Thank you, Karina, and thank you to Enactus for inviting me here today
I’m delighted to have the opportunity to address you all and share some of my thoughts on the greatest challenge facing us as a society and how Government is stepping up to address its impact, particularly in the enterprise sector.
I look forward to the panel discussion and listening to the Enactus participants who no doubt will provide us with insightful solutions to the pressing issue of climate change and other challenges facing society both now and into the future.
It is through shared learnings and understanding, collaboration and support, value-driven change that we can make a difference and that is why I want to recognise the importance of programmes like Enactus who support the development of entrepreneurial, social innovators of the future.
As Minister of State in the Department of Enterprise I have a strong interest and more importantly a policy responsibility in sustainability reporting for companies
It is an area that is developing rapidly in response to a number of factors, the core factor of course being climate change and the urgent need to take action.
At a strategic-level companies increasingly recognise that while business bottom line is vital – without it businesses cannot continue – investors, consumers and job-seekers have become more conscious and discerning about which products and services they choose and which businesses they connect with.
Investors want businesses to demonstrate how they are engaging with core business and societal challenges and how they are mitigating risk in areas such as
- diversity and inclusion,
- environmental sustainability,
- and human rights.
Customers are more conscious than ever of the environmental, ethical and social aspects of companies, and their products and services. We see this happening now in the context of the war in Ukraine. Businesses are ceasing operations in Russia because they know their customers will not tolerate a continued presence there.
We’re all aware it is a job-seekers market, and talented job-seekers want to work for organisations that share their values and contribute positively to the local and global community.
EU proposal for Corporate Sustainability Reporting Directive
Many companies are already seeking to differentiate themselves on the basis of their responsibility to the environment and climate change, by developing their own sustainability reporting, but for consistency and to support companies yet to adopt such reporting we need to put in place regulatory reforms and guidance.
The European Union has a strong tradition in environmental and social legislation. Unsurprisingly, it has been leading the way globally on climate change and sustainability matters by way of strategies such as the EU Green Deal and the sustainable finance agenda.
The proposal for a Corporate Sustainability Reporting Directive known as the ‘CSRD’ is one of the measures detailed in the EU’s Green Deal,
It is a comprehensive proposal that seeks to place the performance of companies on environmental, social and governance matters on an equal footing with their financial performance. This is a seismic change on how companies are publicly accountable for their impact on people and the environment.
The CSRD will significantly update the existing rules for non-financial reporting by companies operating in the EU.
- It will introduce clear and consistent sustainability reporting requirements for all large companies, with at least 250 employees, whether they are listed or not and without the previous 500-employee threshold as under the Non-Financial Reporting Directive, and small and medium sized companies that are listed on EU stock markets.
- It will provide investors, consumers and other stakeholders with an improved understanding of how the development and performance of companies impacts on society and the environment and enable easier comparison between companies.
- These standards will also provide guidance for those non-listed SMEs who want to voluntarily report on their sustainability information.
It is because of the interconnectedness of economies and global nature of enterprise, that it makes sense to work within the EU framework as opposed to going alone.
This means that the CSRD will play an important role in addressing risks posed by climate change to financial systems and in channelling future investments and consumption towards companies that have a clear sustainability focus.
An important element of the Directive will be the mandatory sustainability reporting standards, currently under development by the European Financial Reporting Advisory Group with a first draft delivered to the EU Commission in the coming months, with a view for publication by October this year.
By setting clear, consistent and ambitious standards from the outset, the EU can position itself as the global leader in this field, and can ensure the trust of civil society that it is serious about urgently tackling climate change.
EU Ministers agreed a General Approach on the proposal in February at the Competitiveness Council and the new rules should take effect on a phased basis from 1 January 2024.
The next stage involves interinstitutional negotiations with the European Parliament which are underway. Today the Council Working Party is meeting to hear an update on the Trilogue process with another meeting scheduled next week to progress this file.
The French Presidency has prioritised work in this regard with the ambition of an agreed final text be reached before the end of the summer. Having met with my French counterpart, Secretary of State Olivia Gregoire, who reaffirmed this ambition, and should we have an agreed text by summer the Commission should be able to adopt the first set of reporting standards under the new legislation before the end of 2022.
My strong view is that Europe should be as ambitious as possible on timelines for implementing the new rules, particularly for large companies, and if possible, bringing forward the current commitment in the General Approach. I was extremely disappointed that the date of implementation slipped by a year and made this point to my colleagues at Competitiveness Council earlier this year.
I believe we can and should be ambitious here. We all know action is needed now not tomorrow if we are to address the climate crisis. The latest IPCC report was stark in its assessment - the urgency to act has not lessened but increased.
Now more than ever we need transparency and fairness in how we are approaching climate change. At an individual level we have introduced carbon levies and if we want to maintain social cohesion and public buy-in we must ensure that large companies are themselves stepping up to the plate and taking stock of their contribution to the climate crisis. This is the level of urgency we are at and we must move as one to ensure we are doing all we can to meet our emission reduction targets.
I therefore believe we should be as ambitious as possible on timelines and stay open to bringing forward the timeframes for implementation as the Trilogues process continues with the European Parliament.
On a national level, last November we launched the Climate Action Plan, which makes Ireland one of the most ambitious countries in the world on tackling climate change.
The Enterprise sector has an important role to play in meeting our climate targets. In 2018, the sector emitted 7.9 million tonnes of CO2 equivalent gases. That is 12.7% of Ireland’s total emissions. The sector must reduce emissions to 5 million tonnes per annum by the end of the decade, a reduction of 40% relative to 2018 levels.
The biggest share of these emissions comes from a small number of large companies in the manufacturing sector. These manufacturers are covered by the EU Emissions Trading System which already sees them committed to reducing their emissions in line with the EU wide target for 55% reduction in Green House Gas emissions by 2030.
We understand that the emissions from enterprise that fall outside the EU Emissions Trading System are highly diverse and a large proportion of these arise from small and medium sized companies.
Last night the Government’s Carbon Budgets passed in the Dáil, a very welcome development and an important element of our climate action plan.
Discussions will soon begin on national sectoral Targets for Enterprise under the Climate Action and Low Carbon Development Act with a view to be these being published before the end of the summer following Government approval.
This Government has put in place a number of initiatives to support the green transition
- For example, the ‘Climate Toolkit 4 Business’ is targeted at small and micro businesses in particular to help those in any sector get a starting estimate of their carbon footprint and create a tailored climate action plan for their operations.
- Most importantly it will direct users to advice, grants and other resources, whether that be financial, educational, training or expertise, available from Government through the Local Enterprise Offices, Enterprise Ireland, the Sustainable Energy Authority of Ireland, Irish Water and the Environmental Protection Agency.
My Department is currently in the process of rolling out targeted EU funding awarded under Ireland’s National Recovery and Resilience Fund through
- A Climate Enterprise Action fund opera, particularly geared toward applications from SMEs and micro-businesses and
- A Carbon Reduction Fund for the investment in carbon measurement and abatement technologies for manufacturing enterprises.
We in Government understand these are challenging times, but as the past few years demonstrated, we will be with you every step of the way, and provide the necessary and targeted supports to assist businesses to grow sustainably into the future.
And it’s on that point I will conclude.
We know change is happening and further change is coming but we must not be hostage to fate. We must act and we must act now.
The actions taken today by businesses and entrepreneurs will have substantial impacts into the future. I look forward to listening to the Enactus participants on their projects and vision for the future.