out more about the ESRS, please see our recent free webinar "Further your knowledge about the European Sustainability Reporting Standards"

The Financial Reporting Council (FRC) has published a thematic review entitled “CRR Thematic review of climate-related metrics and targets” which assesses the quality and maturity of climate-related metrics and targets disclosures across 20 companies annual reports for 2022. The review focusses on 4 sectors- materials and buildings, energy, banks and asset managers. The report is intended to assist preparers in the preparation of climate-related disclosures and highlights instances of good practice identified as well as opportunities for improvement and omissions identified. Throughout the report the FRC consider the following overarching questions; Has companies’ climate-related metrics and targets reporting improved since last year? Are companies adequately disclosing their plans for transition to a lower carbon economy, including interim milestones and progress? Are companies using consistent and comparable metrics? Are companies explaining how their targets have affected the financial statements? Overall, the report shows an improvement in the quality of companies’ disclosures of net-zero commitments and interim emissions targets, however it also noted that disclosures of actions and milestones required to meet these targets were sometimes unclear.  

In this week’s Sustainability/ESG bulletin, read about Ireland’s progress in dealing with the climate emergency, Ireland’s new national policy statement on electricity interconnection, and a report into the potential fiscal impacts of the transition to a lower carbon economy. Also covered is Northern Ireland’s climate consultations, a new set of guidelines from Europe on national adaptation strategies, and Ireland and Europe’s progress towards the UN Sustainable Development Goals, as well as the usual roundup of articles, resources and events. Ireland and the climate emergency The Climate Change Advisory Council (CCAC) has published its Annual Review, in which the advisory body warns that at the current rate of policy implementation, Ireland will not meet the targets set in the first and second carbon budget periods. Among other recommendations, CACC is calling on the Government to find ways to help industry become more energy efficient and less reliant on fossil fuels, and that communities, NGOs and the private sector should be involved in adaptation planning and implementation. It also recommends that the Government build and maximise public support for climate action, ensuring a just transition and leveraging actions already in place. The advice comes at a time when analysis by the World Weather Attribution network reportedly announced that European and North American heatwaves would be “virtually impossible without climate change,” and that these events are likely to become more frequent and more severe. The Environmental Protection Agency (EPA) has also published its provisional estimates on 2022 greenhouse gas emissions, which show that Ireland has already used 47 percent of its Carbon Budget for 2021-2025 in the past two years. An annual reduction of 12.4 per cent is now required for each of the remaining years if Ireland is to stay within the Budget. As emissions fell by only 1.9 percent in 2022, this has been described as “extremely challenging”. New national on policy statement on electricity interconnection The Minister for the Environment, Climate and Communications, Eamon Ryan, T.D., has welcomed Cabinet approval of a new National Policy Statement on Electricity Interconnection which plans to make Ireland central to Europe’s energy future. The statement also outlines how a State-directed approach will ensure integrated forward planning, enabling the necessary infrastructure to unlock significant green energy export opportunities. Potential fiscal impacts of the transition to a lower carbon economy in Ireland Current environmental taxes are an important source of revenue for the State, according to a Department of Finance report recently published on the potential fiscal impacts of the transition to a lower carbon economy in Ireland. The report states that the taxes represent approximately €5.3 billion annually or around 6.4 per cent of overall exchequer tax revenue in 2022, and suggests that policy and policy makers will need to consider how to use taxation as an instrument in the economy’s transition to lower carbon over the medium term and towards carbon neutrality by 2050. Public finances in Ireland will come under increasing pressure from factors other than climate change, the report noted, such as population ageing and other demographic changes. Northern Ireland climate consultations open The Department for Agriculture, Environment and Rural Affairs (DAERA) on behalf of the Northern Ireland Executive has published a consultation on “Northern Ireland’s 2030 and 2040 Emissions Reduction Targets and First Three Carbon Budgets and Seeking views on