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Preparing for the future of US tariffs

As US-EU trade tensions continue to escalate, now is the time for Irish businesses to prepare for any potential disruption by assessing their potential exposure and supply chain risks, writes John O’Loughlin On Wednesday, 26 February, during his first cabinet meeting, US President Donald Trump announced tariffs would be imposed on the European Union (EU), stating, “We have made a decision, and we’ll be announcing it very soon. It’ll be 25 percent.” Although no concrete implementation timeline has been disclosed, nor whether these rates will apply universally to all goods or only to certain industries, Trump indicated that levies would be applied “generally”, implying they would “be on cars and all other things”.  Digital services tax memo On 21 February, Trump signed a memorandum directing the US Trade Representative to renew investigations initiated during his first term and assess whether US companies are being adversely affected by countries levying Digital Service Taxes (DSTs). The findings of these reports may result in tariffs being imposed on these countries. Britain, France, Italy, Spain, Turkey, Austria and Canada have been specifically noted within the memo as having DSTs and being subject to this investigation. The administration will also review EU and British policies that may undermine free speech or foster censorship. The Trump administration will also examine EU and British policies that could undermine free speech or encourage censorship. Previous tariffs were suspended to facilitate negotiations for a global tax deal, which have since stalled. Irish and EU reactions Given the heightened risk of a trade war between the US and the EU that has now emerged, companies in Ireland have been increasingly vocal about the potential impact. Glanbia noted that the risk of tariff wars “could potentially impact the importation of key raw materials and/or negatively impact on the group’s international sales channels”. Paul Merriman, founder of AskPaul and CEO of Fairstone Ireland, highlighted that “those who trade in pharmaceuticals and chemicals will see the most notable change as Trump has stated he wants to push manufacturing back onto US soil”. Key actions for businesses US import tariffs on EU goods now seem to be an imminent reality. Key actions businesses in Ireland can and should take include: Assessing your customs data to understand your exposure; Determining the customs origin of goods shipped to the US to see if they are considered to be EU-originating; and Gaining oversight of your end-to-end supply chain, including having the right data, to assess the impact on material sourcing and exposure for tariffs on component parts. Preparing for the future Keeping up to date with the policies and tariff measures implemented by Trump is crucial to evaluating the potential impact of these tariffs and risks to your supply chain. While the exact details of the US President’s EU tariffs are yet to be clarified, understanding your product portfolio and the implications these measures may have on your imports is a vital first step.  John O'Loughlin is Partner for Global Trade & Customs at PwC Ireland You can read John’s earlier article on the global threat of US tariffs at www.accountancyireland.ie

Mar 07, 2025
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Sustainability/ESG Bulletin, 7 March 2025

  In this week’s Sustainability/ESG Bulletin read about a new guide on how accountants can integrate nature into their work, a report on costs facing Ireland for non-compliance with climate targets, the Climate and Environmental Expenditure for 2025 and sustainability in IDA Ireland’s new five-year strategy. Also covered is sustainability in Northern Ireland’s Programme for Government 2024-2027, the UK’s new National Biodiversity Strategy and Action Plan, Accountancy Europe’s analysis of the Omnibus proposal, the conclusion of COP16 in Rome, and the usual articles, resources and upcoming events.   Ireland news New guide for accountants on nature Chartered Accountants Ireland has welcomed the publication of a new guide on how accountants can integrate nature into their work. Why nature matters to accountants addresses the urgent need for accountants to understand and integrate nature-related issues into their work and highlights the financial impact of nature-related issues. It is relevant for accountants in any global region or jurisdiction, and in business and practice. Providing tailored guidance for board members, senior managers, analysts, report preparers, and external auditors, it will help accountants getting started with nature in these roles and for those further along their nature journey or maturity pathway. The guide was developed and prepared by ICAEW for the Global Accounting Alliance (GAA), of which Chartered Accountants Ireland is a member. It launched on World Wildlife Day, 3 March to emphasize the importance of reversing global nature loss to business resilience and economic prosperity. Ireland could face ‘staggering’ costs for non-compliance with climate targets A joint report from two Government advisory councils – the Irish Fiscal Advisory Council (IFAC) and the Climate Change Advisory Council – has warned that Ireland could face costs of between €8 and €26 billion if it misses legally binding climate targets. The report also warns that Ireland is currently on track to overshoot 2030 greenhouse gas emissions target for transport, buildings, small industry, waste and agriculture by around 57 percent.  The costs, described by the report as ‘staggering’, could potentially be more than halved if the Government follows through on its Climate Action Plan, although the report warns that the Plan is not being delivered at the scale or the speed required. The report recommends several actions that would cost less than one-tenth of capital spending planned by the Government out to 2030, and which could dramatically reduce the costs burden, as well as transform Ireland into a healthier, more sustainable, and energy-secure society, reduce reliance on imported fossil fuels, and also boost economic activity and employment in related sectors. Parliamentary Budget Office publishes Climate and Environmental Expenditure 2025 The Parliamentary Budget Office has published its Climate and Environmental Expenditure 2025 in which it details relevant budget allocations for climate action. Within the Revised Estimates for 2025, just over €9 billion has been identified as being climate and environment-related – an increase of almost €2 billion on 2024. €6.996 billion relates to climate ‘favourable’ measures i.e. actions that have a positive impact on Ireland’s transition to a low carbon, climate-resilient and environmentally sustainable economy. The remaining €2.124 billion is identified as being climate ‘unfavourable’ i.e. measures that impede these actions. The report concludes with recommendations that Departments set ‘clear and separate’ performance metrics linked to all climate-related spending – including the use of carbon tax revenues – to help Members of the Houses of the Oireachtas and the public better understand how the allocation of these funds works. IDA Ireland’s new five-year strategy for sustainable growth and innovation IDA Ireland has unveiled its new five-year strategy, Adapt Intelligently: A Strategy for Sustainable Growth and Innovation, 2025-29 with four key strategic objectives: Strengthen long term investment, Scale cutting-edge innovation, Drive sustainable change and Maximise regional opportunities. Under ‘driving sustainable change’ the strategy describes client companies as ‘instrumental in shaping a green and digital global economy’, and Ireland as ‘having the potential to be a prime location for green-powered and digitally enabled enterprises’. The new strategy, which is aligned with the Programme for Government and the White Paper on Enterprise, also identifies four key growth drivers – digitalisation and AI; semiconductors; health; and sustainability.   Northern Ireland/UK news Northern Ireland publishes programme for government The NI Executive has launched its Programme for Government 2024-2027, Our Plan: Doing What Matters Most. Growing a globally competitive and sustainable economy and protecting the environment are among its immediate priorities, and its targets include achieving self-sufficiency with clean and affordable energy and becoming a net exporter of renewables. Proposed measures include helping local businesses cut their energy bills by investing £15 million in the Energy and Resource Efficiency Support Scheme and investing a further £75 million via the Invest to Save Fund into the public sector’s transition to net zero, in addition to publishing a Circular Economy Strategy and a Green Growth Strategy. Unlocking business value through sustainability integration New research from the Sustainability Value Creation Partnership reveals that businesses with deeply integrated sustainability strategies unlock greater value, driving innovation, boosting sales, enhancing reputation, and improving cost control. However, while two-thirds of leaders recognize sustainability’s importance to commercial success, only 37 percent report full integration within their organizations. Read more from Accounting for Sustainability. UK National Biodiversity Strategy and Action Plan The UK government has published its National Biodiversity Strategy & Action Plan (NBSAP) in which it commits to achieving all 23 targets of the Global Biodiversity Framework (see below) at home. The document sets out how the four countries of the UK will work together to address biodiversity loss, drawing on the commitments made by the UK and the UK’s Overseas Territories and Crown Dependencies to summarise and emphasise a collective ambition and determination to work together to address biodiversity loss.   