In this week’s Public Policy news, read how the Government’s new Investment Limited Partnership (Amendment) Bill will make Ireland’s international financial services sector more competitive; how Ireland’s living wage is set to remain unchanged at €12.30; how concerns about deforestation and climate impact are affecting the EU-Mercosur Trade Deal; and how, in the first truly co-ordinated approach to ESG reporting, the World Economic Forum has joined forces with Big Four accounting firms to create an ESG reporting standards framework.Bill to modernise Ireland’s international financial services sectorThis week, the Irish Government approved the draft text and publication of the Investment Limited Partnerships (Amendment) Bill 2020. This Bill will modernise the Investment Limited Partnership Act, 1994. It will enhance the development and competitiveness of Ireland’s international financial services sector, making it more competitive and enriching its regulatory environment. Among other things, the Act will also extend anti-money laundering beneficial ownership requirements to Investment Limited Partnerships and Common Contractual Funds, and will provide relevant powers to the Central Bank to verify PPS numbers relating to beneficial ownership registers. The Bill also makes some technical amendments to the Irish Collective Asset Management Vehicles Act of 2015 to enhance the efficiency of the structure and also align it with the Companies Acts. This modernisation is a longstanding priority of the ‘Ireland for Finance Strategy’. Launched in 2019, this is Ireland’s strategy for the development of Ireland’s international financial services sector to 2025. Its vision is to make Ireland the location of choice for specialist international financial services. One of its aims is to grow employment in the sector to 50,000 people (up from 44,000 people directly employed in the sector at the end of 2018), and increase Ireland’s ranking as a financial services centre at a global and EU level. Minister for Finance, Paschal Donohoe TD, described the Bill as “an important step to maintain Ireland’s place as a leader for investment funds in Europe…[and] as a means to promote investment and Ireland’s competitiveness and sound regulatory environment in international financial services [the need for which] is more acute in the wake of the economic impact caused by COVID-19’.The full text of the Bill can be found here. No recommended changes to Ireland’s Living Wage Rate There is to be no change to Ireland’s Living Wage rate of  at €12.30 per hour for 2021. The announcement follows fresh calculations on living costs and taxation by the Living Wage Technical Group (LWTG), a technical group that works to establish a methodology for calculating the Republic of Ireland Living Wage. Established in 2014, the LWTG defines a living wage as “an hourly wage rate that should provide employees with sufficient income to achieve an agreed acceptable minimum standard of living”.  Any changes to the rate is determined by a fluctuation of living costs and taxation.According to a member of the LWTG, Dr Micheál Collins, a number of employers have voluntarily committed to paying the living wage, with some having increased this wage during the lockdown. It is not legally binding; however, the Programme for Government specifically aims to “progress to a living wage over the lifetime of the Government.”The current minimum wage, which is legislated for, is €10.10 per hour. Concerns about Mercosur-EU Trade Deal Following a meeting of EU trade ministers in Berlin this week, Tánaiste Leo Varadkar expressed concerns about the Mercosur trade deal between the EU and the South American countries of Brazil, Argentina, Paraguay and Uruguay, specifically around climate commitments and ongoing deforestation.The draft deal between the EU and Mercosur was agreed in principle last year following two decades of negotiations. It still needs to be ratified by all 27 EU Member States, including Ireland. Despite Brazil’s rejection of claims that the trade deal would increase destruction in the Amazon rainforest, a growing number of  trade ministers have reportedly expressed reservations about ratifying and implementing the trade deal without “cast-iron and enforceable guarantees from South American governments that they are going to honour their obligations on climate action and on protecting the Amazon”.Echoing German chancellor Angela Merkel “considerable doubts” last month over whether to back the trade deal due to worsening deforestation in the Amazon, Mr Varadkar said: “We don’t want a trade agreement that actually encourages more deforestation and more damage to our environment.” Big Four Firms and the World Economic Forum jointly release new ESG reporting framework The Big Four accounting firms and the World Economic Forum have this week released guidelines for sustainability reporting in corporate financial statements, in what was described as the first truly co-ordinated approach to ESG reporting. The resulting whitepaper Measuring Stakeholder Capitalism, Towards Common Metrics and, Consistent Reporting of Sustainable Value Creation identifies 21 core sustainability metrics and 34 expanded metrics and disclosures. These are organised under four pillars, or principles that are aligned with the UN Sustainable Development Goals and principal ESG domains: Governance, Planet, People and Prosperity.