Rising costs and high bills are preventing companies from delivering on their ethical investment promises

While most companies say green and ethical investing is a priority, not many are splashing out the cash to back up their pledges.

A survey by consultancy Grant Thornton found that 42 per cent of Irish companies say environmental, social and governance (ESG) standards will be a priority in the years to come.

But ESG investing has fallen off the priority list for a fifth of companies, who say rising costs and wage bills are forcing them to divert money to more pressing issues.

“We’re seeing a lot of talk and maybe not as much cold, hard money for it,” said Catherine Duggan, director and sustainability specialist at Grant Thornton Ireland.

“I think when it starts to impact the bottom line in terms of cost, that’s when you’re going to see the biggest change in behavior.”

Grant Thornton’s International Business Report comes the week after the government set 2030 greenhouse gas emission limits by sector.

Businesses must reduce carbon emissions by 35 percent, with electricity, transport and buildings receiving higher caps and farmers making do with a lower 25 percent target.

The deal came after the Environmental Protection Agency said Ireland’s emissions rose 4.7 percent year-on-year in 2021 and are now 1.1 percent above pre-pandemic levels.

“The only thing that’s really going to focus heads now are the sectoral targets,” Ms Duggan said. “I think for the first time this will really bring color to sectors that may not have focused on it.

“There has been a lot of discussion about agriculture, but now there are a whole range of sectors that need to do this.”

Stephen Prendiville, head of sustainability at consultancy EY Ireland, said the deal will herald a “gradual change” in corporate behavior but will initially mean higher costs.

“It’s not without effort, which becomes difficult if you’re just trying to keep the lights on,” Mr Prendiville said.

“It also has the potential to change the business case for some of the changes. A lot of people out there may now wish they had fixed the heat pump when they had the opportunity before they had to face this winter.”

New EU sustainable finance disclosure rules for fund managers come into effect today, a fact that will eventually trickle down to the companies in their portfolios, Ms Duggan said.

EU rules forcing companies to disclose their climate risk are to be phased in from 2024 for larger companies with more than 500 employees, while small companies have until 2026.

“They’re going to start getting pressure from their stakeholders, whether it’s supply chain pressure or pressure from banks,” Ms Duggan said.

“Banks will have to make disclosures much sooner and I think they will try to get that information directly from customers.”

https://www.independent.ie/business/irish/rising-costs-and-big-bills-prevent-businesses-living-up-to-their-promises-for-ethical-investments-41880727.html Rising costs and high bills are preventing companies from delivering on their ethical investment promises

Fry Electronics Team

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