Europe News Accountancy Europe publishes its analysis of the Omnibus proposal Accountancy Europe’s has issued three factual analysis of the European Commission’s (EC) recent Omnibus proposal focusing on: Corporate Sustainability Reporting Directive (CSRD) sustainability reporting standards (ESRS), and Corporate Sustainability Due Diligence Directive (CSDDD). These papers aim to give stakeholders an initial overview of the key proposed changes expected to reshape sustainability reporting and due diligence practices across Europe. The papers can be read alongside Accountancy Europe’s statement on the EC Omnibus sustainability proposal. European Commission adopts Union of Skills The European Commission has adopted a package of initiatives to improve high quality education, training and lifelong learning in the EU. The Union of Skills aims to deliver higher levels of basic and advanced skills, provide opportunities for people to regularly update and learn new skills, facilitate recruitment by businesses across the EU and attract, develop and retain top talent in Europe. The plan is accompanied by an Action Plan on Basic Skills and a STEM Education Strategic Plan to improve skills in science, technology, engineering, and maths, promote STEM careers, attract more girls and women, and boost preparedness in the face of digital and clean-tech transitions.   Environment and climate change a concern of European 16–30-year-olds Forty percent of 25,863 participants in the latest Eurobarometer Youth Survey have identified ‘rising prices and the cost of living’ as a concern, with one third of respondents saying the EU should focus its attention on the environment and climate change over the next five years. The majority of the participants, aged 16-30, for whom social media is the main information source, are also aware of the risks of online disinformation, with 31 percent believing the economic situation and job creation should be a priority.   World news COP16 concludes in Rome The extended session of COP16 concluded in Rome on Friday 28 February, with participants reaching a significant new agreement to address the global nature crisis. Governments agreed on the strategy to raise the funds needed to protect biodiversity and achieve the action targets of the Kunming-Montreal Global Biodiversity Framework (KMGBF), an international agreement aimed at addressing the global biodiversity crisis. The session brings to a successful close the business of the UN Biodiversity Conference, COP16. That meeting was suspended in Cali, Colombia in 2024 after failing to find common ground on a financing deal. UN Global Compact reaffirms support for mandatory human rights and environmental due diligence The world’s largest corporate sustainability initiative, the UN Global Compact, has reaffirmed its support for mandatory human rights and environmental due diligence, a crucial issue as businesses navigate evolving sustainability requirements. The Compact’s newly available Decent Work Toolkit for Sustainable Procurement helps companies, procurement professionals and suppliers align purchasing decisions with decent work principles to enable procurement staff and their suppliers to take action to improve labour conditions for supply chain workers. Report finds financial institutes remain committed to net zero A report from the global non-profit Institute for Energy Economics & Financial Analysis (IEEFA) has found that financial institutions remain committed to their net-zero pledges, despite what it describes as “diffidence towards collaborative action” (a possible reference to the recent exodus of US banks from the Glasgow Financial Alliance for Net Zero). The report, Cautious Urgency Can Resuscitate GFANZ 'Transition-Informed' Indexes, also predicts an expansion in the market for net-zero-aligned indexes. Resources Sustainability trends 2025 2025 is already seeing changes that are reshaping our future. Read about what to expect from sustainability in 2025 in this roundup by Institute Sustainability Advocacy Manager, Susan Rossney, with contributions from experts in reporting, assurance, tax, skills, procurement and more. Climate Ambition Accelerator (Limited Places) The UN Global Compact Network UK is making places available for Irish companies to take part in its Climate Ambition Accelerator. This offers participants a structured pathway and a clear roadmap to set and achieve science-based net-zero targets, align a corporate strategy with a 1.5°C future and to connect with experts & peers to drive climate action. Did you know? A report commissioned by Wind Energy Ireland, Good for your Pocket - How renewable energy helps Irish electricity consumers, has found that scaling up of renewable energy sources in Ireland since 2000 has cut spending on fossil fuels by €7.4 billion and prevented the production of more than 47 million tonnes of CO2 up to the end of 2023. Articles EU firms give cautious welcome to ESG deregulation amid fears of weakened standards (Business Post)   Euro ‘omnibus’ proposal reveals softer CSRD and CSDDD (ICEAW Insights)   European Commission proposes simplification of sustainability reporting rules (Chartered Accountants Ireland)   Trump’s return prompts companies to stifle climate talk with ‘greenhushing’ - Businesses that used to tout carbon-cutting are switching their message (Bloomberg)   Don’t Call It ESG, Call It Resilience - A new taxonomy around environmental, social and governance investing comes as political pressure mounts on investors (Wall Street Journal)   One in seven Irish firms have no women in senior roles (Irish Examiner)   Stand up for the future we want (Sustainable Views – Subscriber only)   Podcasts Zero: Why (Almost) Everyone Hates ESG Right Now (Bloomberg, 26 mins) Reporter Frances Schwartzkopff tells Akshat Rathi why the EU is rolling back some ESG legislation. And reporter Saijel Kishan explains that many companies today are still keeping their ESG plans in place — but just not talking about it.   Why ignoring women endangers the climate | International Women's Day 2025 (Outrage + Optimism, 50 mins) Are women the key to solving the climate crisis? Why are they - and their children - so disproportionately affected by the issue? And how can men step up to support change? To mark International Women’s Day, Christiana Figueres is joined by top climate scientist Dr Katharine Hayhoe. Events Institute of Chartered Accountant England and Wales (ICEAW), 2025: ESG – how should the financial statements reflect sustainability? Gain a practical understanding of how to reflect ESG principles in financial reporting for your organisation. Virtual, 14 & 24 March 2025, 9.30-12.30     EPA, Climate Change Lecture Series - Transformation in a Changing Climate: Insights from the IPBES Transformative Change Assessment Virtual, 26 March, 2025, 7pm   Chartered Accountants Worldwide, Difference Makers Discuss Special: Global Challenges and the Drive for Sustainability with Carmine Di Noia (OECD) In our upcoming episode of Difference Makers Discuss, Ainslie van Onselen, Chair of Chartered Accountants Worldwide and CEO of Chartered Accountants Australia and New Zealand, will be speaking with Carmine Di Noia, the Director for Financial and Enterprise Affairs at the OECD. This special conversation will dive into the crucial global challenges we face today and the role of finance professionals in tackling them. Virtual, 3 April, 18:00 - 18:30 pm BST   Chartered Accountants Ireland ESG Masterclass: Take your sustainability knowledge to the next level (ROI/NI) Masterclass designed for all professional accountants working in business or practice, wishing to consolidate their knowledge and understanding of the sustainability regulatory, reporting and assurance landscape. 9 April, 08:30 – 14.00, Virtual Chartered Accountants Ireland, The SME and SMP Sustainability Workshop A workshop for SMEs and small/medium accounting practices (SMPs) on how to get ahead of the sustainability curve. This interactive half-day session will focus on positive actions you can take to understand the ‘trickle-down’ effect of the Corporate Sustainability Reporting Directive ('CSRD’), green public procurement, access to sustainable finance, and how to make your practice more sustainable to save costs and respond to staff and client demands. Virtual, 23 May, 9.30- 12.30; €60 members; €75 non-members; 3 hours CPD points. EPA, EPA Annual Climate Change Conference 2025 The EPA Annual Climate Change Conference will be held on Wednesday 28 May 2025 in Dublin Castle. Please save the date for this event. In person, May 28, 2025 Sustainability Centre You can find information, guidance and supports to understand sustainability and meet the challenges it presents in our online Sustainability Centre.        

