Sustainability – The Way Forward
Derarca Dennis Partner and Lead for Sustainability Services, EY Ireland
As 2023 comes to an end, the sustainability agenda is at a critical juncture. Even with historic levels of capital shifted toward Environmental, Social and Governance (ESG) priorities, ESG as a topic remains in flux, with views on not only the appropriate definition of ESG, but what information will best inform capital allocation.
This includes ESG reporting and disclosures, taxonomies, ratings, underlying science, data, and modeling capabilities, to name just a few. Here are the core areas businesses should focus on now as they will be relevant to all industries.
1) A reframed growth strategy
Since businesses emerged from the pandemic, many companies in Ireland and globally have endeavoured to resolve a new challenge: putting their company back on track to growth, and at the same time creating long-term, sustainable value. Companies must acknowledge their revised growth strategy can’t be built on the same assumptions and principles of the pre-pandemic era. Success will no longer only be measured with profit and operational metrics alone.
2) Transparent, comparable sustainability reporting
With the EU’s Corporate Reporting Sustainability Directive (CSRD) and the International Sustainability Standards Board (ISSB,) we are in the dawn of a new era of sustainability standards and stakeholders are demanding a greater degree of transparency and comparability. To support our clients, EY has developed an ESG gap analysis tool to reveal the gap between what they do today and what they need to do in coming years. Part of the challenge is to continue delivering sustainability initiatives while also preparing for new requirements.
3) Who owns the sustainability agenda?
Traditionally, Sustainability leads within Operations teams led a company’s ESG agenda and focused on the ‘E’ side of the agenda - environment. As formalised reporting dawns, there has been a trend to bring this role into finance functions and leverage the skills that come with decades of financial reporting. Some may see this as an inspired move to harness the controls of financial reporting to elevate ESG in the corporate arena or some may see it as a challenge to the Sustainability / Operations teams who have led the ESG agenda for decades. Regardless of who is deemed responsible, it’s time to agree a path forward that ensures that the right people are at the table.
4) Prioritising carbon reduction
As companies grow and expand their business footprint and 2030 looms ever closer, their challenge to reduce their carbon footprint has become a priority. To deliver for customers in a less carbon intensive way, many companies are looking to renewable energy. As companies transition to renewable energy and a net zero future this creates both challenges and opportunities across the economy. For some it will mean a change in business model and all that entails, and the need for innovative solutions to reinvent how they manufacture products or deliver services, supported by research and development teams locally and globally. These changes may require new skills and resources but they will also provide new opportunities for current and future employees.
As you think about your 2024 Sustainability agenda , it’s time to take action and the way forward is one that requires collaboration and a broader stakeholder perspective.
To deliver for customers in a less carbon intensive way, many companies are looking to renewable energy.
