Sustainability has become a strategic priority for organisations. Yet many businesses need help understanding their emissions data, evaluating their decarbonisation pathways, or finding the right economic solution to implement their sustainability strategy.

If you want to start or accelerate your ESG journey and take action for a more sustainable future, here’s some practical steps for your business to consider and areas where our team of experts can support you.

In this article

1. What does ESG mean for your business?

The first step involves working with you to help you understand what ESG really means in practical, actionable steps and looking at what upcoming regulations, customers and stakeholders are likely to demand of your business. Our expertise is unrivalled in this space, and we can help you cut through the jargon and help you get a clear idea of what matters most to your business, the costs, and opportunities of implementing these actions and more importantly – how to make it happen.

2. Develop your roadmap for success

Next involves developing a sustainability roadmap whereby decarbonisation (i.e., removing carbon emissions) forms a large overall component. It's not just about decarbonising your own internal operations; you also need to consider your wider supply chain. We work with a variety of businesses in different sectors throughout Ireland helping them to measure their current carbon footprint before establishing what technologies can be used to reduce that figure and whether they aspire to reduce emissions by a specific factor or reach net zero.

Action in this space is being pushed by Ireland’s annual Climate Action Plans, with the 2022 plan set to be released very soon. Huge drive and ambition as well as societal change is undoubtedly required to achieve these targets. Each sector will encounter different challenges and opportunities in implementing the required actions to deliver on Ireland’s commitments. It is imperative that the plans and pathways set for each sector are robust and tangible with clearly set out resources, responsibilities, metrics for measuring progress as well as the required financial support and incentivisation to deliver the action required.

It is vital that these plans involve and mobilise all sections of society, including public bodies, private sector businesses and communities as key players in the decarbonisation of Ireland’s economy.

3. Future proof your business with zero-waste

Like net-zero carbon emissions supporting the climate change agenda, zero-waste packaging can deliver several measurable benefits. Some businesses are already working towards this goal, and those already implementing measures to achieve zero-waste packaging have a head start. Those acting now are the frontrunners in gaining a competitive advantage with their customers and wider stakeholders.

We can help you identify opportunities for implementing zero-waste packaging through a supply chain assessment. This can include sharing your zero-waste ambitions with suppliers to encourage prevention and diversion of waste, incorporating recycling and reuse principles in product design, and educating internal and external stakeholders on the overarching waste issue.

Zero-waste packaging can also be achieved through efficiencies at both the design and disposal stages of the packaging product, with one of the biggest lever being the recyclability of the raw materials used. With a 65% recycling target for all packaging waste in Europe looming for 2025, smart design, behavioural changes regarding disposal, and recycling facility capacity will be the key enablers for achieving this target and we can support you in achieving this ambition.

It is now widely recognised that the circular economy agenda is fundamentally interlinked with the net-zero agenda, both on a global and national scale. With ambitious waste reduction targets and the introduction of EPR schemes, businesses involved in resource-intensive and waste-production industries can expect significant changes to their operations over the coming years. By incorporating circular practices into business models at an early stage, companies can stay one step ahead of forthcoming legislation and act as leaders in the delivery of the climate commitments and creating additional value in along supply chains.

"The EU Corporate Sustainability Reporting Directive (CSRD) is a mandatory standard set by the EU for companies to report on their sustainability policy and performance."

4. Sustainability reporting – are you ready?

The upcoming regulatory requirements and stakeholders’ pressures are now driving companies to integrate ESG into their business model, investment decisions and, most importantly, unlocking new products and services to address various climate-related challenges.

The EU Corporate Sustainability Reporting Directive (CSRD) is a mandatory standard set by the EU for companies to report on their sustainability policy and performance. It will cover new reporting requirements over and above those already contained in the Non-Financial Reporting Directive. For example, companies will need to apply the "double materiality" concept when determining what data or information needs to be disclosed (which is essentially looking at the potential impact of climate change on the financial health and outlook of a company). Furthermore, subject to regulations set by EU member states at the domestic level, companies will face penalties and sanctions for non-compliance with the CSRD requirements. We can support you in all aspects of preparation and compliance.

Due to the increased pressure put on companies by regulators and investors, we expect that the assurance of sustainability data will become as common as audited financial statements in the next few reporting cycles. In fact, in the EU, assurance of sustainability information will become compulsory for companies falling under the CSRD for reporting on 2024 data.

The expectations from investors, regulators, companies, consumers, and other stakeholders are requiring greater accountability for ESG data. Irish companies need to consider the current ESG data challenges including weaknesses in ESG data feeds, independence, and inconsistency of data providers, backward looking/point in time data and lack of standardised data – especially for smaller companies. Taking into account these current challenges, Irish companies will need invest in ESG data transformation. By doing so they will be able to take advantage of opportunities in strategy, supply chains, product development, shareholder value and in helping their customers

5. Climate risk

Climate change requires urgent action. It’s the next high impact, high probability risk facing businesses and the world. It’s also an opportunity to be recognised as a leader among peers.