Mar 06, 2025
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Sustainability/ESG Bulletin, 28 February 2025

  In this week’s Sustainability/ESG Bulletin read about our Sustainability Trends overview for 2025. Also covered are measures announced to accelerate electric vehicle take-up, Ireland’s progress towards UN SDG 5 – gender equality, ethical procurement, sustainability in accounting education and financial literacy, a report showing job creation and economic expansion in the UK net zero economy, news from Europe on the ‘Omnibus’ and the Clean Industrial Deal, and the usual articles, resources and upcoming events.   Sustainability trends 2025 2025 is already seeing changes that are reshaping our future. Read about what to expect from sustainability in 2025 in this roundup by Institute Sustainability Advocacy Manager, Susan Rossney, with contributions from experts in reporting, assurance, tax, skills, procurement and more.   Ireland news Measures announced to accelerate transition to electric vehicles The Minister for Transport Darragh O'Brien, TD, has announced a suite of initiatives aimed at accelerating the transition to electric vehicles (EVs) and encouraging a cleaner and more sustainable transport future for Ireland. Administered by the Sustainable Energy Authority of Ireland (SEAI) and funded by the Department of Transport and Zero Emission Vehicles Ireland (ZEVI), the scheme offers grants ranging from €500 to €1,000 for various vehicle categories and will continue in 2025 with a budget of a €12.5 million. To address a particular challenge of home-charging access, the Minister also introduced a Shared Charging Pilot Scheme to be supported by ZEVI and rolled out in urban, suburban and rural area, enabling homeowners to rent their EV chargers to others through a booking platform.   Ireland’s progress towards gender equality – UN SDG 5 The Central Statistics Office (CSO) has published a report on Ireland's progress towards achieving the UN SDGs – Goal 5 Gender Equality 2025. The release is the latest in a series from the CSO that monitor and report on how Ireland is progressing towards meeting its targets under the 17 UN Sustainable Development Goals(SDGs). Among other things, the report points to a steady rise in the proportion of females in managerial occupations, rising from 33.7 percent in 2020 to 38.4 percent in 2024.   Ethical procurement certification for Office of Government Procurement The Office of Government Procurement (OGP) has been recognised with a certification in Ethical Procurement from the Chartered Institute of Procurement and Supply (CIPS). Commenting, Minister of State with responsibility for Public Procurement, Digitalisation and eGovernment, Emer Higgins, TD, said “The Programme for Government outlined ambitions around transparent, sustainable and green procurement practices, and having highly skilled people in this area is crucial to achieving these goals.” The Office of Government Procurement, which is part of the Department of Public Expenditure, Infrastructure, Public Service Reform & Digitalisation, has a significant role in delivering on Government’s vision for public procurement that is sustainable, ethical, innovative, transparent and cost-effective.    Sustainability in accounting and financial literacy in Ireland ‘Ethics and Sustainability in Accounting’ has been identified as a cross-cutting theme in a revised specification for Leaving Cert accounting, published this week by the National Council for Curriculum and Assessment.  The draft is now open for public consultation until Friday 28 April.  Chartered Accountants Ireland (under the auspices of CCAB-I) will be making a submission in response, which will be published on our website. Separately, the Department of Finance has published Ireland’s first National Financial Literacy Strategy with a view to supporting greater overall financial wellbeing and resilience among people in Ireland, as well as guidelines aimed at improving financial literacy, financial resilience and overall financial wellbeing for children and young people. Financial Education in Schools: Guidelines for the Financial Services Industry aim to build quality partnerships between schools and the financial services industry in delivering financial education programmes across the country. OECD makes climate recommendations in biennial assessment of Ireland’s economy The analysis of economic trends, suggested policy recommendations, and overview of structural policy developments in the recently published OECD’s biennial assessment of the Irish economy includes an analysis of Ireland’s progress towards addressing climate change. The Economic Survey of Ireland 2025  makes a number of key recommendations to meet climate targets, including faster implementation of plans and pricing emissions more uniformly across sectors. The OECD, of which Ireland was one of the founding members in 1961, provides access to the highest quality analysis and policy prescriptions and the opportunity to contribute along with larger economies into shaping the economic policy environment internationally.   Northern Ireland/UK news   Northern Ireland consultation on potential development of offshore renewable energy Northern Ireland’s Economy Minister, Caoimhe Archibald, has launched a consultation as a first step towards identifying areas for potential development of offshore renewable energy. Commenting, Minister Archibald said “Offshore renewable energy in our marine area is a key deliverable of the Executive’s Energy Strategy. It could be the north’s most ambitious energy infrastructure plan in a generation, which could supply our homes and businesses with clean and affordable electricity.” The consultation will remain open for 12 weeks until 22 May 2025, and information and to access the consultation is available on the Department's website.   Invest NI offers free sustainability reports for businesses Invest NI is offering free Sustainability Reports for businesses which intends to enable business to measure, monitor and report on environmental impacts, demonstrating transparency and accountability. This support is available to all Northern Ireland businesses with annual energy and resource spend of more than £30,000, which could include the combined value of a business’s heating, electricity, water, waste disposal or raw material billings.   Reforms to UK government’s flagship renewables scheme announced The UK government has unveiled proposals to reform renewable energy schemes as part of its efforts to decarbonise the electricity grid by 2030. The full list of proposed reforms being consulted on include changes to the way budgets for offshore wind are set and published; increasing the contracts for different (CfD) contract term beyond the current 15 years and enabling CfD support for repowered onshore wind projects.  These proposals are the latest actions taken by the UK government to deliver clean power by 2030 and support growth. Other actions included the launch of the Clean Industry Bonus, incentivising offshore wind developers to invest in cleaner supply chains and create jobs in industrial communities.     