News

Follow our weekly bulletin on key public policy issues for the island of Ireland.

Sustainability

  In this week’s Public Policy news, read about a report into the response of professional accounting bodies to the COVID-19 pandemic; how business-as-usual won’t be enough to meet Ireland’s climate objectives; an extension on the public consultation to the National Development Plan; an investment in SFI Research Centres; current unemployment levels in Ireland; and Northern Ireland’s Energy Strategy and entrepreneurial funding. Building a Better Future – The response of Accounting Bodies to the COVID-19 pandemic Chartered Accountants Ireland has contributed to a report providing insights into how professional accountancy organisations responded to the COVID-19 crisis and are working the shape a more resilient future. Institute's Professional Accountancy Leader, Dee Moran, and Susan Rossney, Sustainability Expert and Public Policy Officer, collaborated with members of the Institute's team and the team in A4S to contribute to the report. “Building a better future”, published by the UK Prince’s Accounting for Sustainability Project’s Accounting Bodies Network, details the accountancy bodies’ immediate response to the pandemic and explores the actions accountancy bodies will take in order to reset and rebuild a more sustainable economy. The report sits alongside a second report setting out recommendations for actions that CFOs and others from across the finance and accounting community can take to build back better, drawing on lessons from the pandemic response. “Fundamental changes” required to how we do business The Minister for the Environment, Climate and Communications, Eamon Ryan TD has announced that he is leading the preparation of the next Climate Action Plan, which will set out actions that must be taken across every economic sector in order to ensure Ireland delivers on its energy commitments. One of the major deliverables of this, of course, was announced this week, with the Minister obtaining Cabinet approval to introduce legislation to ban licences for new oil and natural gas exploration. The legislation will be included in the Climate Action and Low Carbon Amendment Bill which will go before the Oireachtas in the Spring Legislative Programme. The announcement points to the scale of ambition that the Minister has warned is required for Ireland to meet is climate objectives, and which is likely to have a major impact on businesses in Ireland. Speaking at the launch of a joint publication by the Environmental Protection Agency (EPA) and the Sustainable Energy Authority of Ireland (SEAI) last week, Minister Ryan stated that simply “doing less than business-as-usual will not be enough; we must make fundamental changes to how we do business and how we live our lives.” The report, which found that the overall GHG emissions reduced in 2020, contained warnings that this reduction may be temporary, with the economic rebound from the Covid-19 crisis estimated to bring emissions back to previous levels unless additional action is taken (Full detail on the 2020 estimates is available on the EPA and SEAI websites.) We will monitor developments and continue to update members. National Development Plan public consultation phase extended The deadline for submissions to the public consultation to the National Development Plan has been extended until 19 February 2021. The National Development Plan will support economic, social, environmental and cultural development across the country in parallel with the National Planning Framework. This framework provides a high-level guide to planning and development over the next 20 years. Announcing the extension, Minister for Public Expenditure and Reform, Michael McGrath, TD, stated “We need to ensure that we have the capacity to adapt and we must take an integrated approach, including climate change adaption at every stage in our development plan. This will make development more resilient by reducing climate impacts and make for a better future for the people of Ireland and I am particularly anxious to hear the views of the public on this matter.” Details for how to respond to the consultation can be found here. The final review of the National Development Plan is expected to be completed in the summer of 2021. €193 million investment in five world - leading SFI Research Centres Minister for Further and Higher Education, Research, Innovation and Science, Simon Harris TD has announced an investment of €193 million in five Science Foundation Ireland (SFI) Research Centres for six years. A key objective of SFI’s Agenda 2020 is to position Ireland as a global knowledge leader and develop a set of world-leading, large-scale research centres that will provide major economic impact for Ireland. The five centres will carry out research into smart medical devices, e-health, telecommunications networks, cybersecurity, smart cities, artificial intelligence, ethics and data privacy, as well as applied geosciences, energy security and marine resources. The investment is further backed by significant industry support from 200 industry partners committing over €91 million in cash and in-kind contributions. Unemployment in Ireland rises to 25 percent Figures released this week by the Central Statistics Office (SCO) show that unemployment in the Republic of Ireland rose to 25 percent in January 2021, when adjusted to take account of those receiving the Pandemic Unemployment Payment (PUP). The unemployment rate using the standard methodology remained unchanged from last month, at 5.8 percent. The rate of unemployment was 15.7 percent among 15-24 year olds and 4.6 percent among 25-74 year olds. The report mentioned that at least 8 percent of PUP recipients are attending full-time education during the current academic year. Northern Ireland’s Energy Strategy and funding for energy entrepreneurs The Northern Ireland Department of the Economy has published its Energy Strategy e-bulletin, the seventh in a regular series to keep key stakeholders updated on progress with developing the new energy strategy. The bulletin provides information and advice that businesses may need in the coming years as the energy sector is decarbonised, as well as funding opportunities for low carbon energy and report on the Future of Energy Efficiency Policy in Northern Ireland. The bulletin was published the same week as the UK government announced £11 million in government funding for UK energy entrepreneurs to turn ideas into clean, green technologies that eliminate carbon emissions. Commenting, Secretary of State for Northern Ireland, Brandon Lewis said that “[w]ith a share of this new £11 million investment, Northern Ireland’s entrepreneurs will be able to help supercharge the United Kingdom’s ‘Green Economy’, as we continue to work towards our goal of reducing our emissions to net zero by 2050”. The Secretary of State encouraged all entrepreneurs to apply for the scheme to help Northern Ireland build back greener. Further details for how to apply are here. Read all our updates on our Public Policy web centre

