Decarbonisation: Policy and support are key to wider business buy-in

According to the Environmental Protection Agency’s most recent annual report, Irish transport greenhouse gas emissions increased by 6.7 per cent in 2022, more than double the EU’s average of a 2.7 per cent increase for that year.

While many Irish companies are leading the way in meeting science-based targets for cutting emissions and embracing sustainability and transparency about their carbon footprint, some experts say this is not enough, with wider buy-in and more support from Government required.

The Science Based Targets initiative (SBTi) sets standards by which corporates should reduce their greenhouse gas emissions to align with international climate targets, such as keeping the global temperature rise to 1.5 degree. The SBTi is the global gold standard for corporates to use to determine reduction targets, says Dr Dorothy Maxwell, head of Davy Horizons, Davy’s sustainability consultancy.

“These are modelled for most sectors of the economy and take into account International Energy Agency scenarios for global emissions reduction pathways,” she says. “Validating to the SBTi is the global gold standard to ensure credibility and avoid greenwash.”

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According to Philip Connolly, associate director in sustainable futures with KPMG, 104 Irish companies have signed up to the SBTi, 58 of which have approved targets. These include big names such as Origin Enterprises plc, CRH, Bank of Ireland, Kerry Group, Brown Thomas Arnotts and The Merrion Hotel.

“But if we take Denmark as an example of a similar economy, it has 233 companies signed up with SBTi and 177 out of those have approved targets,” says Connolly. “While there are some excellent examples of Irish corporates embracing sustainability and conversations about net-zero targets are now commonplace amongst corporates, more action is required to see real progress.”

Maxwell points out that, for Irish private companies, the initiative is still new but mandatory sustainability reporting under the Corporate Sustainability Reporting Directive, as well as customer and lender demands, are “growing drivers”.

Indeed, more and more companies are coming on board. Tomás Sercovich, CEO of Business in the Community Ireland (BITCI), says the organisation has seen among its members a greater commitment to and sense of urgency around decarbonising their operations.

“Our low carbon pledge now has 68 companies signed up, spanning 11 different sectors, with professional services and agribusiness and food/drink companies being the largest sector groups,” says Sercovich. “These pledge signatories are committed to setting SBTs no later than December 2024 across their entire carbon footprint.”

BITCI’s latest report, published in September 2023, found that 50 per cent of pledge signatories had fully set SBTs and had them approved by the SBTi, while a further 31 per cent had formally committed to setting SBTs.

“This means that 81 per cent of the signatories are well progressed to setting science-based targets by the end of 2024,” says Sercovich. “We hope this progress continues as we move throughout 2024 and ahead of the next iteration of the low-carbon pledge.”

Decarbonisation is now seen as a “must” by Irish businesses, consumers and employees, says Connolly.

“Businesses now have a unique opportunity where achieving their decarbonisation goals can actually make commercial sense,” he adds. “The paybacks on solar PV, batteries, energy efficiency and EVs have never been better due to their falling costs.”

Common barriers to achieving decarbonisation within corporates include a lack of a clear vision and strategy, leadership buy-in, and a need for general education around the challenges, opportunities and “risk of doing nothing”, in Connolly’s view.

However, there is still some low-hanging fruit. Sercovich points out that some companies’ consumption of resources such as land, energy and water is obviously large and inefficient.

“But securing internal buy-in and costs associated to remedy this is a real challenge,” he admits. “According to our state-of-the-nation 2022 research, costs to decarbonise is a big barrier; 61 per cent agree that without proper support organisations will be forced to prioritise survival over meeting sustainability goals.”

Quick wins to address this, he says, can include introducing energy-efficiency measures, deploying alternative energy sources, reframing waste streams and adopting a circular economy model of business.

Sercovich points out that while the low-carbon pledge is recognised in the Government’s Climate Action Plan as an initiative to mobilise industry, the signatories can’t do it alone.

“In reality there is an urgency for companies to act, yet they’re operating in an increased regulatory environment,” he says. “Many are also struggling with assessing the impact of their business on nature and responding to that.

