This blog is the first in a four-part series analysing how Irish Enterprise is responding to the challenge of planning for a climate-resilient future. This series is based on a study of 106 sustainability action plans created mainly by large and medium-sized organisations who participated in Skillnet Climate Ready Academy’s Sustainability Leaders Programme (SLP) between 2022-2023. SLP uses the Sustainable Development Goals (SDGs) as a framework to help businesses develop a sustainability action plan.

Below is a breakdown of the top sectors and organisation sizes that completed SLP within this timeframe:

Figure 1: Frequency of Top 5 Sectors in SLP 2022-2023.

Figure 2: Frequency of employee size categories in SLP 2022-2023.

Part one of the series will cover: 

• Response to the climate crisis to date at a European and national level 
• Future prepared firms and financial performance 
• The SDGs: A guiding framework for impact 
• Global and Irish Enterprise engagement with the SDGs 

 

Response to the climate crisis to date at a European and national level 

In 2019, the European Union launched the EU Green Deal, a roadmap and action plan to make Europe the first climate neutral continent by 2050 with approximately 25% of the EU’s long-term budget focused on climate action¹. In line with the Paris Agreement and the EU Green Deal, the Irish Government passed the Climate Action and Low Carbon Development Act 2021². This Act sets legally binding targets to reduce emissions across every sector of the economy and the Government’s annual Climate Action Plans contain the roadmap to halve emissions by 2030 and achieve net zero by 2050³.    

Despite those commitments, numerous reports have found that progress in responding to the climate crisis has not been at the scale required. A UN report released ahead of COP28 in November 2023 claimed “the world is woefully off-track” to limiting global warming to 1.5 degrees and, with greenhouse gas emissions still rising, global temperatures are heading towards 2.5-to-2.9-degrees Celsius by the end of the century⁴. In Ireland, the latest projections from the Irish Environmental Protection Agency predict GHG emissions will reduce by 25% by 2030⁵, significantly below the 51% target in the Climate Action Plan³ and more recent 42% target under the EU’s amended Effort Sharing Regulation (ESR)⁶.  

The Irish Government has set maximum limits on Greenhouse Gas emissions targets for each sector of the economy with the industrial sector targeted to reduce emissions by 35% by 2030⁷. Despite the introduction of climate policy and work done on potential pathways to reducing emissions in an Irish context, Irish businesses have been slower than their counterparts in the EU to begin the transition to becoming sustainable. A report by the European Investment Bank found that only 22% of Irish firms have set climate targets compared with an EU average of 41%⁸. This presents a challenge to Ireland in meeting its climate commitments, as it will require a significant effort to mitigate climate risks in the short to medium term⁹. 

 

Future Prepared Firms and Financial Performance 

Companies which prepare for disruptive change not only become more resilient but perform better financially over time. A longitudinal study of 83 European multinational companies was conducted between 2008-2015 to assess the relationship between future preparedness maturity and financial performance¹⁰.

Businesses with high forecasting maturity that had re-oriented their practices to long-term transformational strategies were found to have 33% higher profitability and 200% higher market valuation growth than the average. It makes business sense for businesses to protect themselves from future climate related risks. In a sample of 100 major businesses, researchers found that the financial impacts resulting from climate change were equal to about 10% of annual sales while the cost of inaction far outweighed the cost of taking action¹¹.

In certain sectors such as Industrial Goods and Services and Construction, companies with a good ESG performance have been shown to have a higher financial performance¹². With the SDGs spanning across each ESG pillar, they have the potential to serve as a blueprint of where to identify challenges and risks as well as opportunities for growth and access to new markets¹³.  

 

The SDGs: A guiding framework for impact?

Adoption of the SDGs by the business sector across global stock markets has been found to be poor. A survey of 8,550 companies in the MSCI All Country World Index, found that only 0.2% of companies were fully aligned to the goals and 55% of companies were either mis-aligned or neutral¹⁴.

Business alignment here is understood in terms of positive or negative impact that the companies have on specific SDGs through the provision of products and services that financially benefit the business. Delving deeper into performance on specific SDGs, business actions are most frequently aligned with SDG 12 – Responsible Consumption and Production. However, there are a greater number of businesses whose actions are strongly misaligned (by a significant margin) with SDG 12 – Responsible Consumption and Production, SDG 13 – Climate Action and SDG 7 – Affordable & Clean Energy¹⁴.

What can be ascertained from these findings is that whilst SDG 12 – Responsible Consumption and Production appears to be the area which businesses are directing most of their positive contributions towards, the number of businesses taking actions which negatively impact SDG 12– Responsible Consumption and Production far outweighs the number of businesses actively seeking to progress it. The use of the SDGs in this study as a guiding framework for assessing enterprise impact, both positive and negative, illustrates its potential for directing enterprise planning for material areas of risk and opportunity. 

 

Building on 2020 Analysis of Irish Enterprise Engagement with the SDGs 

A 2020 report Charting Ireland’s sustainable future: Innovative approaches towards achieving the UN Sustainable Development Goals for Enterprises by 20FIFTY Partners¹⁵ captured recurring themes from Ireland’s enterprise engagement with seven environmentally-focused SDGs and their role in supporting the private sector in delivering impactful contributions to the achievement of the goals. The seven SDGs with a focus on the environment are listed below in Figure 3. 

Figure 3: The 7 Environmental SDGs¹⁵

The report concluded that awareness of the SDGs remained low but was slowly growing within the national enterprise agencies, the private sector, and the wider public. It highlighted the critical role of the private sector in enabling the goals of Agenda 2030 to be achieved, stating that the SDGs can assist enterprises to act more responsibly to use their resources to solve complex global issues and help create a better world. The report also outlined a series of recommendations based on global best practice across each theme on how the enterprise sustainability eco-system must work in unison to achieve its targets by 2030 including: 

• Promoting SDG education and awareness and develop a certified Continuous Professional Development Framework for enterprise SDG training; 

• Building an eco-system of enterprise supports around the environmental SDGs; 

• Introducing SDG standards and benchmarking for the private sector in Ireland; 

• Measuring the impact of national enterprise agency supports on the Environmental SDGs. 

The first recommendation informed the development of the Skillnet Climate Ready Academy and the Sustainability Leaders Programme¹⁶, the outputs of which are the focus of this insights series. The next part of this series will begin to delve into the insights concluded from an analysis of sustainability action plans developed by businesses who graduated from SLP between 2022 and 2023. It will provide an analysis of areas of material concern for Irish enterprise when creating a sustainability action plan and assess the alignment between these areas of focus and the SDG framework. 

By Aisling O’Connor

Researcher, Skillnet Climate Ready Academy