UK’s net zero economy a “powerhouse of job creation and economic expansion” A report by the Confederation of British Industry (CBI) has described the net zero economy as “a powerhouse of job creation and economic expansion” supporting 10.1 percent growth in total economic value since 2023.  The report, The Future is Green: The economic opportunities brought by the UK's net zero economy, identified 22,800 net zero businesses in 2024, with small and medium-sized enterprises (SMEs) making up 94 percent of the sector, together contributing £28.8 billion into the economy and support 273,000 full-time jobs, outpacing employment in the telecommunications industry. It also attracted £23 billion in funding in 2023/25, with £20.1 billion coming from foreign direct investment (FDI), a growth of 47 percent compared to 2022/23.    Europe News   The EU released its ‘Omnibus’ package this week, proposing significant changes to sustainability reporting, notably to the CSRD, CSDDD, Taxonomy, and CBAM. The legislative proposals will now be submitted to the European Parliament and the Council for their consideration and adoption. The changes on the CSRD, CSDDD, and CBAM will enter into force once the co-legislators have reached an agreement on the proposals and after publication in the EU Official Journal. For early insight, watch our 30 minute webinar with David Connolly, FCA who provided insights from Wave 1 reporting and an at-a-glance view of the Omnibus proposals. See coverage by Chartered Accountants Ireland. Chartered Accountants Ireland will continue to cover developments as they unfold.   The European Commission has presented the Clean Industrial Deal, a business plan to support the competitiveness and resilience of EU industry. The Deal aims to accelerate decarbonisation, while securing the future of manufacturing in Europe. The Deal focuses mainly on two closely linked sectors: energy-intensive industries and clean technology. As part of the Clean Industrial Deal, the Commission will also adopt a new Clean Industrial Deal State aid framework by June 2025 to accelerate the roll-out of renewable energy, deploy industrial decarbonisation and ensure sufficient manufacturing capacity of clean technology.   World news The OECD has published a paper that maps diverse patterns of worker rights along supply chains, considering all labour embodied in OECD countries’ final demand for a good or service. The paper, Mapping efforts to protect worker rights in supply chains,  compares three instruments designed to safeguard worker rights in the context of international trade: trade agreements, voluntary sustainability initiatives, and supply chain sustainability laws, and documents their coverage of specific supply chains.   Technical Roundup (From our colleagues in Professional Accounting on 21 February ) The International Auditing and Assurance Standards Board (IAASB) and the International Accreditation Forum (IAF) have confirmed a new partnership enforcing a shared commitment to high-quality sustainability assurance. The International Sustainability Standards Board has released its Q1 2025 Implementation Insights podcast.   Resources A new book has published that explores key debates shaping the future of business and sustainability has published. For the World’s Profit: How Business Can Support Sustainable Development, published by The Brookings Institute, includes a chapter on the rollout of International Standard on Sustainability Assurance (ISSA) 5000 and the evolving assurance ecosystem.   Articles EU to keep climate goals but loosen rules for companies, says green chief (Financial Times) UK accountants push to end fees cap on ESG work for audit clients (Financial Times) IAASB and IAF Strengthen Collaboration to Enhance Sustainability Assurance (IAFA) Safeguarding the EU's sustainable finance framework is critical for its competitiveness (Environmental Finance) Just the Facts | What is the EU Competitiveness Compass? (European Movement) Why Membership Organisations Are Now More Important Than Ever (Climate Action for Associations)     Events   Mid South West Economic Engine, SME Big Breakfast Briefing: Reduce Energy Costs with Net Zero Action Hosted by BBC’s Louise Cullen, attendees at this event will gain exclusive insights from Invest NI, hear the real success stories from local businesses and learn how to be the Supplier of Choice in 2025. There will be insights from Invest NI’s Green Economy Team and a session on how to be the Supplier of Choice in 2025. The Carbonfit team will be on hand to help you sign up and get started. In person, Glenavon Hotel, Cookstown, BT80 8QS, 6 March, 09:00 - 14:00   Institute of Chartered Accountant England and Wales (ICEAW), 2025: ESG – how should the financial statements reflect sustainability? Gain a practical understanding of how to reflect ESG principles in financial reporting for your organisation. Virtual, 14 & 24 March 2025, 9.30-12.30     EPA, Climate Change Lecture Series - Transformation in a Changing Climate: Insights from the IPBES Transformative Change Assessment The EPA, as part of the National Dialogue on Climate Action, will host a public lecture online on 26th March 7:00pm Virtual, 26 March, 2025   Chartered Accountants Worldwide, Difference Makers Discuss Special: Global Challenges and the Drive for Sustainability with Carmine Di Noia (OECD) In our upcoming episode of Difference Makers Discuss, Ainslie van Onselen, Chair of Chartered Accountants Worldwide and CEO of Chartered Accountants Australia and New Zealand, will be speaking with Carmine Di Noia, the Director for Financial and Enterprise Affairs at the OECD. This special conversation will dive into the crucial global challenges we face today and the role of finance professionals in tackling them. Virtual, 3 April, 18:00 - 18:30 pm BST   Chartered Accountants Ireland ESG Masterclass: Take your sustainability knowledge to the next level (ROI/NI) Masterclass designed for all professional accountants working in business or practice, wishing to consolidate their knowledge and understanding of the sustainability regulatory, reporting and assurance landscape. 9 April, 08:30 – 14.00, Virtual Chartered Accountants Ireland, The SME and SMP Sustainability Workshop A workshop for SMEs and small/medium accounting practices (SMPs) on how to get ahead of the sustainability curve. This interactive half-day session will focus on positive actions you can take to understand the ‘trickle-down’ effect of the Corporate Sustainability Reporting Directive ('CSRD’), green public procurement, access to sustainable finance, and how to make your practice more sustainable to save costs and respond to staff and client demands. Virtual, 23 May, 9.30- 12.30; €60 members; €75 non-members; 3 hours CPD points.   EPA, EPA Annual Climate Change Conference 2025 The EPA Annual Climate Change Conference will be held on Wednesday 28 May 2025 in Dublin Castle. Please save the date for this event. In person, May 28, 2025     Sustainability Centre You can find information, guidance and supports to understand sustainability and meet the challenges it presents in our online Sustainability Centre.  

