Earlier this year the Government signed the European Union’s Corporate Sustainability Reporting Directive (CSRD) into law. In line with the aims of the European Green Deal, the new rules will play a key role in channelling future investments and consumption towards companies that have a clear sustainability focus.
The rules apply to larger EU companies in the first instance. These companies – including AIB – must apply them in the 2024 financial year for reports published in 2025. Reporting companies must disclose not only the risk they face from a changing climate and other environmental and social factors, but also the impact their own operations have on the environment and society. In a major move to align financial reporting with sustainability reporting, these environmental, social, and governance (ESG) disclosures will need to be assured by an appropriate body.
The first wave of companies reporting under the new rules are Plcs with more than 500 employees; they will disclose their 2024 performance in 2025. Organisations with more than 250 employees, €50 million in turnover or €25 million in assets will disclose in 2026 on their 2025 performance.
“AIB’s purpose is empowering people to build a sustainable future,” says AIB’s chief strategy and sustainability officer, Mary Whitelaw. “The new regulations are designed to increase transparency, prevent greenwashing and improve the sustainability of businesses across the EU. While it is certainly quite a big deal getting to grips with the challenge of reporting under the new rules, we believe that companies that can demonstrate they are transitioning to sustainable, green business models will enjoy a major competitive advantage.”
AIB is helping customers to crystallise that advantage by providing them with a range of green products and services as well as information, education and advice, says Whitelaw.
“In the wider AIB Group, Goodbody Clearstream provides sustainability and carbon management services, assisting larger organisations to measure and implement best-in-class environmental and sustainable practice in their business, products and supply chain,” she says.
Whitelaw points to downstream consequences for SMEs. “Larger companies may seek information from their suppliers to ensure they are meeting the relevant environmental and social obligations to which the bigger company is committing,” she says.
Goodbody Clearstream’s head of sustainability strategy and reporting, Ché McGann, believes the biggest challenge will be for the many private companies that have never publicly disclosed any sustainability performance in the past.
“It requires companies to disclose a range of environmental, social and governance impacts important to their business and to report on how a range of issues such as climate change will potentially impact on their financial performance,” says McGann. “Goodbody Clearstream is helping companies navigate CSRD, including through an initial project plan and gap assessment, a double materiality assessment and, finally, to the report and preparation for assurance of their sustainability statement.”
McGann adds: “This is a disclosure regulation and companies don’t need to have every aspect of sustainability performance addressed in year one. But they should have a plan, a policy and some basic measures, such as a carbon footprint.
“It will be perfectly acceptable for companies to disclose that they do not have certain elements of their sustainability journey in place. They should, however, be capable of providing a methodology and a planned approach to dealing with their material issues in the future.”
One company that will report under CSRD is O’Brien Fine Foods, a family-run business established in 2000 and employing more than 600 people. The company, with headquarters in Co Kildare, specialises in the manufacture and marketing of premium meats, supplying both branded and private-label ranges to the domestic and UK markets. Its branded portfolio includes Brady Family, Green Farm and Bearfields of London. O’Brien Fine Foods is also a customer of both AIB and Goodbody Clearstream.
“In the last five years our business has seen more volatility than in the previous 20 years,” says Nick Reynolds, head of ESG with O’Brien Fine Foods. “To stay relevant and fit for the future, we don’t just need to understand the key ESG-related risks and opportunities for our business but prepare accordingly for them. This will require investment, innovation, collaboration and finding new ways of working with all our key stakeholders across our value chain, such as investors, suppliers, customers, and industry bodies.
“Though a huge undertaking, CSRD provides us with the structure to better understand our impacts, risks and opportunities, laying the foundation for the business to make better decisions in how we want to go forward into this new world, where business has a huge role to play in managing environmental and social impacts.”
