- Survey of Irish businesses reveals compliance is now the key motivation behind sustainability-related actions followed by doing good for the environment
- Irish businesses missing potential value based opportunities from sustainability initiatives
Dublin, 22 April 2022: New data from this year’s EY Ireland State of Sustainability report reveals that 80% of Irish businesses have low confidence in meeting carbon neutral targets in 2030, an increase from 66% last year. Although awareness of sustainability considerations and implications has increased to 64% from 61% in 2021, a deeper understanding of the challenges that lie ahead in relation to achieving sustainability targets has dampened confidence.
Commenting on the report findings Stephen Prendiville, Head of Sustainability at EY Ireland said: “As organisations look more closely at their carbon ambitions, they’ve gained a deeper awareness of the various challenges the transformation will introduce. With this understanding, Irish business leaders are also experiencing a greater sense of concern around the achievement of stated goals. Business leaders are also facing headwinds amidst the ongoing energy and inflation crisis and challenging geopolitical issues. These factors combined with less time to achieve the 2030 goals mean that we are seeing lower confidence reported.”
Key motivations behind sustainability-related actions in this year’s survey include compliance (returned by 28% of respondents, up from 16% last year) and doing good for the environment (25% up from 22%). None of the survey respondents said sustainability would improve the organisation’s ability to grow profits. In addition, just 40% of respondents agreed that their company's sustainability efforts to date have positively impacted the bottom line, a fall from 44% in 2021.
Just 36% of participants said their organisation felt opportunities for value generation from sustainability/ESG or net zero strategies were well established.
With compliance now the dominant driver of sustainability efforts, this focus would appear to be at the expense of any value based opportunity, with very limited numbers focusing on the opportunities to increase profits, customer appeal or loyalty.
Stephen adds: “The regulatory landscape has been evolving quickly and a lot of implications are being discussed so it’s not a surprise to see it front of mind for many when thinking about sustainability efforts. And it’s possible many companies might be waiting to see what regulations will be implemented before confirming their plans for sustainability. What is interesting is that no one surveyed sees “the ability to grow profit” as a key factor in their sustainability efforts, and the sentiment that sustainability would appeal to customers plummeted. It’s imperative that businesses don’t rely on regulation alone and seek to understand more clearly the long-term business value of sustainability and net zero strategies.”
The compliance mindset is shifting the dial when it comes to increased accountability and engagement with stakeholders and supply chains. 62% said there has been a significant increase in focus on sustainability in their business in the last year. And the number of Irish based organisations that have adopted Science-Based Targets has increased to 28% from 22% in 2021.
Stakeholder Influence Increasing
The proportion of organisations that engage and consult with relevant stakeholders on sustainability issues to shape strategies has increased from 47% in 2021 to 53% this year. And, businesses are recognising the importance of sustainability to the customer, with 79% believing the sustainability of their product or service is very important, and 83% agreed the sustainability of business operations is very important.
Just 16% of respondents are concerned that their company is not doing enough from a sustainability perspective, down from 25% who felt the same last year. 16% say that they don’t believe their organisation is taking sustainability seriously enough.
Stephen adds: “The biggest concern in the results is the predominant sense among Irish business that they are doing enough when it comes to sustainability. Simply put, we need to do more. Decarbonisation requires a huge transformation effort and is a significant challenge for some organisations, but it is also a major opportunity. Businesses need a strategy with a credible implementation plan to decarbonise their business. This needs to be prioritised so businesses can realise the long term value opportunities created while achieving their sustainability goals.”
Notes to Editors
Definition of terms:
- Net zero. The point at which an organization has achieved its 1.5˚C SBT and removed its residual emissions from the atmosphere.
About the EY Ireland State of Sustainability Report:
This research was conducted by Empathy Research in April 2022 amongst a nationally representative sample of businesses in Ireland with 50 or more employees. The research respondents were senior level representatives including managing directors, business owners, chief operating officers, senior managers and heads of sustainability.
EY exists to build a better working world, helping to create long-term value for clients, people and society and build trust in the capital markets.
Enabled by data and technology, diverse EY teams in over 150 countries provide trust through assurance and help clients grow, transform and operate.
Working across assurance, consulting, law, strategy, tax and transactions, EY teams ask better questions to find new answers for the complex issues facing our world today.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Information about how EY collects and uses personal data and a description of the rights individuals have under data protection legislation are available via ey.com/privacy.
EY member firms do not practice law where prohibited by local laws. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
For more key insights, visit ey.com/ie/Sustainability.