Feb 28, 2025
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2025 – Sustainability Trends

  2025 is already seeing changes that are reshaping our future. ESG principles are experiencing political pushback in some regions, and a doubling-down on actions and investments in others. January fires in LA, storms in Ireland, changing regulatory frameworks, shifts in global power and advancements in artificial intelligence show that the trends of 2025 are poised to redefine our lives. The landscape in 2025 underscores a crucial truth: sustainability is no longer optional but essential for business resilience, competitiveness and long-term success.   A dangerously divided world The World Economic Forum (WEF) at Davos this year saw world leaders describing a “dangerously divided and ideologically incoherent” world. State-based armed conflict topped the list of risks likely to present a material crisis on a global scale in 2025 in the forum’s Global Risks Report 2025. Extreme weather events, geoeconomic confrontation, misinformation & disinformation, and societal polarisation remained the highest short-term risks. Longer-term (10 years) the top four risks identified were extreme weather events, biodiversity loss and ecosystem collapse, critical change to Earth systems, and natural resource shortages.   This divided world is reflected in the polarisation of opinion on ESG. Political pushback against ESG in some regions – notably the US – is being met by a doubling-down on actions and investments in others like China as the global value of ESG assets is still expected to reach $35 - $50 trillion by 2030.   Political change US President Donal Trump has signalled an anti-ESG era in American policies and attitudes, but it is not as simple as ‘turning ESG off’. Many of the new governments elected in 2024 remain committed to ESG-related principles in some form. The UK’s new Labour government has introduced several policies to support a 2050 net zero goal. Ireland’s new Programme for Government continues to commit Ireland to accelerating progress towards achieving the 17 Sustainable Development Goals (SDGs). It also plans to further develop the sustainable finance sector, renewable energy and upskilling and training, and provide more supports for industry to decarbonise and embrace a circular economy. The EU’s landmark 2024 Draghi Report drew parallels between the bloc’s future long-term competitiveness and decarbonisation and social justice. The recently released EU Competitiveness Compass framework aims to “rekindle economic productivity and secure the EU’s competitive edge” through an Affordable Energy Action Plan, a Clean Industrial Deal, an Industrial Decarbonisation Accelerator Act and action plans for energy intensive sectors (such as steel, metals, and chemicals).  Although certain large companies called for the EU not to re-open negotiations on sustainability reporting and due diligence legislation to ensure that much-needed certainty prevails, the EU announced its ‘Omnibus’ package this week to simplify the EU Taxonomy, the Corporate Sustainability Reporting Directive (CSDD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Despite fears that the measures will weaken transparency and negatively impact private investment in green projects, the European Commission insists the package will make sustainability reporting more accessible and efficient, and will mobilise €50 billion in additional public and private investment.  The Omnibus is expected to be the first milestone of many as the EU works to balance competitiveness and resilience with achieving sustainability results and acting as a ‘guiding light’ for other jurisdictions and markets.   The renewable energy revolution continues  In 2023, the world passed a clean energy milestone as a record-breaking 30 percent of the world’s electricity was produced by wind and solar power. The revolution in renewable energy shows little signs of slowing, a trend driven by economics rather than government policies, according to Fatih Birol executive director of the International Energy Agency (IEA). True, the EU and US are likely to take diverging paths, but Marie Joyce, COO and CFO of NTR plc maintains that while the pathways may differ, the global transition to sustainable energy remains an inevitable and necessary shift, driven by both economic and environmental imperatives. “The US experienced a surge in energy transition investments over the past couple of years under the Biden administration, largely due to the Inflation Reduction Act. However, that momentum is likely to slow as investors grow wary of potential policy shifts under Trump. This pattern of fluctuating commitment to energy transition has long been a feature of the US landscape, yet the industry has continued to grow. Despite heightened uncertainty, this growth is likely to persist, while Europe's approach will remain steady—because we simply have no viable alternative.” Europe has maintained a clear and consistent policy centred on reducing reliance on fossil fuels, and in 2024 produced more electricity from solar than coal for the first time. This, Joyce notes, is partly driven by decarbonisation goals, but is primarily motivated by the need to ensure energy resilience and mitigate the volatility of energy costs. The International Energy Agency (IEA) expects the world to add 5,500 GW of renewable energy capacity between now and 2030. This global trend is visible in national policies. Despite cries of ‘drill, baby, drill’, renewable energy sources are expected to meet almost half of all electricity needs globally by the end of this decade. The UK closed its last coal-fired power plant in 2024, and China is forecast to make up at least half of the world's cumulative renewable electricity capacity by the end of the decade. Ireland’s Programme for Government aims to achieve ‘energy independence’ via renewable energy resources with a goal to achieve 80 percent of Ireland’s electricity generation from renewable sources by 2030. The High Court recently ruled  that planners had failed to comply with climate law by not attaching enough importance to the need for renewable energy as a climate action measure when denying a wind farm planning permission. This underscores the strength of climate legislation and could significantly boost renewable energy projects while hindering developments that increase greenhouse gas emissions.   The economic and social need for the low-carbon transition Transitioning to a low-carbon economy and society is vital for economic as well as environmental reasons. Recent reports from the World Economic Forum warn that climate inaction could cost businesses up to 7 percent of annual earnings by 2035. As Ani Dasgupta, president of the World Resources Institute, puts it: “Walking away from the Paris Agreement won’t protect Americans from climate impacts, but it will hand China and the European Union a competitive edge in the booming clean energy economy.” Global companies like IKEA have likewise acknowledged that decarbonisation is essential for both business viability and environmental responsibility. In Ireland, the Irish Fiscal Advisory Council warns that failure to meet our emissions targets will lead to compliance costs of circa €0.35 billion annually to 2030 and €0.7 billion annually thereafter. In its December 2024 Fiscal Assessment Report in December 2024 it warned that the climate transition is the second largest budgetary challenge Ireland faces after ageing: “The climate transition raises challenges, but doing nothing has substantial costs. If Ireland fails to reduce its emissions, as it currently looks set to by a wide margin, it may have to transfer large amounts of money to neighbouring countries. This would be in the form of the government being required to purchase statistical transfers or credits. A recent report by T&E (2024) suggests Ireland’s costs could be between €1.7 and €9.6 billion by 2030. However, these estimates assume Ireland follows through on measures that it looks increasingly unlikely to implement. If these measures were not implemented, then the State would be further from its climate objectives and would face much higher compliance costs, potentially as high as €20 billion.”   Skilling up to meet demand To achieve this transition companies are likely to continue to build skills in 2025 to meet market demand to fill the growing number of jobs required. In the US there are at least 10 million jobs in the green economy, compared with 300,000 in the fossil fuel industry, and organisations globally are building climate literacy among employees and board members. In Ireland, demand for green talent grew by over 22.1 percent in 2024 – well above the global average of 11.6 percent – according to a report published by the IDA. This trend is likely to continue in 2025. Grace Cartin ACA, Audit & Assurance Partner with Deloitte in Belfast, notes that ESG is becoming a significant growth area for audit and assurance teams across Ireland. “ESG requires a new skillset be developed by firms, as the evolving assurance requirements call for specialised expertise in the market. We have responded by upskilling current audit team members. This focus on upskilling and gaining experience in areas beyond ‘traditional’ audit services helps address the challenges of skills and talent retention. It also provides employees with a more diverse range of experiences and career opportunities.  