Energy transition is now a business imperative

With Ireland now past the half-way point of the decade, progress on the country's Climate Action Plan – which mandates a 51 per cent reduction in greenhouse gas emissions by the end of the decade, and net zero by 2050 – has come into sharp focus.

According to Johnny Meehan, head of sustainability consulting at Forvis Mazars Ireland, the remainder of the decade is likely to see a significant ramping up of energy transition efforts “to make up for underperformance in the first half”. While much focus will be on macro-level investment, including efforts to achieve 80 per cent of electricity generation from renewable sources by 2030, the private sector is expected to play an increasingly important role.

“For businesses, sustainability isn’t a separate field, it’s an outcome of everything a company does,” he said. “It applies to products and services, competitive strategy, and the business case for investment.”

Last October, the Forvis Mazars C-Suite Barometer, a global survey of over 3,000 industry leaders across 40 countries, found that 32 per cent of Irish executives rank sustainability as their top strategic priority, compared to 21 per cent globally.

This isn't all that surprising. Ireland's export-focused economy means that businesses in many sectors need to consider EU regulations, supply chain decarbonisation and net zero initiatives as part of their mandates. In addition, while the Corporate Sustainability Reporting Directive (CSRD), which requires companies to publish detailed sustainability reporting, was recently watered down, it has influenced companies right across the supply chain.

“The CSRD was a game changer, in that it got CEOs, CFOs, chief legal counsels triggering the sustainability discussion,” says Meehan. “That had never happened before – we used to typically get calls from supply chain leaders who were stuck.

“There has been a spillover effect from that, in that executive leadership teams now understand a lot more about energy efficiency and embedded emissions in their value chain, mapping it all the way from upstream to downstream and gaining understanding of the impacts, risks, and opportunities.”

Thus, as businesses look to increase their energy transition investment, Meehan noted that more companies are viewing it as a commercial and cost of goods opportunity.

“Regardless of what happens with compliance, or the ‘push’ to get people to do things, there’s a whole dynamic now around ‘pull’ factors, because the economics speak for themselves,” he said.

The financial sector has especially taken note. Bank of Ireland has committed €30 billion in sustainable finance by 2030, some €16.5 billion of which has already been deployed, while AIB and PTSB offer green lending with preferential terms to businesses that are investing in energy efficiency and decarbonisation. Insurers, too, are integrating climate-risk analytics into their planning, with businesses that show climate resilience, adaptation, and transition plans able to negotiate better terms.

“What I say to clients is that sustainability is priced into so many different aspects of your business right now,” said Meehan. “If you don’t accelerate decarbonisation or disclose your baseline and transition plan, that’s going to affect your loan terms, your tender scores, your insurance premiums, and how customers and analysts rate your business.”

However, most Irish businesses are not fully aware of the support ecosystem that exists to assist with the transition. SEAI provides substantial grants per site for energy efficiency measures, while Enterprise Ireland has approved sustainability funding of more than €60 million since 2022 and manages the €300 million Decarbonisation Fund for larger industrial projects. Other initiatives of note include the Climate Action Voucher, GreenStart and GreenPlus, which provide partial funding for foundational or multi-year projects.

“We have, I would say, a very pro-business culture in Ireland, but we’re also becoming a very pro-sustainability culture, because it’s increasingly being talked up by the government and state agencies through the lens of competitiveness,” Meehan added.

The implications of inaction have been widely discussed. The Irish Fiscal Advisory Council has estimated that should Ireland miss its EU climate requirements, it could cost the country between €8 billion and €26 billion by 2030. Delaying the transition is a missed opportunity for energy security and affordability.

But unlike two decades ago when Meehan moved into sustainability and it was niche and premium-priced, risks have since become realities, where inaction has resulted in outcomes we see today especially on cost of energy and capacity constraints. “Sustainability is the business case now,” says Meehan. “It drives savings and enhances your bottom line, de-risks your supply chain and builds resilience. From a top-line and brand point of view, it enables you to differentiate yourself from competitors and meet more rigorous expectations from stakeholders”.