Feb 05, 2021
Sustainability

  In 2020, Chartered Accountants Ireland began the process of embedding sustainability throughout our activities. We launched an online Sustainability Hub, published a guide for accountants, and held events throughout the (virtual!) country. Read about our journey in 2020, and our plans for 2021. 2020 was remarkable for many reasons, and you could be forgiven for missing the anniversary of the signing of the Paris Agreement. This landmark international accord was adopted by nearly every nation in 2015, and set out a global framework to prevent the earth’s temperature rising over 1.5 degrees above pre-industrial levels. The anniversary was to be marked at the UN Climate Change Conference of the Parties (‘COP 26’) Glasgow in November 2020. This conference will take place in November 2021 instead. In 2020, Chartered Accountants Ireland began the process of embedding sustainability throughout our activities. In January 2020 we published our Climate Change Call to Action. This call to action was signed by 13 chief executives representing 14 accounting bodies worldwide. It called upon the accountancy profession to act now to help the organisations they work with to respond to climate change with the urgency and scale required. The accountancy bodies, who are all members of A4S’s Accounting Bodies Network, represent over 2.5 million accountants and students globally. (The A4S is The Prince of Wales’s Accounting for Sustainability Project). The call to action included actions and commitments from the bodies themselves in support of their members, and highlighted that climate change represents an economic, social and business risk – a risk that accountants from across the world must take action on. Just last month, Institute Chief Executive Barry Dempsey contributed again to a report by the Accounting Bodies Network, launched on 14 January. The Building a Better Future report details the response to the COVID-19 pandemic by 16 accounting bodies, explores how the profession plans to contribute to a sustainable recovery and examines lessons learnt from their response to the pandemic. It also demonstrates how the accountancy bodies in the report want to take this opportunity to build a more sustainable and resilient economy, creating a sustainable legacy out of a crisis. Institute's Professional Accountancy Leader, Dee Moran, and Susan Rossney, Sustainability Expert and Public Policy Officer, collaborated with members of the Institute's team and the team in A4S to contribute to the report. What we did in 2020 Chartered Accountants Ireland supported members in dealing with the economic, social and business risk posed by climate change, even while dealing with the immediate economic crisis, in a range of other ways in 2020, including: Launching Strategy24, reflecting our ambition to build a more sustainable profession and institute in all aspects of our work. Our vision for the future is underpinned by five core ideals that support our central ethos of "for tomorrow, for good".  Building and launching a Sustainability Hub. This online centre has information, guidance and supports to help members understand sustainability and meet the challenges it presents. Publishing a new guide, Sustainability for Accountants, detailing the risks and opportunities presented by sustainability, and the steps that need to be taken to address the challenges. In 2020, our Professional Accountancy team, with input from our Ethics and Governance Head, Niall Fitzgerald, as well as Institute Committees and our Expert Working Group on Sustainability responded to two sustainability-related international consultations of relevance to our members.   The first was public consultation on the review of the EU’s Non-Financial Reporting Directive. This Directive lays down the rules on disclosure of non-financial and diversity information by large public-interest companies, which have been required to non-financial statements in their annual reports from 2018 onwards. The second was the IFRS's consultation on the establishment of global sustainability reporting standards.  Running three nationally-focused knowledge and networking sustainability events, connecting experts with each other, and providing accountant-relevant information on the topic for both the public and private sector: a webinar as part of Climate Finance Week to discuss how accountants can lead the way in introducing sustainable practices (Nov 6); 'Public Sector: Engaging with Sustainability' (Nov 26); and ‘ESG Disclosure: What Investors Look For' (Dec 9).  Through our District Societies we ran events on the topic of sustainability. In 2020 the topic was addressed by: London (Feb 2020) Cork (June 2020) North-West (September 2020) Ulster (September 2020) Societies. Our Young Professionals Society's January 2020 event on sustainability was attended by over 100 people. It showcased sustainable products and used only ethically sourced catering and recyclable products at the event. Sustainability was included as a topic area in our CPD programme, as part of the CPD Blitz business workstream in November and December 2020. Within the Institute itself, there is an established team-driven CSR programme, which details our ESG initiatives, including information about our use of paper, plastic, water and electricity, our diversity and inclusion commitment and our focus on staff wellbeing. In 2020 we introduced branded keep cups and water bottles for the team, and planned a Green Week in March 2020 (postponed to when the offices reopen). Plans for events, mostly online, are now being generated for 2021. Our Future Plans In 2021 we will be building on our sustainability activities, beginning our path to carbon neutrality, and increasing our public policy activities and members events. Every few weeks in eNews, we will publish ‘explainers’ into areas that we have identified as being important focal points for members in 2021, including decarbonisation, the circular economy and biodiversity and what they mean for accountants. Head of Ethics and Governance and member of the Expert Workin Group, Niall Fitzgerald, is addressing the topic of sustainability and governance in webinars and in the Institute's Annual Governance Conference in April. There will be a Sustainability Week from 14 June, with a Chartered Accountants Ireland Sustainability Conference and other online events. Follow our activities in the Sustainability Centre on our website to find information on our Expert Working Group on Sustainability, our events, resources, and sustainability related news. For further information contact our Public Policy Officer and Sustainability Expert Susan Rossney.

