Irish businesses have upped their game on sustainability, but the country’s progress remains far from secure. Experts have observed first-hand a notable shift in both awareness and intent among corporate leaders over the past few years. Yet she is equally clear that this new maturity is being tested by shifting politics, uncertain policy signals and gaps in Ireland’s energy and climate infrastructure.
Irish businesses have made significant strides towards sustainability in recent years. This has been driven largely by regulation, customers, investors, lenders and the availability of grant supports. Awareness and action have grown in large businesses, especially in sectors prioritised under Ireland’s Climate Action Plan, including agriculture and food, energy, transport and construction. The influence of those big players is filtering rapidly down the supply chain. We are seeing this starting to cascade down supply chains, driving action in mid-market and SME companies, especially on climate change.
Recent policy changes could halt progress among some companies, however.
Recent proposed changes under the Omnibus Directive, including proposals to restrict sustainability reporting to companies meeting criteria such as more than 1,750 employees and €450 million in revenue, as well as pulling back on Scope 3 disclosure requirements, could slow this progress.
Despite this, many companies have kept momentum going.
BDO’s recent Global Sustainability Services Survey found that companies with more than 1,000 employees want to continue CSRD preparation regardless of the Omnibus proposals because they are focusing on sustainability to drive value creation. Smaller companies, as part of global supply chains, will stay the course as they face pressure from their business partners.
In fact, companies are no longer dipping a toe in ESG, they are committing in measurable ways. Ireland now has more than 140 companies, including BDO itself, with validated Science-Based Targets. Emissions measurement, climate transition planning, supply-chain carbon reporting and the adoption of science-based targets have all become mainstream tools of corporate governance. This has been driven by a recognisable power dynamic, one that is reshaping markets across Europe:
Much of this progress has been propelled by increasing pressure from large customers demanding Scope 3 data and reductions throughout their supply chain.
Yet even the most committed companies face considerable internal obstacles.
Despite strong ambition, many companies struggle with budgetary limitations, resource constraints and knowledge gaps. These factors impede the practical implementation of sustainable practices. Addressing these issues will be key to achieving climate goals and maintaining competitiveness as the green transition continues.
The wider ESG environment is also becoming more complicated. Reporting standards are shifting not just across the EU but in Britain and internationally. Nature-related disclosures are gaining ground. Digital tools are reshaping how companies gather and use their data. New regulations, from the EU’s Carbon Border Adjustment Mechanism to its anti-deforestation rules, are transforming supply-chain expectations. And yet, for all this movement, the pace remains insufficient.
Progress to date is lagging behind the scale of the climate, nature and social challenges we face. Recent geopolitical challenges from the US ESG backlash and EU prioritisation of defence, competitiveness and energy security have dampened momentum in EU and international policy, which will undoubtedly affect the speed of progress.
Ireland’s climate targets are ambitious, but delivery is the problem.
The EU and Ireland’s greenhouse gas emissions targets are commensurate with the climate change challenge; however, we are not on track to meet them. The implementation of our energy transition infrastructure across renewable energy – especially offshore wind, grid upgrades, green hydrogen and biomethane – are progressing too slow. Accelerating the infrastructure and getting pricing mechanisms right is key to enabling businesses to respond quicker and seize green-economy market opportunities.
In terms of the proposed changes for the CSRD, simplification for large companies is logical, but the current version of the Omnibus Directive goes too far, it seems.
While it was overcomplicated for Wave 1 corporates and simplification is welcome for practicality, the severe narrowing in scope and application undermines the original purpose. Published sustainability reports, just like financial reports, inform investors and wider stakeholders on whether a business is managing ESG risks and opportunities to best practice. This should drive investment in the sustainable market transition, rewarding best practice with access to competitive capital.
Small and medium-sized firms, meanwhile, will continue to face pressure from both customers and lenders to provide sustainability data, regardless of their exclusion from mandatory CSRD rules. Support is available from organisations such as SEAI, Enterprise Ireland and Bord Bia and sectoral initiatives – and, it makes financial sense to look at sustainable practices.
The perception that sustainability has to cost a company money is not correct. I have never met a business that does not save money from energy savings and efficiency, especially SMEs. Good sustainability performance is good business and key to maintaining and growing customer markets.
In the midst of this complexity, BDO sees its role not just as an adviser but as a translator of fast-moving regulatory expectations.
BDO Ireland and its member firms have seasoned sustainability experts that can support companies of all sizes on all their ESG needs. No matter where a business is on their sustainability journey, our teams can provide expert support. We help businesses embed sustainability into core strategy, implement best practices, identify financing opportunities and meet reporting requirements.