As business models are exposed to transition risks, such as a shift to a low-carbon economy, or physical risks, such as extreme weather, investors and other stakeholders are assessing whether valuations sufficiently incorporate those risks and, crucially, understanding what companies are doing to mitigate and adapt to them. Businesses are also facing more regulation on climate risk – including complying with the recommendations of the Taskforce on Climate-Related Financial Disclosures (TCFD).

Our climate risk and decarbonisation strategy experts will help demonstrate to investors, regulators, and wider stakeholder group that you understand the risks and opportunities of climate change. And we’ll support you in developing a strategic response that improves your resilience, enhances your brand, and positions you to thrive in a changing world.

6. ESG due diligence

In today’s business world, issues like child labour, carbon emissions, fair tax and corruption bring complex and costly risks, as well the opportunity to gain competitive advantage by doing things differently. In short, the way a company handles environmental, social and governance (ESG) issues can affect its long-term performance and its valuation.

Over the past year, we have been inundated with requests and queries on ESG due diligence from a range of Irish businesses. This growth in interest, compared to a year ago, shows how ESG due diligence is now a core part of investment/deal processes. Several sectors have been impacted recently, including:

  • Banks: This is also impacting banks and investors who are increasingly aware of how vigilant ESG Due Diligence can provide insight into risks, assess possible reputational issues, and ensure that investment decisions are in line with new regulation, such as SFDR.
  • Insurance: This is also impacting insurers who are increasingly aware of how ESG Due Diligence can provide insight into how companies differ on their ESG performance and what this might indicate in terms of higher insurance related risks.
  • Corporate: ESG Due Diligence helps to provide relevant insight when companies are considering a merger and acquisition, or a divestment – in particular, whether a company has suitable ESG policies, management, and strategies in place that are in line with national and international regulation, such as EU Taxonomy and CSRD.
  • Private equity: This is also impacting private equity firms, who are increasingly embedding environmental, social and governance considerations in their acquisition and disposal processes and utilising ESG Due Diligence to provide a complete review of all relevant ESG risks and opportunities, in line with national and international regulation.

7. Social impact assessment

Value creation is the goal of all companies, but corporate value creation is not always aligned with value creation for the environment & society as a whole. Companies have always created societal and economic value in the course of doing business. They provide people with goods and services, contribute taxes to the economy, and create jobs and wealth. In so doing, companies play a significant role in helping to lift billions of people out of poverty.

However, in the course of doing business, some companies also draw on natural resources and can generate negative externalities. Businesses operations are increasingly scrutinised. A company’s creation, or reduction, of societal value increasingly has a direct impact on the drivers of its corporate value, namely revenues, costs, and risk. It is the phenomenon that we at KPMG describe as ‘the disappearing disconnect’ between corporate and societal value creation.

To do well in today’s business environment, businesses increasingly must measure, understand, and proactively manage the value you create, and to mitigate negative impacts on society, the environment, and shareholders. That is because what was ‘external’ is rapidly being internalised, whether through regulation, changing market dynamics including resource shortages, or more frequent and impactful stakeholder pressure.

In recent years, methodologies to measure an organisation’s impacts – both positive and negative –have become much more sophisticated. A growing trend is to express all economic, social, and environmental impacts in a common financial metric; doing this can generate productive conversations in the boardroom and management meetings and help to change thinking and action within organisations.

KPMG has a dedicated economic & social impact measurement & reporting team, who work with a broad range of clients across all sectors and can support you in quantifying, engaging, and reporting on your social impact. 

"Those taking action now are the frontrunners in gaining a competitive advantage with customers and consumers."

Embed ESG into your company

Embedding an ESG strategy can help strengthen organisational value, generate new opportunities for employees, and attract future talent. For your leadership teams, it provides a mechanism to communicate internally and externally on how you are managing ESG risks and demonstrating resilience. However, for ESG actions to become part of a long-term strategy, companies should invest in developing skills, knowledge, and understanding to embed ESG fully into your business.

Why now?

The earlier your start the sooner the positive results will come to fruition. We can work with you to plan and mitigate various scenarios by proactively identifying and addressing ESG risks, threats, and opportunities. ESG strategies are a tool to build resilience and safeguard the business against future negative impacts, and many ESG initiatives can lead to considerable cost savings and improve operational efficiency.

Our recent Survey of Sustainability Reporting 2022 in Ireland highlights how companies show leadership on sustainability matters. The research found CEOs are most frequently identified as having ultimate responsibility for sustainability. In some cases, Boards have set up sustainability and ESG Committees to review and supervise companies' sustainability or ESG progress. In other companies, sustainability KPIs have been added to the personal objectives of leadership team members. In all cases our teams have unrivalled experience and expertise in helping businesses like yours work to a tailored approach. Contact KPMG Sustainable Futures today so we can measure, manage, and report on your sustainability ambitions.

Get in touch

If you are ready to move from talk to action or want to accelerate your sustainability progress please get in touch with Russell Smith, Head of Sustainable Futures. We’d be delighted to hear from you.

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