For those in business, how to pursue the sustainability agenda is increasingly a critical issue for consideration when it comes to performance. A global move to decarbonisation is finally picking up momentum, while in Ireland the demands of five-yearly carbon “budgets” kick in later this year.
This means all sectors will have limits on how much carbon they can emit, while the country will be set on a course to achieve net-zero emissions by 2050. This will have to be factored into all future development and enterprise.
How a business transforms its operations under these environmental strictures will be increasingly tied into financial success. Because progress – or lack of it – can be so easily determined through improved technology, performance will be all too evident for shareholders, investors, regulators and environmentally conscious consumers.
For those directing a business – but especially mid-sized and smaller companies with limited resources – the prospect of embracing sustainability and not only determining their carbon footprint, but also reducing it, can appear daunting, according to Tomás Sercovich, chief executive of Business in the Community Ireland (BITCI).
It is a not-for-profit network of 120 companies committed to sustainability and working with some of the largest businesses in Ireland to encourage them to set more concrete targets when it comes to emissions. The challenge is formidable because the task is about fundamental, systemic change, he says: “It’s about telling people their business model has to change.”
BITCI works with companies on sustainability, corporate responsibility and ESG (environmental, social, and corporate governance), while the current report card for Irish businesses suggest most “are in a good place”, though there is a need to push on with greater ambition and urgency.
Big multinationals based in Ireland; large food and drink companies and financial services are leading the way, Sercovich believes, because they are already exposed to demands from investors, shareholders and regulators. BITCI underlines that the benefits of collaboration, peer support and shared experiences are answering the question: “How do we get there?”
The journey, more often than not begins, with actions on renewables – energy efficiency and transportation, he explains. With tangible progress under these headings, the emphasis shifts to addressing Scope 1 and Scope 2 emissions from owned or controlled sources within their operations – and then Scope 3 emissions throughout their supply chains.
It entails taking “little-by-little” steps and getting support and advice on setting up targets, he adds. “It’s about understanding this is where we have to go, and having the vision to do so”, while “a bit of peer pressure among competitors is not such a bad thing”.
That means understanding scenarios, the circumstances where emissions might go up, or realising investment in technological solutions may take time to have an impact. It is also about understanding expectations change and accepting the reality of more accountability and transparency, he points out.
With the particular demands on food companies because of their emissions profile, Sercovich says “clearly agriculture has a long way to go” and needs to factor in a lot of change in consumer attitudes. Envisaging what is required and deployment of technologies will be important in making the transition, whether it’s adjusting livestock feeds to reduce emissions or adopting “net-zero farming”.
Equally, it’s about asking “what does the low-carbon plate look like, and how do we get there?” He has no doubt about the ability of the Irish food sector to innovate as it is already “internationalised” and exposed to such demands in markets where it operates.
BITCI recently launched its new "low-carbon pledge" where 59 companies including the ESB committed to setting targets based on science by 2024, known as SBTs. This is aligning carbon-reduction efforts with the Paris Agreement, ie reducing global warming to well below two degrees.
Notwithstanding progress, Irish businesses must adapt to “the risks of a more unpredictable world where climate events are intensifying and being seen more frequently than ever before”, Sercovich says.
Informed by climate science, targets are likely to become more stringent, he notes. Yet there is a risk that if they are set too high initially companies will not engage with them. “It’s about taking them on the journey; otherwise there is a risk of losing companies, especially smaller ones.”
Sercovich stresses the need for collaboration in the broadest sense, whereby businesses work with their suppliers, competitors and peers to develop new initiatives and approaches to decarbonising supply chains and develop the action plans of tomorrow.
The carbon disclosure project (CDP) measures the environmental impact of companies on behalf of 590 leading global investors representing €91 trillion in assets. Its disclosure system allows investors, companies, cities, states and regions to manage their environmental impacts. Progress is independently verified and graded by CDP’s experts.
Irish companies are becoming increasingly willing to set externally verified emissions targets, confirms Brian O'Kennedy, director of CDP Ireland Network and chief executive of Clearstream Solutions.
The network is also a not-for-profit with a mission of encouraging companies and cities to measure, disclose, manage and share vital environmental information.
Meanwhile, Clearstream provides sustainability and carbon-management services, assisting organisations to measure and implement environmental and sustainable practices in their businesses, products and supply chains. When they set up over 12 years ago businesses were operating in the environmental space, he recalls, but did not understand the implications of climate disruption.
While there has been a dramatic change in the past two to three years, O’Kennedy says business is not yet where it needs to be. That said, when CDP Ireland set up about nine years ago, they had an average two to three “new responders” each year; notably big PLCs. Despite Covid-19, there was “a massive 52 per cent increase” in Irish companies reporting to CDP in 2020.
The average CO2 emitted by 257 companies with operations in Ireland reporting to CDP was 50,483 tonnes; a decrease of 24 per cent on 2019.
Climate change and sustainability is now an integral part of the annual reporting cycle of many Irish companies. Moreover, he believes non-disclosing companies will increasingly be at a competitive disadvantage – that includes the ability to compete on public procurement as companies will increasingly have to demonstrate sustainability/social impact in how they operate.
This, O’Kennedy adds, means recognising sustainability is “a driver of value that must be built into everything” – and not an add-on as corporate social responsibility was in the past.
Clearstream helps companies measure and disclose their carbon footprint, he explains. That in effect focuses on the past, whereas SBTs look forward with climate ambition a key focus. The starting point is setting a baseline and targets underpinned by initiatives to improve outcomes, where “decarbonisation pathways” are most important.
It is not about penalising companies in sectors with higher emissions such as agrifood companies or cement manufacturers, he underlines. CDP is “much more interested in how you decarbonise” and show leadership. He cites the Kerry Group as an example in this regard – it is on their A-list, not because of emissions, “because of what they are doing, and implementing low-carbon solutions”. That is especially important in helping others including smaller suppliers throughout their value chains address Scope 3 emissions, O’Kennedy points out.