Feb 04, 2021
Sustainability

The OECD has published a new report which explores how better use of energy taxes could strengthen developing country finances while cutting emissions and pollution. According to the report, developing countries could raise revenues of up to one percent of GDP by increasing carbon taxes on fossil fuels. The report considers that developing and emerging economies seeking to recover from the COVID-19 crisis would benefit from better-designed energy taxes accompanied by targeted support to low-income groups. The report examines energy taxation in 15 developing and emerging economies in Africa, Asia and Latin America and the Caribbean. The report finds that, on average, the countries could generate revenue equivalent to around one percent of GDP if they set carbon rates on fossil fuels equivalent to €30 per tonne of CO2. The report also finds that five of the 15 countries do not use any coal and the use of wind and solar energy is growing fast. The report notes that 13 of the 15 countries have experience with fuel excise taxes, meaning carbon tax reform would be relatively straightforward to implement in administrative terms. For more information, read the report and the OECD’s update.

Feb 01, 2021
Public Policy

  How will more extreme weather create disruptions to operations or supply chains? How will greater scrutiny from banks on climate risk affect business’s ability to borrow money? To answer these and other questions facing Irish businesses, SustainabilityWorks, cofounded by Laura Heuston, FCA, is running a series of free online workshops about climate change risks and opportunities for the Irish private sector: Learn about the climate change impacts that are predicted for Ireland Understand climate risks and opportunities for the private sector, supported by real world case studies Hear from guest speaker Professor Andreas Hoepner on what’s happening at EU level with investors and policymakers, and what this means for business Get practical advice on assessing climate change impacts for business Please click on the links below to register for all or some of the following dates: Computer & Electronics Manufacturing:  Thursday 18th of February from 2.00 – 3.30pm Retail: Tuesday 23rd of February from 2.00 – 3.30pm Hospitality and Tourism: Wednesday 24th of February from 2.00 – 3.30pm Food & Beverage Manufacturing: Tuesday 2nd of March from 2.00 – 3.30pm   Further information Getting to grips with climate change can feel overwhelming, especially when clear, sector-specific information is scarce, in-house resources are limited, and the focus – especially now – is on survival. SustainabilityWorks wants to help Irish businesses – both SMEs and large corporates – cut through the complexity and understand how climate change will impact them on a practical level. How will more extreme weather create disruptions to operations or supply chains? How will greater scrutiny from banks on climate risk affect business’s ability to borrow money? Climate R|O - our research project funded by the Environmental Protection Agency - has identified the biggest climate risks and opportunities for four sectors of the Irish economy. SustainabilityWorks reviewed the latest science, spoke with companies and trade bodies, and gathered insights from the finance and energy sectors – both of which will be key to enabling business to transition to a low carbon future. At these workshops they will share their findings and discuss practical ways that businesses can become more climate resilient. They will also gather your views to help inform their final results and their recommendations to policymakers. The event is open to all, so please feel free to share this invite with colleagues, suppliers/partners, or others in your network who you think would be interested in coming along.