Climate Change Committee (CCC) Advice Report: The path to a Net Zero Northern Ireland”. The main aim of the consultation is to consult on the proposed 2030 and 2040 emissions targets for NI and proposed carbon budgets for the periods 2023-2027, 2028-2032 and 2033-2037. A series of consultation sessions are planned to include sector specific workshops and a number of public consultation sessions, with registration links available. The consultation will run until Wednesday 11 October 2023. Building a climate-resilient future in Europe The European Commission has adopted a new set of guidelines to assist Member States in updating and implementing comprehensive national adaptation strategies, plans and policies in line with the European Climate Law and the EU Strategy on adaptation to climate change. The guidelines aim to make climate adaptation a top political priority and to enhance Member States’ strategies and plans. The announcement comes as a new Eurobarometer survey finds that a large majority of Europeans believe climate change is a serious problem facing the world (93 percent) and that 73 percent of Europeans agree that the cost of damage due to climate change is much higher than the investment needed for a green transition. European Green Deal update The European Commission has welcomed the final approval of the revised Energy Efficiency Directive, FuelEU Maritime Regulation and Alternative Fuel Infrastructure Regulation (AFIR), as part of the ‘Fit for 55’ package of legislation to reduce EU greenhouse gas emissions by at least 55 percent by 2030. The revised legislation aims to reduce energy use this decade and beyond, and put the EU on a cost-efficient pathway to become climate-neutral by 2050. Following the formal approval of both co-legislators, the new legislation can now enter into force on publication in the EU's official journal. Progress on delivery of the UN Sustainable Development Goals The European Union has presented its first Voluntary Review on the implementation of the 2030 Agenda for Sustainable Development at the United Nations in New York. The review gives an overview of how EU internal and external actions are contributing to delivering on the 17 Sustainable Development Goals (SDGs), both within the EU and in partner countries around the world. Separately, Ireland’s Minister for the Environment, Climate and Communications, Eamon Ryan, T.D., presented Ireland’s second Voluntary National Review (VNR) on the SDGs, Building Back Better while Leaving No One Behind. The VNR outlines the progress Ireland is making, with 80 percent of the associated 169 targets reached. The EU has performed best on ensuring decent work and economic growth, reducing poverty and fostering peace, security, and inclusive societies and institutions, while Ireland has made progress in a number of areas, such as education, employment, social protection, hunger reduction, health, community engagement and wellbeing. Did you know? Business in the Community Ireland (BITCI) has put together a list of Corporate Environmental Volunteering Opportunities for its member companies. Each of the volunteering opportunities listed provides contact details, information on the skills required of volunteers, and the time they need to commit to the cause or organisation.  Articles FRC thematic review examines quality of climate-related metrics and targets disclosures (Financial Reporting Council)   IAASB to issue proposed sustainability assurance standard (Chartered Accountants Ireland)   FRC Lab publishes report on ESG data use (Chartered Accountants Ireland)   ‘No one wants to be right about this’: climate scientists’ horror and exasperation as global predictions play out (The Guardian)   Stocktake: Markets are under-pricing climate risks (Irish Times)   ESG label shunned amid political polarisation (Irish Times) Upcoming events  The Future of Sustainable Finance – In person – 5 September, 8.30 – 10.00 The latest event in our Dublin 2050 series. Dublin has been steadily growing its reputation as a hub for sustainable finance in recent times, making significant progress in advancing sustainable finance practices and attracting investments aligned with ESG principles. This expert panel-led event aims to contribute to knowledge sharing, collaboration, and innovation within the business community. Venue: Dublin Chamber, 7 Clare Street, Dublin 2 Dublin Chamber – Sustainability Academy Workshops Dublin Chamber has announced it will offer Sustainability Academy workshops in Autumn. Beginning  with a workshop on Sustainability/ESG 101 in September, the 3-hour Zoom workshops includes a free one-hour, post-workshop one-on-one advisory consultation per company with an expert advisor. Find out more here. Business Post LIVE and iQuest - Energy Transition Summit Delivering Ireland’s energy revolution - 19 September 2023 - Croke Park, Dublin   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: 23 August 2023  14.00-15.00/30 Teams 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.

