News analysis
Businesses worried about new ESG law
Nearly half of Irish companies are concerned about the costs or time involved in meeting new EU rules on environmental, social and governance (ESG).
Under the new law – known as the Corporate Sustainability Reporting Directive (CSRD) – companies must disclose information on their social and environmental impacts.
However, a survey published by the Compliance Institute shows that most Irish businesses are concerned about the new ESG law.
For example:
- 41% of companies surveyed said they would struggle to provide the data required
- 60% said the new rules would have a massive impact on their business
- 50% of the companies said they didn’t know they would be independently audited as a requirement of the CSRD
- 7% said they needed help understanding the new rules
New ESG law means independent audits
Many respondents to the Compliance Institute’s survey said they didn’t know that independent auditing would become a feature of the new law.
The CSRD makes it mandatory for the ESG information produced by companies to be subject to external assurance by an independent third party.
Speaking on RTE radio, Michael Kavanagh, CEO of the Compliance Institute, said the new law would significantly impact businesses.
Kavanagh urged companies to comply with their obligations immediately.
“You need to discuss how it is going to be resourced, how you are going to get the information and prepare a detailed project plan on who will do what,” he said.
He said that firms should be aware of the amount of work involved.
A sound ESG strategy is necessary for companies reporting per the new EU Corporate Sustainability Reporting Directive (CSRD).
What is the Corporate Sustainability Reporting Directive (CSRD) in a nutshell?
The CSRD is an ESG reporting standard under which approximately 49,000 companies in the EU will need to report.
Its objective is to encourage companies to manage and improve their ESG performance.
The CSRD is also designed to prevent companies from ‘greenwashing’ and has become known as the anti-greenwashing directive.
However, it is far more wide-ranging than just a law to prevent greenwashing, and firms will require a robust ESG strategy to meet the demands of the new law.
Read more here: Wide public support for the CSRD