Jan 31, 2021
Public Policy

  The ‘Davos Agenda’ – the virtual Davos event that took place this week – saw leaders address topics from how to save the planet, to building fairer economies and healthy futures. The changes in 2021 and beyond will be dramatic, not just to the operations of business but across economies’ entire value chains.  In this article we discuss what impact the sustainability agenda will have on businesses, and accountants in 2021. We will explore each of these topics in more detail in the weeks and months ahead. 2020 saw a ramp-up like never before in sustainability-related activity in Ireland and around the world. Company AGMS became battlegrounds for ESG (environmental, social and governance) shareholder activism, with record support for shareholder proposals on environmental, human rights and social justice issues. Countries scrambled to mobilise their climate action plans, pledging to reduce pollution of air, land and oceans and protect biodiversity. While 2020 was dominated by a potential green recovery from COVID-19, companies and markets in 2021 are making climate-change and social justice commitments at pace. In finance, last year saw a surge of investor demand in ESG funding opportunities, and an escalation in calls for comparable and simplified sustainability reporting standards. These were mirrored by developments in the consolidation of these standards, with announcements of mergers and collaboration between international sustainability standard setters, and consultations on, among others, a review of the EU’s Non-Financial Disclosure Regulation and a proposal on sustainability reporting issued by the IFRS. 2021 will see this momentum accelerate, as the world grapples with the challenge of decarbonising their economies, finding alternatives to rapidly depleting resources, dealing with supply chain disruption and delivering a ‘green recovery’. Governments are set to introduce more policies to meet their sustainability-related pledges, which will impact on businesses. Major global events will include ‘COP 15’ the fifteenth meeting of the ‘Conference of the Parties’ in May which will focus on biodiversity, and the UK-hosted (‘COP 26’), the 26th UN Climate Change Conference of the Parties. Ireland will pass the Climate Action and Low Carbon Development (Amendment) Bill, which will give legal underpinning to the Government’s plans to a commitment to reduce our overall greenhouse gas emissions by a 7 percent year-on-year from 2021–2030. Last week, the Tánaiste and Minister for Enterprise, Trade and Employment in Ireland, Leo Varadkar called for more Irish companies to engage with the mission to drive sustainability and principled business. Pointing to the role of Irish business in rebuilding a socially just, low-carbon and climate resilient economy and society, Varadkar’s message was clear: the business transformation required to achieve the UN Global Goals goes beyond incremental improvements and adjustments to ‘business-as-usual’. Similarly, the former UK Business and Energy Secretary and COP26 President Alok Sharma announced that tackling climate change “is the one of the most urgent shared endeavours of our lifetimes, demanding bold action from every nation to prevent catastrophic global warming.” The changes required will not be trivial. The professionals called upon to deliver these changes in businesses will most often be their accountants. As those trusted to make decisions, measure what matters, and acquire the finance to fund change, accountants are expected to identify and mitigate risk, avail of opportunities, and in short, ensure that businesses survive and thrive. The six major sustainability trends for 2021 milestones of which accountants should be aware are: Decarbonisation Decarbonisation is likely to be the most pressing concern for businesses this decade, as businesses work to reduce carbon emissions quickly or face higher taxes. At the time of writing, Ireland has a carbon tax of €26.00 per tonne of carbon dioxide produced. Budget 2021 increased this to €33.50 per tonne. This increase applied to auto fuels from October 2020 and will apply to solid fuels from May 2021.The plan is for carbon tax in Ireland to increase each year this decade, reaching €100 per tonne of CO2 by 2030. The