We may be the Emerald Isle but selling Ireland’s environmental “greenness” on the international stage is going to be critical to our future prosperity. How can that guarantee be provided as tackling climate change becomes an integral component of economic policy?
Tomás Sercovich is CEO of Business in the Community Ireland (BITCI), an organisation that has been driving the sustainability agenda for 21 years and works with the largest companies in Ireland. He says going green is "fundamental" when it comes to Ireland's international reputation.
“From an inward investment perspective we know that investment decisions are increasingly influenced by sustainability criteria such as access to energy from renewable sources, being able to generate electricity on-site and partnering across the supply chain with companies with high environmental standards.
“Multinationals also require expertise in the green agenda. Therefore a country that can offer expertise and a broad skillset on sustainability can influence investment.”
Sercovich admits, however, that some Irish companies have been slow to communicate and engage with key stakeholders on their vision for a low-carbon future.
“Although some large companies in Ireland are pioneers on energy efficiency, renewable energy, waste management and much more, the challenge I see is for smaller companies and companies that have yet to access technologies that will make their operations more sustainable.”
He said BITCI launched a new initiative called the Low Carbon Pledge in March this year. “This is a huge development as companies are committing to setting science-based targets, and we hope this inspires many more companies to make such a pledge.”
Stephen Prendiville, head of sustainability, EY Ireland, also sees Ireland’s perceived “greenness” as a critical selling point from a global perspective.
“We remain a small open economy, reliant on foreign direct investment (FDI) to maintain and grow our standard of living, so it’s hugely important in terms of human, intellectual and economic capital movement.”
According to Prendiville, the green agenda is driving a variety of behaviours at the corporate, investor, shareholder, worker and consumer levels. Ireland needs to be sensitive to these in order to maintain an attractive “offering” for FDI and for existing company operations to maintain and expand here.
Essentially Ireland needs to “walk the walk”. Yet we are perceived by some to be relatively slow when it comes to being proactive on climate change. Is this true?
Mixed bag
It is a mixed bag, admits Prendiville. “There are Irish leaders in almost every sector, from financial services to construction to food supply chains. I would suggest that Irish corporates are not noticeably ‘slower’ than the majority of other nation’s corporates, with maybe an exception for the Nordics who have been pursuing sustainability and climate-led initiatives for many years.”
If Ireland can accelerate its efforts it has a golden opportunity to “own” this space on the international stage, Prendiville says, “acting as we always have done, as the gateway for investment flows to and from the EU to the rest of the world”.
“When you consider the source of gravity that will be created by the EU Green Deal – a €500 billion budget to crowd in a further €500 billion in investment – the opportunity for Ireland to place it in the ‘flow’ of entrepreneurship, innovation and economic activity that will result is enormous,” he says.
According to Eoin Cassidy, a partner with Mason Hayes and Curran who specialise in environmental matters, the “greening” and decarbonisation of Ireland’s economy is not just essential for the national health and wellbeing of Ireland but is critical to the State’s future economic prosperity and our ability to attract long-term international investment.
“The dial has shifted dramatically on sustainable practices,” he says.
Renewable electricity
Russell Smyth, partner and head of KPMG’s Sustainable Futures division, agrees.
“Ireland’s success in attracting inward investment will only continue if it can communicate and deliver a policy environment conducive to corporates’ net zero ambitions, including providing access to low-cost renewable electricity, renewable gas, clean water as well as other sustainable practices.
Smyth says that KPMG research has found that some Irish-based companies are well ahead of the curve when it comes to sustainability.
“KPMG’s Global Sustainability Reporting Survey, published in November 2020, found that the largest companies operating in Ireland are reporting on their sustainability at a higher rate than the global average, at 88 per cent compared to 77 per cent,” he explains, although he adds that our communication of the specifics pertaining to this can be subpar.
“With regards to Irish companies reporting on climate change actions more specifically, Irish companies are more likely to include carbon-reduction targets in their strategies than the global average but are less likely to acknowledge climate risks in financial reports.”
Cassidy thinks it’s unfair to criticise our inertia on climate change, saying there may be a limited number of true leaders on climate change amongst Irish corporates but there is good reason for that.
“Under Irish company law among a director’s duties to his or her company is to act in good faith in what the director considers to be the best interests of a company and to have regard to the interests of the shareholders,” he says.
“To put it crudely, for trading companies this is often boiled down to maximising the company’s profits to enable the shareholders to receive a return on their investment whether through dividend or otherwise.”
Nonetheless, our efforts and achievements in this space must be accompanied by a comprehensive international and national communication strategy, adds Prendiville.
“Our global diaspora needs to hear about the great work we are doing. We need to tell our story comprehensively and with conviction – and we all have a role to play in that.”
How are Irish businesses faring when it comes to fossil fuels?
Ireland benefits from a strong multinational presence, but the commitments that corporations are making with respect to achieving net-zero emissions leave us exposed, say many business experts. Multinationals want to move quickly to net-zero emissions, and will not stay in Ireland if it cannot deliver on 100 per cent renewable energy. Will Ireland’s failure to fully embrace renewable technologies negatively impact us going forward?
Eoin Cassidy, partner with MHC, says it’s difficult to say just yet.
“It may be that some companies monitor the extent of Ireland’s adoption of renewable electricity generation technologies and draw conclusions from the extent of progress in this area. However, this is possibly the wrong way of looking at the issue. There is no shortage of ambition to fully embrace renewable technologies and the current Government has taken significant steps to date to implement the policy and legislative a framework required to take the first real steps towards the ultimate ambition of net zero by 2050.”
However, Cassidy stresses that multinationals with strong commitments to net zero emissions “cannot expect the Irish government to meet these commitments for them”.
Russell Smyth, partner and head of KPMG's Sustainable Futures division, notes that KPMG is working with a number of multinationals, including leading agri-food companies such as Danone, which have actively stated that securing a pathway to net zero operations in Ireland is "an imperative" and without this further investment will be negatively impacted.
“Such multinationals have found that achieving this pathway in Ireland is currently proving more challenging than in some other continental European markets,” he says.
Yet Stephen Prendiville of EY does not agree with the premise that Ireland is failing to embrace renewable tech.
“Our targets to have 70 per cent generation from renewable sources in 2030 is highly ambitious, and will be the platform to push on towards 100 per cent by 2050.”
Achieving these transitions takes time, he says. “You don’t click your fingers [or flick a switch] and have renewable energy sources. Supply chains are not unlimited in their abilities to deliver renewables right now.”
Acceleration of off-shore wind and solar development should be front of mind for the Government, he adds.
Despite the efforts made to date, Ireland is one of the most fossil fuel-dependent economies in Europe, says Cassidy.
“The real leg work and heavy lifting has yet to happen, and achieving a net zero solution for Ireland’s energy system will require dramatic changes necessitating societal and political support.”