In a recent article for Business Plus magazine, Liam McKenna, Consulting Partner at Mazars, outlines why it is crucial for businesses to understand and promote sustainability throughout their supply chains.
As Europe and the rest of the world face unprecedented heat waves, the need to address the challenges of climate change and sustainability has become evident to most people. Although the pace of change may be frustratingly slow, it is underway and starting to gain momentum.
In Ireland, we can identify three primary drivers behind sustainability strategies and plans: the government's climate action plan, regulatory compliance (initially focused on the financial services sector but expanding with mandatory sustainability reporting), and access to capital through funds that prioritize environmental, social, and governance (ESG) strategies.
While these primary drivers may not directly impact small- and medium-sized owner-managed businesses, all businesses will be required to promote sustainability throughout their supply chains. As a result, public sector tenders have begun allocating points to sustainability, and larger corporations are demanding insight into their suppliers' sustainability metrics and carbon emissions.
Businesses that do not yet consider sustainability but have larger clients will find themselves scrambling to respond to questionnaires and challenges that they do not fully understand or have the data to satisfy. It is critical that these businesses recognise the requirements and regain a balance of control in their business relationships. A foundational step in achieving this is defining a sustainability strategy.
Sustainability is an extremely broad and multifaceted concept that addresses various aspects. It encompasses environmental concerns such as water usage, pollution, and carbon emissions. Additionally, it includes social issues, including the impact on the community, fair working conditions, and diversity and inclusion initiatives. Moreover, sustainability also involves governance aspects, such as transparent reporting, oversight of sustainability efforts, and their connection to pay and bonuses.
Given the breadth of topics, no single organisation can address them all, nor is it necessary to do so. What is essential is to identify and address the material issues relevant to each organisation. Material issues for a manufacturing business will differ greatly from those of an insurer or a distribution company.
Once the material issues are identified, their current status can be assessed as a baseline, and improvement targets can be set. This process will shape the sustainability strategy, which, in turn, may drive operational changes and investments in the coming years. The materiality assessment should be of high quality to ensure the organisation does not embark on the wrong path, leading to operational disruptions and inefficient allocation of investment funds. Therefore, it is recommended that the materiality assessment involves direct engagement with key stakeholders such as clients, shareholders, staff, suppliers, executives, and the board.
The introduction of the Corporate Sustainable Reporting Directive (CSRD) will require large corporates to publish audited sustainability reports from their 2024 year-end. As a result, they will request information and data from suppliers and these should be anticipated, making planning essential. From 2025 to 2028, the mandatory reporting requirements of the CSRD will extend to mid-sized companies.
At Mazars, we believe that sustainability actions need to be taken in a manner that does not undermine the commercial sustainability of an organisation. However, it is important to note that organisations that address these challenges are likely to gain a competitive edge and become more resilient. Conversely, organisations that fail to accept the challenge or provide adequate reporting, run the risk of becoming irrelevant before the end of the decade. We consider this change to be inevitable. Businesses that embrace sustainability early on will benefit by using it as a differentiating factor that can accelerate their success. Recognizing the inevitability of this change, it is wise not to delay in taking action.
This article was first published in the August 2023 issue of Business Plus Magazine.
Nine years on from the Paris Climate Agreement at COP21 (which tried to limit global heating to 1.5C), COP 29 takes place in the hottest recorded year, when that safety limit has already been breached. COP29 runs between 11 - 24 November in Baku, Azerbaijan.
The following article featured on the Business Plus Magazine website, Bizplus.ie on 13 October 2024. Author Johnny Meehan, Head of Sustainability Consulting, traces what has brought us to the current standpoint for business and environmental obligations and where we go from here.
The Corporate Sustainability Due Diligence Directive (CSDDD) obliges large companies to identify, mitigate and, where necessary, remedy human rights and environmental impacts in their operations and ‘chain of activities'.
Transparency builds trust with stakeholders and balanced reporting is required to demonstrate authenticity
The Irish Government has committed to a climate action plan that includes achieving a 51% reduction in our greenhouse gas emissions by 2031 and sets a path to deliver net-zero emissions by no later than 2050.
Solutions for embedding sustainability into your strategic business plans
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