UK has similarly announced ambitious targets, and pledged to reduce its emissions by at least 68% by 2030. With the UK’s departure from the EU, emissions trading, ecodesign and energy labelling have changed, and the introduction of a carbon emissions tax for the UK was the subject of a consultation last year. Under the terms of the Northern Ireland Protocol, however, emissions from electricity generation in Northern Ireland, remain within the EU ETS and would not be subject to this tax. The Circular Economy A circular economy is an economic system aimed at eliminating waste and the continual overuse of resources. Applied to business it can be summarised as: reduce, recycle and reuse, use fewer products and use them for longer. Of the 200+ measures across various waste areas in Ireland’s Waste Action Plan for a Circular Economy policy, there are measures on consumer protection and citizen engagement; single-use items will be banned from July 2021, and all packaging will have to be reusable or recyclable by 2030. Sustainable Reporting Sustainability reporting will be key to reaching global and European climate and environmental objectives. The need for the disclosure of good quality, reliable and comparable sustainability information continues will see ongoing consolidation of global sustainability reporting standards continuing and even increasing in 2021. The UK announced in November 2020 that TCFD-aligned disclosures will become mandatory for large companies and financial institutions in the UK. This is likely to result in climate-risk reporting becoming obligatory for SMEs which operate in their supply chains. The review of the Non-Financial Reporting Directive (NFRD), expected to be published by the end of March 2021, may change the quality and scope of non-financial information to be disclosed. All companies are advised to consider describing their sustainability-related activities from 2021, either in annual reports or in separate sustainability reports. Sustainable Finance European Commissioner Mairead McGuinness was clear in her assessment of the importance of sustainability finance: "The rules of the game must be transformed to fully integrate sustainability at every step of the financial value chain..." Green financial markets are growing rapidly globally, and institutional investors are seek information on ESG issues to better understand risks that could affect companies' performance over time. Businesses looking for finance in 2021 should be aware of these current trends. Biodiversity Businesses can expect to hear more about biodiversity in 2021. Biodiversity is the variety and variability of life on earth and, as Business in the Community Ireland recently stated is rapidly rising up the corporate agenda as more and more companies understand both the moral imperative and the business case for protecting the ‘web of life’. Both the Government and businesses in Ireland will come under increasing pressure support the agenda of protecting the country’s three levels of biodiversity. Similarly the UK government, in its 10-point plan for a Green Industrial Revolution, identified ‘protecting our natural environment’ as a key step on its path to achieving a green economy and becoming a global leader in green technologies. New Roles for Accountants Accountants have always been part of a global drive to keep our planet comfortably habitable, making the improvements and adjustments required of business to achieve this. New roles, such as Chief Sustainability Officer, ESG Finance Lead and Chief Impact Officer are developing to deliver this change, but in the absence of widely established sustainability-related roles, accountants will be called upon to use their existing stills in ‘measuring what matters’. This will encompass the risks posed by climate change, which includes supply chain risk, transition risk, risk of developing stranded assets and risk of lack of access to finance. In the coming weeks and months we will publish a series of articles on areas that accountants will have to focus on in 2021. In Chartered Accountants Ireland we will continue to update our  Sustainability Centre with updates for members about news and events in this area. Updates are also published weekly in our Public Policy bulletins in news.

