Accountability and clearer government strategies key to incentivise action

Irish Examiner

30-05-2025

Ireland's sustainable future is at a crossroads. For businesses, sustainability has moved from a niche topic to a crucial factor directly influencing their financial health and operational future.
As tough EU regulations loom, Irish companies are wrestling with complex legal requirements, financial risks, and the urgency of meaningful action.
Liam McKenna, partner at Forvis Mazars, actively guides Irish businesses through this intricate sustainability landscape. The firm itself has evolved to meet global business demands.
Initially known simply as Mazars, the Irish operation was part of a vast international network but lacked visibility in the critical US market. The strategic merger with Forvis, the eighth-largest financial advisory firm in the United States, filled this gap.
Liam McKenna, partner at Forvis Mazars.
'US clients frequently needed international expertise, but Mazars had a relatively low profile stateside," says McKenna. "On the other hand, Forvis had substantial recognition in the US but lacked global reach. The network made perfect sense because of our aligned geographic interests and similar corporate cultures."
Since June 2024, Forvis Mazars has leveraged this combined strength, helping clients navigate increasingly rigorous global sustainability requirements.
EU regulation and the Omnibus Shift
Central to current business anxieties is the EU's Corporate Sustainability Reporting Directive (CSRD), originally designed to increase corporate transparency. However, McKenna highlights that it has been controversial, particularly due to heavy burdens placed on SMEs.
The Omnibus Directive, inspired by Mario Draghi's EU competitiveness report, seeks to ease these burdens by significantly scaling back and delaying reporting obligations. Initially, CSRD requirements applied to companies with over 250 employees; this threshold will now rise to over 1,000 employees, and enforcement timelines will extend by two years.
Yet McKenna warns against complacency. 'Yes, the reporting obligations were tough, but they brought clarity and urgency,' he says. 'Without them, there's a risk companies will lose momentum toward real sustainability.'
The bigger picture: Financial enalties and Irish Preparedness
Ireland faces broader sustainability obligations under the national Climate Action Plan, closely tied to EU climate goals. With stringent emission targets approaching, McKenna points out the genuine risk of massive financial penalties.
"Current estimates suggest Ireland could face fines ranging between €12 billion to €26 billion," McKenna says. "The irony is clear, taking action now would be considerably cheaper than paying huge fines later."
Despite this logic, both Irish businesses and government actions have lagged. McKenna emphasizes the need for accountability and clearer government strategies to incentivise action.
Gross EU consumption of renewable energy per type, figures supplied by the South East Energy Agency. Source: European Commission
"The question we need answered is how the government intends to pass potential EU penalties onto businesses to encourage meaningful sustainability changes," he says.
One discussed measure is significantly increasing carbon taxation. Currently at €63 per tonne, the tax could rise dramatically if Ireland faces EU fines.
"We could see carbon taxes soar to €300 or €400 per tonne, drastically impacting business costs," McKenna says.
From reporting to action: Genuine sustainability strategies
With reporting pressures potentially easing, McKenna sees an opportunity for businesses to focus more on real sustainability initiatives. He advocates practical measures such as 'double materiality' assessments, a key CSRD element, which help businesses understand both their environmental impact and how climate change could affect their operations.
"Double materiality assessments offer genuine business insights, far beyond ticking compliance boxes," McKenna says. "They guide strategic planning, help businesses anticipate climate-related impacts, and uncover efficiencies and growth opportunities."
Voluntary standards and business opportunities
Despite regulatory shifts, many companies are adopting voluntary sustainability frameworks aligned with CSRD principles. Forvis Mazars advises clients on such adopting standards tailored to their specific business needs and stakeholder expectations.
"Many companies voluntarily report sustainability data because their stakeholders including banks, investors, and customers, value sustainable credentials," McKenna says. "Increasingly, sustainability translates directly into competitive advantage, lower costs, and stronger market positions."
McKenna stresses that Irish businesses, although behind their international peers, must urgently shift from reactive compliance toward proactive sustainability strategies.
"Even if sustainability seems a lower priority right now, global market expectations are rapidly shifting. Companies that fail to adapt will soon face serious disadvantages," he says.
Time to act is now
Ireland's approach to sustainability remains inconsistent, frequently distracted by immediate crises rather than addressing the underlying urgency of climate action. McKenna sees this as deeply problematic, suggesting Ireland has lost around five critical years due to delays.
"Climate change doesn't pause for economic or political convenience," McKenna says. "We're already experiencing significant impacts, from extreme weather events to soaring insurance claims and infrastructure damage. Every delay makes solutions more expensive and complicated."
He urges immediate action from businesses, independent of regulatory timelines, arguing sustainable practices aren't just ethically necessary, they're financially prudent.
"Sustainability isn't just a regulatory hurdle; it's essential to future-proofing businesses," McKenna says.
As Irish companies navigate uncertainty around regulation, McKenna's message is straightforward: sustainability must become a competitive advantage, not just a compliance obligation.
"The risk of inaction isn't hypothetical," he says. "It's a certainty of future financial pain and operational challenges. Irish businesses face a stark choice, and the moment to act decisively is now.'