As a result, Deloitte is turning the skills and talent challenge into an opportunity by developing talent internally and offering a broader career path.” The need to build skills is being addressed by professional accounting bodies. Chartered Accountants Ireland’s Director of Education Ian Browne explains: “as financial reporting and auditing and assurance broadens to take in the scope of its sustainability obligations, this will be reflected in the professions’ qualification curriculum.” “We have seen a considerable uptick in demand for sustainability training over the past two years”, says Joseph Carroll, Head of Professional Development with Chartered Accountants Ireland. “There’s a real appetite among finance professionals for in-depth knowledge skills for use on the job, particularly on double-materiality assessment. It’s a trend we expect will continue into 2026 and 2027.”   The need for ‘trail-blazing’ climate action “Blazing temperatures in 2024 require trail-blazing climate action in 2025,” UN Secretary-General António Guterres announced, as he called on the world “to fight even harder to get on track”. All indicators point to a relentless rise in global temperatures to continue in 2025, meaning that both mitigation (reducing harmful emissions) and adaptation (adapting to the effects of climate change – wildfires, flood, droughts, migration, costs, and more) have never been more necessary. The need for adaptation by businesses to climate events or face significant costs grows ever more urgent.  Global heating is driving both extreme droughts and floods with rapid switches – the so-called ‘whiplash effect’ – between extremely wet and dry conditions. This effect is increasing exponentially around the world, and is said to have catalysed the Los Angeles wildfires in January which is likely be one of the costliest natural disasters in US history.  According to global reinsurer AON economic losses resulting from natural disasters in 2024 amounted to $368 billion, making 2024 the ninth consecutive year of losses exceeding $300 billion. In Europe, the European Environmental Agency (EEA) predicts that weather- and climate-related extremes will see economic losses of assets increase as severe events intensify further. In a report published in December, the European Central Bank and European Insurance and Occupational Pensions Authority warned that climate change is increasing the frequency of natural disasters with multibillion euro costs being left uncovered by insurance. They advised the EU to create a taxpayer-funded disaster relief fund and a publicly-backed reinsurance scheme to fill the growing gap for insuring against these natural catastrophes. In Ireland, the national adaptation platform, Climate Ireland, warns that flooding poses a serious threat, particularly along the coast where most of the population and infrastructure is concentrated. Scientists in the University of Galway have warned that Ireland’s future weather will be even warmer and wetter than previously predicted and a survey shows that dealing with flooding or storms is likely to cost Ireland’s insurance industry up to €1.5 billion over the next decade. The Central Bank of Ireland’s 2024 Flood Protection Gap Report estimates the average annual cost of inland (river and surface water) flooding is €101m, with a €510m loss expected about once every 25 years. As well as too much water, too little water is likely to cause business disruption both within and beyond a business’s immediate locality. For example, 40 percent of facilities that make semiconductors – a core component of enabling technologies critical to economic growth, national security, and global competitiveness – are based in regions likely to be significantly impacted by severe water stress. No surprise, then, that supply chain resiliency was found to be the fastest-growing investment priority for businesses in a global survey by The Capgemini Research Institute.   Nature and biodiversity and business Nature and biodiversity information will be crucial for businesses in 2025. Fifty-five percent of the world’s GDP, equivalent to an estimated $58 trillion, is moderately or highly dependent on nature and biodiversity, both of which are fundamental to long-term business survival. Ecosystems accounting and nature-based solutions (i.e. managing, protecting or restoring ecosystems, to benefit both biodiversity and people) are also expected to gain momentum in 2025 as a means whereby business can address both climate and biodiversity challenges. The Central Statistics Office published a full set of ecosystem accounts for one of Ireland's ecosystems (Forests and Woodlands) for the first time in 2024, with details of the ecosystem services they provide. At a policy level, the EU Nature Restoration Law, enacted in last year, requires Member States to submit a Nature Restoration Plan to the European Commission by 2026, and sets binding targets to restore degraded ecosystems, particularly those with the most potential to capture and store carbon. Ireland’s National Biodiversity Action Plan aims to have 900 businesses involved in the Business for Biodiversity platform by 2025 to enhance private sector action on biodiversity. Companies themselves are increasingly recognising the importance of protecting natural ecosystems, not only to mitigate risks but also to seize opportunities for innovation and resilience. Companies in scope of the Corporate Sustainability Reporting Directive (CSRD) must disclose their impacts, risks, and opportunities related to nature and biodiversity against ESRS 4. Outside of CSRD, many other companies are voluntarily disclosing their nature-related issues to investors using recommendations from the Taskforce on Nature Related Financial Disclosures (TNFD). As these reporting obligations ‘trickle-down’ to the level of the SME sectors, companies across the economy are finding themselves asked to provide key customers with nature-related information, often for the first time, for fear of losing valuable contracts. With more business coming into scope of these regulations in the coming years, understanding a businesses’ impacts and dependencies on nature has never been more important.   Sustainability Reporting…. The advent of reporting frameworks globally, both voluntary and otherwise, mean that more and more companies will develop and publish detailed sustainability reports in 2025. The first wave of CSRD reports, publishing in early 2025, are likely be subject to a high level of scrutiny from stakeholders, particularly as to how the companies approach Double Materiality Assessments (DMA). While there have been changes proposed with the recenty ‘Omnibus’ package, other companies can look to the first wave examples if they face the same challenges in terms of establishing their DMA approach, as well as collecting and managing the data. “Accountants have a critical role to play in assisting companies in, both large and small, with this work”, notes Dee Moran, Head of Professional Accountancy at Chartered Accountants Ireland. “We are continuing to monitor developments on behalf of our members.” Meanwhile there are useful resources that members can look to. IBEC and Davy have published a toolkit for understanding and implementing the CSRD requirements, for both organisations in scope looking to refine their reporting practices, as well as the small enterprises beginning their sustainability journey who may not be in scope directly. …and Assurance In Ireland, assurance of sustainability information in reports will be conducted by statutory auditors who are also approved as sustainability assurance providers. Companies will need to have their sustainability reports assured to increase the confidence of external users in the accuracy and reliability of their ESG disclosures in line with the required standards. Chartered Accountants Ireland has issued Audit Regulations (incorporating assurance under CSRD), and Guidance, Ireland (October 2024) setting out the Institute’s regulatory framework for the approval and regulation of statutory auditors who are approved to carry out sustainability assurance.  Chartered Accountants Ireland also revised the CPD Regulations with effect from 1 January 2025, which now specifically mention 'sustainability assurance' as a subject area in which a member who is working in practice should undertake CPD if that member is involved in work of this nature.   Useful resources include Accountancy Europe’s new webpage of FAQs: fundamentals to assurance on sustainability reporting. The International Federation of Accountants (IFAC) and the We Mean Business Coalition (WMBC), together with the Global Accounting Alliance (GAA), have also published a report titled ‘Building Trust in Sustainability Reporting and Preparing for Assurance: Governance and Controls for Sustainability Information’.   