Irish companies remain underprepared to meet EU sustainability and enforcement standards, a new survey has revealed, even as the bloc looks set to water down the new reporting rules that came into effect last year.
The European Commission is set to publish omnibus legislation this week. Politico reported last week that the package will propose deep cuts to the EU’s environmental reporting rule book, which came into force last summer, in a bid to slash red tape and boost the bloc’s laggard economy.
The legislation will look to change the EU’s corporate sustainability due diligence directive (CSDDD), which requires companies to investigate human rights and environmental abuses in their supply chain, and the corporate sustainability reporting directive, which forces companies to report on their impact on the environment and their exposure to climate risk.
Any changes will be a relief to Irish companies, which, according to a new A&L Goodbody report, are woefully underprepared to implement the new standards.
Of the 100 Irish business representatives surveyed by the law firm, almost four in 10 said their organisation did not have a dedicated sustainability function, and only one in five have adopted a climate transition plan.
Meanwhile, more than a third of companies in the Republic had not provided their staff with any sustainability or environmental, social and governance (ESG) training.
Still, Irish companies are concerned about ESG compliance with 71 per cent expressing significant concern about the risks of greenwashing.
“Our research highlights the urgency for Irish companies to bridge their knowledge gaps regarding ESG-related legal requirements,” said Jill Shaw, ESG & sustainability lead at A&L Goodbody.
“While the upcoming omnibus package on sustainability promises to simplify obligations, its impact remains to be seen. There is also a risk that streamlining these regulations could ultimately raise the compliance bar for affected companies. Keeping a close watch on policy developments will be crucial.”
Based on segments of the new legislation, Politico reported last week that the commission will propose eight changes to CSDDD rules to significantly water them down. This will include asking businesses only to look at their direct suppliers and not further along their supply chains.
The commission’s changes to the reporting rules, meanwhile, would delay their implementation by a year and would mean they apply to only the largest companies operating within the bloc.
Ms Shaw said as ESH laws and policies evolve, businesses in the Republic must “proactively” look to grasp what they mean for their organisation and track the latest developments.
“Companies that prioritise ESG considerations will reap the rewards when it comes to unlocking business opportunities and enhancing their reputation,” she said.