Jan 29, 2021
Public Policy

  In this week’s Public Policy news, read how the healthy pre-pandemic position of Ireland’s public finances is expected to absorb the sharp increase in public indebtedness, and how collective redundancies in Northern Ireland reached a 10-year-high last year. In other news, the UK Government is to push trustees of pension schemes to assess the environmental impact of their investment portfolios, and a virtual Davos Agenda – the first of two Davos events this year – took place this week under the theme of “A crucial year to rebuild trust.” Sharp increase in public indebtedness The fourth annual assessment of public indebtedness, the Annual Report on Public Debt in Ireland 2020, was published this week by the Department of Finance. The aim of these reports is to provide a comprehensive analysis of public debt developments in Ireland. This report reveals that the COVID-19 pandemic led to a sharp increase in public indebtedness in Ireland, with debt-to-GNI (Gross National Income) expected to have increased by 12 percent in 2020. It is expected to increase again in 2021 to 115 per cent (approx. €47,700 per person). In spite of this, however, the debt service burden has fallen, reflecting the decline in borrowing costs. It is expected that the shift in public indebtedness can be absorbed by public finances, namely due to the relatively healthy pre-pandemic fiscal position, low financing costs and a number of positive structural features of Irish public debt. Speaking about the report, Minister for Finance, Pascal Donohue, TD, commented that the “measures taken will help to steer the economy through these challenging times, and help to return the public finances to a more balanced path once the worst effects of the crisis fade.” Speaking on RTÉ’s Morning Ireland programme, Minister Donohoe stated that there were no plans to change the 12.5 percent rate of corporation tax under the current Government due to its importance to the country’s overall competitiveness, and that although tax increases during the crisis were ruled out for now, the Government is committed to bringing the finances back to a credible place when jobs and income begin growing again. Collective number of redundancies in Northern Ireland in 2020 hit a 10-year high A report on the latest labour market statistics published by the Northern Ireland Statistics & Research Agency (NISRA) this week has revealed that the collective number of redundancies over 2020 was more than double that of 2019, and that redundancies in Northern Ireland over the past year hit a 10-year high. Although the number of proposed redundancies decreased at the end of the year, 11,000 collective redundancies were proposed and 4,680 confirmed during 2020. Employment numbers in the UK dropped year-on-year last month and fell by 828,000 between February and December 2020 due to the impact of the coronavirus pandemic, according to the Office for National Statistics (ONS). Latest data from the HMRC confirmed that the number of people on furlough in Northern Ireland rose by more than a third between October and December, from 68,000 on 31 October to 94,800 by the end of December. Climate change to be addressed by pension scheme trustees The UK government has published a consultation seeking views on proposals to require trustees of larger occupational pension schemes and authorised schemes to address climate change risks and opportunities. The measures will apply to schemes with more than £5bn in assets from October 2020 and to schemes with more than £1bn in assets from October 2022. The UK government is expected review whether smaller schemes should be subjected to the new requirements in 2023. Guy Opperman, UK Minister for Pensions and Financial Inclusion, reportedly described  climate change as “a major systemic financial risk and a threat to the long-term sustainability of private pensions”. In 2019 UK chancellor Rishi Sunak announced the intention to mandate climate disclosure by large companies and financial institutions across the economy by 2025. This includes pension scheme trustees, asset managers and insurers disclosing climate-related financial risks and opportunities line with recommendations set by the Task Force on Climate-related Financial Disclosures (TCFD). The consultation closes on 10 March 2021. A virtual Davos Event A virtual Davos event –the ‘Davos Agenda’ – took place remotely this week, as the World Economic Forum (WEF) brought together leaders from business, government and society leaders to jointly address the principles, policies and partnerships needed for 2021. The Davos Agenda, which concludes today, coincides with the usual date of the conference, and is the first of two Davos meetings in 2021; the second will be in Singapore from 13 to 16 May. Diverse topics addressed during the meeting can be grouped under seven key themes:  How to Save the Planet Fairer Economies Tech for Good Society & Future of Work Better Business Healthy Futures Beyond Geopolitics The event in May will be the 51st edition of this annual meeting, and will allow world leaders to meet in person for the first time since the pandemic began. The theme will be ‘the Great Reset’. Ahead of this, the WEF will host a Global Technology Governance Summit in Tokyo from 6-7 April 2021, which will feature global stakeholders from government, business and civil society dedicated to ensuring the responsible design and deployment of emerging technologies through public-private collaboration. Details of the Davos Agenda can be found here. Read all our updates on our Public Policy web centre

Jan 29, 2021