“These are the ones that we truly believe as a business community are the right measures to start with,” Bob Moritz, head of PwC, said.The metrics are deliberately based on existing standards to bring greater comparability and consistency to the reporting of ESG disclosure. The report issued guidelines, divided into the four domains. It also called for companies to move details about their ESG impacts into their mainstream annual financial reports and for the information to be verifiable and as reliable as financial metrics. The current common practice is for companies to report on ESG in separate, voluntary sustainability reports not verified by a third party.The initiative was spearheaded by the International Business Council (IBC), a community of over 120 CEOs. Members of the IBC were urged to take the lead in embracing the guidelines and are expected to discuss a timeline for adoption at the Council’s January meeting in 2021.Read all our updates on our Public Policy web centre.

 The Big Four accounting firms and the World Economic Forum have this week released guidelines for sustainability reporting in corporate financial statements, in what was described as the first truly co-ordinated approach to ESG reporting. The resulting whitepaper Measuring Stakeholder Capitalism, Towards Common Metrics and, Consistent Reporting of Sustainable Value Creation identifies 21 core sustainability metrics and 34 expanded metrics and disclosures.  Progress, not perfection“These are the ones that we truly believe as a business community are the right measures to start with,” Bob Moritz, head of PwC, said. “We’re not looking for perfection, we’re looking for progress.”The metrics are deliberately based on existing standards to bring greater comparability and consistency to the reporting of ESG disclosure. Four PillarsThe report issued guidelines organised under four pillars, or principles, that are aligned with the UN SDGs and principal ESG domains: Governance, Planet, People and Prosperity.It also called for companies to move details about their ESG impacts into their mainstream annual financial reports and for the information to be verifiable and as reliable as financial metrics. The current common practice is for companies to report on ESG in separate, voluntary sustainability reports not verified by a third party.The project was developed within the International Business Council (IBC), a community of over 120 global CEOs, run by Brian Moynihan, chief executive of Bank of America. It aims to encourage the 120+ large global companies in the IBC to adopt the standards for their 2021 accounts.Described as “perhaps the biggest step yet to rally companies, regulators, and standard-setters around a single set of ESG metrics and integrate them into mainstream financial reporting” the initiative was the result of a growing demand for global consistency and comparability in ESG reporting. For years there has been a drive to create a common accounting framework, driven in part by frustration among investors at the number of competing systems for measuring sustainability. These include metrics under the TCFD, SASB, GRI and others. It is hoped that the initiative will overcome the challenges that arose from the ‘alphabet soup’ of competing metrics and piecemeal reporting. Although it remains to be seen how many global companies will adopt the new standards, the backing of all four top accounting firms is expected to help. Members of the IBC were also urged to take the lead in embracing the guidelines, and are expected to discuss a timeline for adoption at the council’s January 2021 meeting.

During the 2020 State of the Union address last week, Ursula von der Leyen, President of the European Commission touched on taxation measures, specifically the Carbon Border Adjustment Mechanism and Digital Tax. The President outlined that “carbon must have its price – because nature cannot pay the price anymore.”During her speech the President also outlined that “this Carbon Border Adjustment Mechanism should motivate foreign producers and EU importers to reduce their carbon emissions, while ensuring that we level the playing field in a WTO-compatible way.”When speaking about digital tax the President outlined that “we will spare no effort to reach agreement in the framework of OECD and G20. But let there be no doubt: should an agreement fall short of a fair tax system that provides long-term sustainable revenues, Europe will come forward with a proposal early next year.”For more information read the full speech.