Sustainable Finance and Governance The sustainable finance landscape will continue to evolve in 2025, as companies aim to fund sustainability improvements and capture opportunities. Sustainable investing is expected to gain prominence globally, with ESG ratings play an increasingly central role. emerging initiatives in transition finance should be availed of. In 2025, Ireland’s sustainable finance sector is likely to see significant advancements, driven by the implementation of the Ireland Sustainable Finance Roadmap, which aims to position Ireland as a global leader in sustainable finance. There is likely to be a growing appetite for sustainable projects and climate investments in Ireland in 2025, as well as in green lending (AIB saw green lending grow to €3.7 billion, accounting for 30 percent of total new lending last year, and aims for 70 percent of new lending to be green by 2030). The Cambridge Institute for Sustainability Leadership (CISL) has published a guide for investors to build climate resilience within their portfolios, and confidence in sustainability governance had grown significantly year-on-year according to the annual survey of directors and executives from around the world conducted by INSEAD Business School. Strong sustainability governance is being driven by multiple stakeholders, including investors and lenders, regulators, and customers. Níall Fitzgerald, Head of Ethics and Governance with Chartered Accountants Ireland, highlights that “sustainability reporting and assurance are critical elements, but organisations will also be judged by their actions. These include managing elements of governance from sustainability strategies to skills throughout the organisation, resources, effective risk management, and strong internal controls.” He adds “Chartered Accountants Ireland’s work with Chapter Zero Ireland and Accountancy Europe indicates a strong commitment in 2025 by directors of all organisations in private, public, and non-profit sectors to upskill in sustainability governance to keep up with the pace of change”. Another platform for raising sustainable finance that is expected to remain in news this year is the voluntary carbon markets (VCMs). Talks at the 2024 global climate summit COP29 in Baku, Azerbaijan, finally agreed on new rules which would allow the launch of a centralised accounting system, run by the UN, allowing for countries and companies to begin offsetting their carbon emissions and trading those offsets.   Sustainability and SMEs (and small accounting practices) While most small to medium enterprises (SMEs) are not yet in scope of sustainability reporting regulations, sustainability has grown in relevance for many of their customers or clients. Companies obliged to disclose their own environmental, social and governance (ESG) information and that of their supply chain are increasingly requiring SMEs to provide ESG information or risk losing the contract or tender.   While formerly the preserve of large accounting practices, advising on climate and sustainability is now ‘trickling down’ into small/medium accounting practices (SMPs). Accountants are increasingly finding themselves ‘accounting for sustainability’ in their own practices, and measuring climate-related impacts, risks and opportunities for their clients. SMPs, the trusted (and sometimes only) advisor to SMEs either in scope of new legislation or in the supply chains of in-scope companies, may find themselves playing a stronger role in the SME sector in 2025 to help bridge the knowledge gap that exists of the growing importance and complexity that climate change presents for Irish business. Chartered Accountants Ireland is continuing its series of workshops for SMEs and Small to Medium Sized Accounting Practices in 2025, with the next workshop taking place on 23 May.   Public procurement SME in particular are likely to be affected by ‘green public procurement’, the process whereby public bodies seek to procure goods, services and works with a reduced environmental impact throughout their life cycle when compared to goods, services and works with the same primary function that would otherwise be procured. As the Government of Ireland’s annual public sector purchasing accounts for 10% to 12% of Ireland’s GDP, procurement has been identified as having a key role in helping Ireland become more resource efficient. A new Green Public Procurement Strategy and Action Plan 2024-2027 was published in 2024. It aims to play a key role in driving the implementation of green and circular procurement practices across the public sector.  Delivery of a new Green Public Procurement Strategy and Action Plan is an important commitment in the Government’s Climate Action Plan 2023. This plan includes, among other things, a mandate to accelerate Green Public Procurement implementation.   AI and ESG In 2025, two megatrends, AI and sustainability, are expected to converge to redefine how businesses address environmental and social challenges. The UN Global Compact and Accenture have developed a guide to accelerating sustainable development with technology in GenAi for the Global Goals, which outlines ways that artificial intelligence can be used to advance sustainability. Automating reporting and improving data quality with better data extraction and analysis and predictive modelling are just some of the ways in which AI and blockchain might revolutionise sustainability reporting in 2025 and beyond. Significant growth in data centres to power data centres for AI computing has also led to a debate around nuclear energy. Tech giant Microsoft last year entered into a power purchase agreement with Constellation Energy enabling the restart of the Three Mile Island Unit 1 nuclear reactor in Pennsylvania in order to meet the company’s goal of having 100 percent of its electricity consumption, 100 percent of the time, matched by purchases from zero carbon energy sources by 2030. Google has signed a deal to use small nuclear reactors to generate the vast amounts of energy needed to power its artificial intelligence (AI) data centres.   Tax and ESG In 2025, tax and ESG are likely to converge more closely as regulatory frameworks increasingly integrate sustainability into tax policies. Ireland’s Programme for Government has committed to retain the planned increases in carbon tax, with a planned rise of €7.50 per tonne of CO2, to fund initiatives such as social welfare programmes and a national retrofitting scheme. For some companies, tax could be considered as a material sustainability topic given the significance of tax contributions to society and heightened investor scrutiny on tax. Under CSRD, companies must disclose information about their business model, strategy and value chain, highlighting how their tax practices align with their ESG commitments.  Surveys are showing how many companies have already involved their tax departments in CSRD implementation, with more signalling plans to do so in 2025 and beyond. “Tax is a key lever for governments in accelerating the green transition” says Gearóid O’Sullivan, Head of Tax, Chartered Accountants Ireland. “As such, we can expect tax advisors to play an ever-increasing role in assisting businesses navigate each ESG pillar to support the transition to a green, net-zero economy. The role of the advisor in managing the complexity of this transition has never been more crucial.” Litigation              Climate and environmental issues are likely to come before the courts once again in 2025 as a ‘surge in greenwashing litigation’ is predicted, with cases challenging companies’ claims about their climate commitments or sustainability efforts. According to Climate Change Litigation Databases of the 224 suits against corporations, 73 are for misleading advertising. In Ireland a new division of the High Court has been established that is dedicated to Planning and Environmental cases saw its live caseload increase by 73 percent from October 2023 to November 2024.   Diversity, Equity, and Inclusion In 2025, DEI (Diversity, Equity, and Inclusion) in the workplace is expected to continue to focus on creating more inclusive and equitable environments. Despite some companies scaling back their DEI efforts due to external pressures, particularly in the US, many others are doubling down on their commitments.  “Companies that scale back on DEI efforts risk not only regulatory scrutiny but also falling behind competitors who embrace inclusive practices” according to an article on navigating backlash and progress in 2025 in FT Longitude, which states that “The future of work will be defined by organisations that embrace complexity and lead with inclusion.” Dee France, Wellbeing and Support Lead at Chartered Accountants Ireland and Chair of the Chartered Accountants Worldwide Wellbeing Taskforce, agrees that embracing diversity, equity, and inclusion (DEI) should be seen as more than a moral obligation: “Despite the early pushback on DEI initiatives by the new Trump administration, it is a strategic necessity. It drives innovation, boosts financial performance, and equips organisations for sustainable success in an increasingly complex and interconnected world. Globally, companies with above-average diversity on their executive teams are 36 percent more likely to outperform their peers financially, according to McKinsey.” An inaugural global report into the resilience of the Chartered Accountancy profession conducted by Chartered Accountants Worldwide Wellbeing Taskforce (in collaboration with the Resilience Institute) has also found that targeted skill development and resilience-training is needed foster a thriving and sustainable profession in the face of challenges such as multitasking, avoidance, and worry, which can erode resilience and mental health. New rules to improve gender balance in corporate boards have also entered into application in the EU, with the Gender Balance on Corporate Boards Directive aiming for a more balanced gender representation on the boards of listed companies across all EU Member States. The Directive sets a target for EU large listed companies of 40 percent of the underrepresented sex among their non-executive directors and 33 percent among all directors. The deadline for the transposition by Member States was 28 December 2024, and companies must meet the targets by 30 June 2026.   Collaboration With some notable exceptions (like the exodus of US banks from the Net-Zero Banking Alliance) the growth of collaboration within and across industries is expected to grow in 2025. “Collaboration across industries, governments, and civil society will be paramount in addressing the multifaceted challenges”, according to the International Institute for Management Development (IMD), and will enable companies to share information on evaluating impacts, risks and dependencies and opportunities. In late 2024, the UN Global Compact Network launched an Ireland branch, connecting Irish businesses to a global movement dedicated to advancing sustainable business practices and aiming to achieve the UN Sustainable Development Goals (SDGs). Membership of this network is expected to grow in 2025 as companies seek support to achieve ambitious goals and become more resilient.     Chartered Accountants Ireland will continue to provide thought leadership, education and lifelong learning and training to our members and to the wider business community as a leading business voice on sustainability in Ireland. You can keep up to date with on sustainability with information, guidance and supports to understand sustainability and meet the challenges it presents in our online Sustainability Centre at Chartered Accountants Ireland  

Feb 28, 2025
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Webinar recording: Insights into first wave of CSRD reports

  Today's Chartered Accountants Ireland ESG Network meeting was joined by guest speaker David Connolly, a Fellow of Chartered Accountants Ireland, and Director with EY’s Climate Change and Sustainability Services, a specialized team within EY dedicated to helping financial institutions navigate the complex world of climate change and sustainability. In this recording  you can watch David's insights from Wave 1 reporting on the day the EU released its 'omnibus' package of simplification proposals. These propose to amend four key rules from the European Green Deal: The Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy on Sustainable Investments and the Carbon Border Adjustment Mechanism (CBAM).

Feb 26, 2025
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Adapting Ireland's pension system for a sustainable future

Ireland’s pension system stands at a critical juncture driven by evolving market conditions and demographic shifts. Rav Vithaldas delves into the details The pension market in Ireland is characterised by a growing shift towards defined contribution (DC) schemes, consolidation and regulatory compliance. Our pension system comprises a basic state pension, employer-provided occupational schemes and private personal plans, all incentivised with tax benefits and options for voluntary contributions. According to the Central Bank of Ireland (CBI), the total assets of the Irish pension fund sector increased by 2.4 percent in the third quarter of 2024 to total €142 billion. The most prominent pension funds among our occupational pension schemes include master trusts, designed to provide a governance structure that allows multiple employers to participate in a single, centrally administered, pension arrangement. This can be particularly beneficial for small and medium-sized enterprises (SMEs) that may not have the resources to manage their own standalone pension schemes. The introduction of master trusts is part of a broader trend towards pension consolidation and is in line with the EU’s Institutions for Occupational Retirement Provision (IORP) II Directive, which aims to improve the governance and transparency of occupational pension schemes. Challenges in the Irish pension system Ireland’s pension system faces two challenges: rising occupational pension coverage and consolidating DC funds. Auto-enrolment is the main strategy employed to expand coverage, targeting about 800,000 workers without employer pensions, but its implementation has been delayed. With auto-enrolment on the horizon, master trusts are expected to manage more assets in the coming years, largely driven by regulatory changes. Initially, SMEs were the ones transitioning to master trusts, but as trust in this market strengthens, larger entities are also increasingly opting for master trusts. Consolidation is also progressing, driven by the IORP II Directive, which reduced the number of defined benefit (DB) schemes from 766 to 480 within a year. The industry goal to reduce group DC schemes to 500 or fewer indicates that about 12,000 schemes are yet to be consolidated. Age of retirement Along with these structural changes, the Irish pension market is increasingly integrating environmental, social and governance factors, driven by regulatory compliance and a desire to align with beneficiary values. Pension funds are updating policies, conducting ESG analyses, practising active stewardship and applying exclusionary screens. They are also investing in ESG assets, exploring impact investments, focusing on enhanced transparency and education, and participating in global initiatives like Principles for Responsible Investment (PRI). Despite these trends, Ireland continues to grapple with challenges arising from the absence of a legally mandated retirement age. This situation has led to issues such as a lack of clarity regarding retirement timing, inconsistent retirement ages in different companies (complicating the prediction of pension liabilities and funding), the potential for age-based discrimination and challenges for trustees managing delayed benefit payouts. In 2025 and beyond, Ireland's pension sector will likely be shaped by several key themes: Auto-enrolment rollout: From 30 September 2025, employers will be required to integrate auto-enrolment systems, which will require careful planning for compliance and a smooth transition. State pension sustainability: With demographic changes, there will be more focus on the financial sustainability of state pensions and retirement age policies, necessitating vigilance and flexibility. Flexible retirement: Employers and trustees must accommodate varying retirement preferences while adhering to regulations. DB scheme challenges: Financial pressures and solvency requirements for DB Schemes demand proactive risk management and member protection. Governance and investment strategies: Evolving market conditions and changes to the Standard Fund Threshold call for improved governance and investment strategies, with a growing emphasis on ESG factors. Digital resilience: Cybersecurity and data protection will become more critical, requiring ongoing investment in technology and strict operational standards. AI in pension administration: Artificial intelligence will bring process enhancements to pension administration but must be implemented with careful ethical and regulatory considerations to maintain trust and integrity. While these new trends in the Irish pension market address challenges arising from the lack of a statutory minimum retirement age, our perspective on Ireland’s pension system is that it currently stands at a critical juncture whereby: An ageing population necessitates reforms for better pension coverage and retiree adequacy; The shift from DB to DC schemes offers flexibility and improved risk management; Auto-enrolment pension schemes aim to boost participation and secure retirement for more workers; Master trust consolidation in Ireland indicates a move towards more efficient and professional pension management, driven by regulatory changes, cost pressures and a push for better governance; and Sustainable investing within pension funds showcases a commitment to ESG, aligning with responsible investing trends and mitigating ESG risks. Overall, these developments reflect a proactive approach to evolving market conditions and demographic shifts, aiming to ensure the sustainability and adequacy of retirement provisions for Irish citizens. Rav Vithaldas is Partner and Pensions Assurance Leader at EY Ireland 

Feb 20, 2025
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