The International Auditing and Assurance Standards Board (IAASB) has announced that it plans to issue its proposed sustainability assurance standard, International Standard on Sustainability Assurance 5000 (ISSA 5000) on 2 August. This will then be subject to public consultation until early December to allow for stakeholder feedback. In making the announcement the IAASB stated that "When approved, ISSA 5000 will be the most comprehensive sustainability assurance standard available to all assurance practitioners across the globe. It will apply to sustainability information reported about any appropriate sustainability matter and prepared under any suitable framework. It will also apply for both limited and reasonable assurance engagements."

The FRC Lab has published a report entitled "ESG data distribution and consumption- Optimising the flow of ESG data from companies to investors". This report is the second phase of the FRC Lab's ESG data project, having published "Improving ESG data production" in 2022. This report examines how investors access and collect ESG data and how they use it. Specifically, it looks at the following three elements of relevance to ESG data; Motivation- What motivates investors to collect ESG data? Method- How do investors collect the data? Meaning- How do investors integrate ESG data into their investment processes?

In this week’s Sustainability/ESG bulletin, read about Chartered Accountants Ireland’s response to the call for expert evidence on the Climate Action Plan 2024. Also covered is Institute representation at the Commercial Built Environment Roadmap Working Group, the recent increase to the Non-Domestic Microgen Grant to install Solar PV panels, the launch of the first Biodiversity Leaders Programme for Irish Industry, sustainability-related updates from Europe, as well as the usual roundup of articles, resources and events. Chartered Accountants Ireland - Climate Action Plan 2024 Chartered Accountants Ireland has responded to the call for expert evidence by the Department of the Environment, Communications and Climate Action (DECC) to support and inform the preparation of the Climate Action Plan 2024. This plan is due for publication later this year. In the Institute’s response, Chartered Accountants Ireland identified challenges facing businesses - particularly SMEs -  in decarbonising, and recommended that the Government further investigates barriers to businesses wishing to take climate action. Also included in the response was a recommendation the Government highlights the risks and opportunities that climate change presents for businesses, as well as tax measures to support climate action. For more details on tax measures  see the Pre Budget Submission 2024 – Supporting Ireland’s Transition to a Sustainable Future of the Consultative Committee of Accounting Bodies – Ireland (CCAB-I). Chartered Accountants Ireland attends Commercial Built Environment Roadmap Working Group Institute representatives Stephen Lowry, Public Policy Manager and Joey Hayden, Conferencing & Facilities Manager, attended a meeting of the Government’s Commercial Built Environment Roadmap Working Group under the Heat and Built Environment Taskforce. This Taskforce was established to accelerate and drive delivery in relation to retrofitting, renewable heat, district heat and decarbonisation of the building stock. The meeting was to help inform the development of a Commercial Built Environment Roadmap as it relates to office users and the commercial landlord sector. The roadmap, which will set out the key existing and new policy interventions to achieve the objectives set out to reach Ireland’s targets in relation to the commercial buildings sector, is due to be published in September. Increased financial support for businesses – solar panels The Irish Government has announced an increase to the Non-Domestic Microgen Grant. This grant provides financial support for businesses, farms, schools, community centres or other non-profit organisations to install Solar PV panels to generate electricity on site. New funding ranges from €2,700 to €162,600, typically supporting 20-30 percent of the investment cost and reducing payback periods. The grant is administered by the Sustainable Energy Authority of Ireland (SEAI). Separately, the Department of the Environment, Climate and Communications has published its Policy Statement on Geothermal Energy for a Circular Economy, to raise awareness of the potential of geothermal energy, and its National Hydrogen Strategy, which sets out the strategic vision on the role that hydrogen will play in Ireland’s energy system. Summer Economic Statement – Climate Action Fund An additional €2¼ billion to spend over the period 2024-2026 has been announced in the Irish Government’s Summer Economic Statement 2023. The additional finance, from windfall corporation tax receipts, will be made available to boost delivery of critical capital infrastructure