“For businesses to be ambitious and challenge themselves they need guidance, financial support and clarity from Government and the EU Commission to guarantee their compliance and action. We must mutually support each other so a clear pathway towards net zero and nature positive can be achieved.”

Schneider Electric is working with numerous large corporates and industrial players to adjust to net zero timescales, support sustainable development, reduce CO2 emissions, cut waste and drive down energy costs. According to Chris Collins, country president Ireland with Schneider Electric, there is a “huge appetite” for sustainability and renewables in the State.

“Most of that enthusiasm is coming from the private sector,” he says. “Some of the trailblazers we see among our own customers are in the life sciences and data centre sectors. These organisations are prioritising energy management and digitalisation while exploring and investing in ways to generate their own energy. They’re also looking at ways to help others by sharing any of the excess energy they generate.”

Collins says many other sectors and businesses are open to the idea of hosting renewables on their sites but simply need more encouragement and support from Government and public-sector organisations.

“Greater investment and resourcing in renewables will lead to growth as it will stimulate construction projects, besides investment in supply chains and the growth of the green economy, creating more jobs. It’s a win-win,” he says.

However, Collins notes that research carried out by Schneider Electric has shown that half of Irish organisations are delaying planned investment in sustainability and decarbonisation strategies due to cost pressures.

“This is counterproductive when you consider the link between cutting emissions and energy usage. By meeting their emissions targets businesses will inevitably lower their overall energy costs, providing them with a useful boost to the bottom line in challenging times.”

Policy is key to encouraging this investment, says Jackie Keaney, commercial director of waste management firm Indaver, which focuses on the sustainable recovery of energy and materials.

We will not meet our 2030 carbon emissions targets, she says, “unless we put the right policy in place and implement this policy in a timely manner, remove barriers to project development and provide market certainty”.

“Only with market certainty will businesses invest in the necessary full-scale infrastructure,” says Keaney.

Indaver is aiming to begin production of hydrogen fuel from the energy generated by its waste-management plant and has planning permission for a 10MWe hydrogen generation unit. This would support the national hydrogen strategy but policy development is delaying it, Keaney says.

“We need to get on with it now,” she adds.

Road use accounts for 95% of transport emissions

With transport accounting for 20 per cent of the State’s overall emissions, the goals of halving our carbon output by 2030 and reaching net zero by 2050 seem overly ambitious to many.

Even as petrol and diesel prices recently hit record highs, demand has remained stable, as Philip Connolly, associate director in sustainable futures at KPMG, points out.

“This shows Ireland’s current dependence on private cars,” says Connolly. “And although electric vehicles will play a substantial role in the decarbonisation of the sector, more needs to be done to make active travel and public transport a safer, more viable option for citizens.”

Heletjé van Staden, assistant professor of management in the supply chain management area at UCD College of Business, says that, in Ireland, emissions from transportation are second only to those from agriculture.

“Ireland repeatedly occupies the lower ranks in terms of sustainable transport uptake in Europe, with approximately 95 per cent of transport emissions in Ireland attributed to road,” she says. “The EU average is approximately 75 per cent.”

The State is playing catch-up with the rest of the EU in terms of investment in sustainable transport infrastructure. For example, while rail transport is known to be much more sustainable than road, in 2022, just 2.6 per cent of Irish railway lines were electrified, one of the lowest figures in Europe, with the EU average approximately 57 per cent.

“These figures show that Ireland is clearly not doing enough to meet stated transport emissions targets and is not on track to reach it,” says van Staden.

In terms of freight transport, van Staden says we need to see an increase in collaborative road shipments and increased rail transport uptake. Inefficiencies are many, she points out – it is estimated that one in three trucks on Irish roads are empty, for example.

But most importantly, there needs to be meaningful investment by Government in sustainable transport, she says.

“In terms of passenger transport, we need to see an increase in active travel and public transport use,” says van Staden, with more investment in these areas and improvement particularly needed in “reliability and accessibility of public transport”.

We need to see investment in sustainable goods transport, “especially rail and short sea,” she adds.