Many Irish businesses believe their rivals greenwash their operations but say their own environmental reporting is accurate, a new study shows.
The EU will make environmental and social governance (ESG) reporting mandatory next year, obliging companies to demonstrate how they are performing in these areas.
A study published by lawyers McCann Fitzgerald shows that 63 per cent of businesses believe that actively reporting on these issues will attract investment to their organisations.
However, almost six in 10 Irish organisations believe that other businesses exaggerate their sustainability operations’ and practices’.
On the flip side, the lawyers found that 11 per cent of businesses accept that they themselves may overstate how well they are doing on these fronts.
Almost three-quarters – 72 per cent – believe that mandatory reporting will influence corporate behaviour in these areas.
Valerie Lawlor, partner and head of McCann Fitzgerald’s energy group, says the results show that Irish businesses are thinking about these issues in advance of mandatory reporting.
“This has even extended to relationships with suppliers, with more than half of organisations now imposing ESG requirements on suppliers as part of their procurement process,” she notes.
However, Ms Lawlor warns that due to the EU’s Corporate Sustainability Reporting Directive and other laws imposing more reporting requirements, organisations will need to tackle concerns that they are overstating performance.
Despite fears about others boosting their performance, just one-third of companies get their own reporting independently verified.
Those that do mainly use United Nations Sustainable Development Goals to support their claims.
McCann Fitzgerald finds that the main focus for most organisations is on “E” or environmental standards.
Two-thirds emphasise this element in their performance and the same number say that this is the most challenging area to address.
Éamon Ó Cuív, partner in the firm’s finance practice, notes that many investors and lenders impose ESG reporting standards as a condition of backing businesses.
One-third of respondents note this shift, according to the lawyer, who predicted that the trend would grow in coming years.