projects and make a contribution to the existing Climate Action Fund. New Retrofit Collection of Standards launched A new collection of standard recommendations has been published, compiled by the National Standards Authority of Ireland (NSAI). The Retrofit Collection aims to guide the delivery of high-quality, sustainable, and efficient building upgrades. Launching the collection at a Department of Enterprise Trade and Employment’s ‘Building Better Business’ event, Minister of State with responsibility for Employment Affairs and Retail Business, Neale Richmond TD stated that “[t]his collection of standards from NSAI provides a clear and reliable pathway for businesses in the construction sector, enabling them to confidently deliver high-quality retrofit installations to their customers.”  First Biodiversity Leaders Programme for Irish Industry launches   A new programme has launched that will facilitate professionals across all sectors to implement effective Biodiversity Action Plans. An eight-week course, led by Anja Murray, Broadcaster, Ecologist, and Programme Lead at Climate Ready Academy, the Biodiversity Leaders Programme was launched by the Climate Ready Academy (an initiative of Skillnet Ireland). It aims to guide and empower businesses to adopt responsible and sustainable practices that can promote and enhance biodiversity within their field. In the Corporate Sustainability Reporting Directive (CSRD), the European Sustainability Reporting Standards (ESRS) ‘E4 standard’ specifically addresses corporate sustainability relating to biodiversity and ecosystems (see Business for Biodiversity Ireland). Department of Enterprise Trade and Employment encourages businesses to engage with sustainability reporting The Minister of State with responsibility for Company Regulation at the Department of Enterprise, Trade and Employment, Dara Calleary TD has encouraged businesses to engage on new Corporate Sustainability Reporting Directive, the CSRD. Read more. Northern Ireland’s 10X Delivery Plan publishes Northern Ireland’s Department for the Economy has published the 10x Delivery Plan for 2023/24. The plan aims to be a step-change for growth for Northern Ireland’s economy. It outlines a work schedule to help deliver the 10x Economic Vision and its objectives and represents a ‘transformative approach to supporting innovative economic growth in a way that is inclusive and sustainable’. Among the sustainability areas of focus are Northern Ireland’s use of renewable energy and reduction of greenhouse gas emissions, and a planned doubling in the size of the low carbon and renewable energy economy. EU Nature Restoration Law passes The European Parliament has adopted its position on the EU Nature Restoration Law. This law proposes to restore at least 20 percent of the EU’s land and sea areas by 2030 and repair all ecosystems in need of restoration by 2050. The package reportedly aims to set specific targets for the first time on nature restoration. Measures will include rewetting some peatlands that had previously been drained, increasing green spaces in urban areas, and improving biodiversity in land used for agriculture and forestry. The European Commission has also adopted a package of measures for a sustainable use of key natural resources. Measures include a soil monitoring law, proposals to boost innovation and sustainability, and new measures to reduce food and textile waste. The proposals are to be discussed by the European Parliament and the Council in the ordinary legislative procedure. ‘Unprecedented’ sustainability commitments in EU/New Zealand free trade agreement A new landmark free trade agreement between the EU and New Zealand includes ‘unprecedented’ sustainability commitments, including in respect of the Paris Climate Agreement and core labour rights. For the first time ever in an EU free trade agreement the deal has a dedicated sustainable food systems chapter, a dedicated trade and gender equality article and a specific provision on trade and fossil fuel subsidies reform. It also liberalises environmental goods and services at entry into force. Following the ratification process in both the EU and New Zealand, the deal will enter into force. International Federation of Accountants feedback on Sustainability Reporting Standards The International Federation of Accountants (IFAC) has submitted  feedback in response to the European Commission’s European Sustainability Reporting Standards (ESRS). In its response, IFAC welcomed the standards while noting significant concerns regarding the need for interoperability that supports a global system for reporting. IFAC has also welcomed the International Sustainability Standards Board’s (ISSB) new standards and other important jurisdiction or regional initiatives, notably the U.S. SEC’s proposed climate disclosure rule. However, these approaches, it says, must align key concepts, terminologies, and metrics to avoid regulatory fragmentation, especially on matters of materiality. Glossary update The Chartered Accountants Ireland sustainability glossary has been updated to include carbon sinks and geothermal energy. Did you know? 15 July has been inaugurated as the EU Day for the Victims of the Global Climate Crisis. The annual day will serve to commemorate victims in Europe as well as worldwide and to raise awareness of concrete steps that people can take to help prevent - and be better prepared for and respond to - climate disasters.   