There is pressure on companies to make sure their carbon footprint reductions are real and realistic, they wrote. Emily Stiles

Ireland’s largest company is making steady progress by setting science-based targets (SBTs) as part of the net-zero transition to help the company reach its net-zero greenhouse gas emissions target. increase.

four years ago, Community Doing Business in Ireland its launch low carbon pledge, 47 companies signed up. That number has now increased to 70. The signatories span 11 sectors, with professional services firms, agribusiness, food and beverage and financial services being the largest sectors.

The pledge requires all signatories to commit to setting SBTs by 2024 and to review and assess indirect and supply chain emissions.

This should include your overall carbon footprint (scopes 1, 2 and 3) and align with the Paris Agreement and the latest IPCC findings. The ultimate goal of the pledge is to be carbon neutral, and these goals are the first steps towards a net-zero world by 2050.

Pledge signatories include A&L Goodbody, William Fry, ABP, Gas Networks Ireland, Virgin Media, Vodafone, An Post, DHL, ESB, Tesco, EirGrid, Bidvest Noonan, Irish Rail, Irish Distillers, AIB, Allianz, Cairn Homes, Includes Dawn Meats. , RSA Insurance, Deloitte, EY, Ornua, PM Group, PwC, SSE Ireland, Veolia,

In a recent update prepared by PwC for BITCI, 7 out of 10 pledge signatories claimed to be “well on track” to set science-based targets (SBTs) by 2024. and the majority are set to reach the SBT by 2030.

SBTs provide a clear path for companies to reduce their greenhouse gas emissions. A target is considered “science-based” if it is in line with the pursuit of efforts to limit warming to 1.5°C.

Many climate scientists believe that reaching net-zero global CO2 emissions by mid-century is essential to limiting global warming to 1.5°C and mitigating the negative impacts of climate change. .

As a result, the concept of net zero has gained traction in recent years, says a PwC report. In contrast to SBT, net-zero targets indicate carbon neutrality rather than direct emission reductions, so carbon offsets are allowed.

However, according to PwC, not all net-zero targets are the same. The definition of “net zero” and the paths to get there are varied and often inconsistent. To address this, SBTi has launched the first science-based global standard for corporate net-zero targets.

The SBTi Net Zero Standard aims to reduce a company’s net zero to zero or a residual level consistent with reaching net zero emissions at the global or sector level for scope 1, 2, and 3 emissions. Define.

The SBT provides short- and medium-term milestones in line with the Paris Agreement, but these targets can also lend credibility to a company’s net-zero efforts.

know the scope

scope 1 Emissions are direct GHG emissions from sources owned or controlled by the company. scope 2 Emissions are indirect greenhouse gas emissions from consumption of purchased electricity, heat, or steam. scope 3 Emissions are related to the supply chain (purchased goods and services, transportation and distribution, waste generated in operations, etc.) and customers (downstream transportation, end-of-life treatment of sold products, etc.).

Two-thirds of organizations have publicly set a net-zero goal, with cost cited as the biggest challenge to that goal.

Just over a quarter of respondents to the Low Carbon Pledge report set net-zero targets for scopes 1 and 2 before 2030, while this target date for scope 3 emissions was set at Only 1 in 8.

Key drivers for adopting SBTs include business model resilience, reputation, stakeholder pressure, corporate and social responsibility, policy and regulation. Some say they signed up simply because it was the right thing to do.

One-third of pledge signatories use carbon offsets. Of these, 95% are using offsets as part of their net zero strategy. Such offsets are primarily focused on the transportation/logistics and professional services sectors.

At the same time, the PWC report stated that challenges remain to make meaningful changes, primarily the need for guidance on baseline calculations, reporting, standards, etc., and the involvement of the value chain on scope 3 emissions. I’m here.

PwC’s Kim McLenahan believes companies need to develop comprehensive and ambitious strategies to reach net zero.

“It is very encouraging to see the progress made by leading Irish companies and their clear commitment to decarbonize their businesses,” he says. “However, the majority need to move quickly from expressing intent to charting a clear decarbonization path and formally signing the SBT.”

In the future, joining a low carbon pledge may not be an option for large companies. of the EU Corporate Sustainability Reporting Directive Recently approved by the European Parliament, large businesses must annually provide reliable information on environmental, social and governance issues, and human rights impacts.

The first phase of translating the Directive into Irish law will begin in the fall following a public consultation process. The new reporting requirements apply to companies with more than his 250 employees and annual turnover of €40 million, and the information companies provide about their climate impact must be independently audited and certified. there is.

From January 2024, the Directive will apply to companies with 500 or more employees, and is expected to be reduced to the 250 employee threshold by 2025.

green budget proposal

The climate change mitigation aspect needs to be funded by private investment and entrepreneurs that stimulate activity and develop a green economy. PwC’s view is that tax is an important tool, from tax incentives to encouraging investment in certain areas to taxation to discourage certain behaviors.

Peter RileyFinance Minister Paschal Donohoe, PwC’s tax policy leader, believes measures in the 2023 budget will accelerate the green agenda. The accounting firm demands certainty from renewable energy investors and developers in the taxation of investments and divestments.

Areas that need to be focused on, Reilly said, are the eligibility of grid connection costs and the application of participation exemptions to pre-trade scenarios.

Improving the R&D tax credit system to support the development of green innovation and ClimateTech is another proposal. Reilly also believes there is scope to establish Ireland as a ‘green finance hub’. This could be accelerated by the introduction of preferential tax rates on returns generated from sustainable investment products.

To give the 2023 budget a green tint, PwC believes Finance Ministers should also consider:

• Tax credit for employers who purchase transportation tickets for their employees.
• A tax break on interest on renovation loans provides an incentive for landlords to renovate their rental properties.
• “Insulation assistance” schemes and reduced stamp duty where modifications are made shortly after purchase.
• Tax breaks on EV loan interest and tax breaks on home charging points.

Photo: Environment Minister Eamon Ryan (right) and (from left) BITCI Chief Executive Officer Tomas Selkovich, PwC partner Kim McLenahan, and Heidi Hopper Duffy of Iarnród Éireann. (Photo by Jason Clarke)