The International Sustainability Standards Board (ISSB) has opened a new office in Beijing. The office’s work will focus on executing the ISSB’s strategy for emerging and developing economies, developing countries and SMEs, and will serve as a hub for stakeholder engagement in Asia. Resources A recording of Davy Horizon’s recent ESG Peer Network event on Decarbonisation and Responsible Sourcing in Value Chains is now available, along with digital versions of our new whitepaper and service information sheets. A free sustainability advisory service is now available from the Enterprise Europe Network at Dublin Chamber. The new EEN Sustainability Advisory Service focuses on improving business’ sustainability strategy. It is suitable for SMEs and companies at any stage in their sustainability strategy journey. Articles and newsletters Accountancy Europe’s Sustainability Update covers the European Commission’s sustainable finance package, the European Supervisory Authorities sharing a common understanding of greenwashing, the start of the CSDDD trilogue negotiations and the publication by the ISSB of its two inaugural standards.   Five tips for easier climate reporting – British luxury brand Burberry shares the five things that would have been good to know right from the start (ICAEW Insights)   Accounting firms accused of missing climate risks in company audits (Financial Times)   Irish businesses demonstrate confidence and pursue sustainability (Accountancy Ireland – Briefly)   The NewERA Climate Action Framework- a guide (Accountancy Ireland – The Bottom Line)   Four pathways to sustainable Irish cities (Accountancy Ireland – Briefly)   Upcoming events   SMEs and Your Finance for Energy Projects – Webinar – 25 July, 13:00 – 14.00 Is energy a business significant cost? If so, join next week’s webinar about SMEs and Your Finance for Energy Projects. The webinar will focus on SMEs that rent/own buildings for office, retail, warehouse, hotel, pub or leisure services, and landlords that lease/rent buildings to SMEs. The panel discussion will address key topics, including financial supports and where should an SME start. Register here. Dublin 2050 - the Future of Sustainable Finance – In-person event – 5 Sept, 8.30 – 10.00 The latest in the ‘Dublin 2050 series’ this expert panel-led event aims to contribute to knowledge sharing, collaboration, and innovation within the business community on advancing sustainable finance practices and attracting investments aligned with ESG principles. Dublin Chamber, 7 Clare Street, Dublin 2 Dublin Chamber – Sustainability Academy Workshops Dublin Chamber has announced it will offer Sustainability Academy workshops in Autumn. Beginning with a workshop on Sustainability/ESG 101 in September, the 3-hour Zoom workshops includes a free one-hour, post-workshop one-on-one advisory consultation per company with an expert advisor. Find out more here. 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 Accountant 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: 26 July, 2023  14.00-15.00/30 Chartered Accountant House/Teams 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.  

The Minister of State with responsibility for Company Regulation at the Department of Enterprise, Trade and Employment, Dara Calleary TD has encouraged businesses to engage on new Corporate Sustainability Reporting Directive, the CSRD. Read more. Speaking at a recent webinar, Minister Calleary stated “The new rules for sustainability reporting may be challenging at the outset, however, the requirements have been sequenced, whilst still maintaining ambition, to allow companies, and the accounting and audit industry time to understand the new standards, start measuring the relevant data, and deepen the knowledge and skills necessary.” Minister Calleary went on to state his intention to establish and chair a new sub-group of the Enterprise Forum on Responsible Business that will act as a link with industry and relevant stakeholders and will provide a platform for regular interaction between the Department and its agencies on these important matters. A total of 34 responses were submitted by stakeholders and interested parties on the Member State options contained within the CSRD, ahead of its transposition into Irish law. (The response from Chartered Accountants Ireland can be found here and the Department’s published proposed policy response to the public consultation is here.)

Earlier this year the Dept. of Enterprise Trade and Employment (DETE) sought the views of stakeholders and interested parties on the Member State options contained within the Corporate Sustainability Reporting Directive (EU) 2022/2464, ahead of its transposition into Irish law. 34 responses were received by DETE including one from Chartered Accountants Ireland .A copy of each of the responses is now available on DETE’s website . This week DETE also published its proposed policy response to the public consultation on the Corporate Sustainability Reporting Directive and readers can access a copy of it here.

The latest KPMG Enterprise Barometer reveals a positive outlook among Ireland's indigenous businesses, with over a third planning workforce expansion. These entrepreneurial firms prioritise sustainability but seek clarity on costs and benefits, says Alan Bromell KPMG Enterprise Barometer 2023 highlights confidence among Ireland’s indigenous businesses, with over half (55 percent) expecting to increase turnover in the next 12 months.  The majority of survey respondents, 83 percent, support the need for more action on climate change, and 7 out of 10 are actively pursuing sustainable measures, demonstrating the proactive approach these entrepreneurial businesses are taking to incorporate environmentally friendly practices into their operations.   The research reveals overall optimism among Irish businesses, with over half (55 percent) expecting to increase turnover in the next 12 months and 38 percent expecting to expand their workforce, demonstrating a belief in their growth potential and job creation. Balancing the costs and benefits of sustainability While the majority of survey respondents support more action on climate change, two-thirds express concern about the need for more clarity on the costs and benefits of these measures, and three-quarters say no stakeholder groups are exerting pressure on them to develop decarbonisation strategies. This poses a significant challenge for companies as they strive to make informed decisions on sustainability measures and allocate resources effectively. The survey showed resilience and measured confidence in the future amongst Irish businesses and entrepreneurs. Notwithstanding the challenges in areas such as costs and interest rates, Irish entrepreneurs are resourceful and robust. Private Irish business and entrepreneurship are critical pillars of the Irish economy, providing employment, sustaining tax revenues and acting as role models for future entrepreneurs. In addition, their ingenuity and innovation can be instrumental in solving various challenges, from technology, health and nutrition to sustainability and environmental protection. The survey also shows that sustainability has become a fundamental aspect of business operations, and it’s encouraging to see businesses in Ireland actively pursuing sustainability measures. However, they need help understanding the costs and benefits of decarbonisation. Tax suggestions for Budget 2024 When asked for their views on the current tax regime, less than a quarter (24 percent) said they believe it encourages entrepreneurship and growth. At the same time, three-quarters feel that the Irish tax regime is more challenging for domestic businesses.  The top three tax changes businesses would like to see in Budget 2024 are introducing tax measures to encourage sustainable behaviour (83 percent), amending capital gains tax rates or rules to encourage investment in Irish companies (79 percent) and introducing a reduced tax rate for dividends for entrepreneurs (74 percent ). These highlight a desire for tax incentives and reforms that promote sustainable business practices, stimulate investment and reward entrepreneurship. Recruiting challenges Sixty percent of private Irish businesses and entrepreneurs face difficulties recruiting the right individuals to fill key company positions. Nearly half (45 percent) consider the current tax regime in Ireland a disadvantage to recruiting and retaining skilled employees. The availability of residential accommodation is another primary concern; over three-quarters (77 percent) say lack of accommodation is an issue, suggesting that the housing situation in Ireland could impact recruitment and competitiveness. Alan Bromell is Head of Private Enterprise at KPMG