Green Financing in Ireland - How climate change is shaping Irish Businesses
Public awareness and the recognition of the challenges of climate change in the last few years has risen considerably, yet studies suggest far more action on reducing harmful emissions in Ireland is needed. The State of the Environment report in Ireland produced last year by the Environmental Protection Agency (EPA) highlighting what scale of effort was needed. While the agricultural industry accounted for over 35% of emissions in Ireland, large scale commercial emitters, as regarded within the EU’s Emissions Trading System made up a further 25%.With rising public and political concerns, businesses in Ireland are beginning to recognise that there are necessary measures and changes that need to be made and while some have been fairly proactive, others are yet to take any clear, decisive action.
Back in 2018, several Irish businesses agreed to the Community Ireland’s Low Carbon Pledge, a commitment to reduce emissions by 50% by 2030 and to be completely net zero by 2050, in accordance with government plans.
State owned postal service provider in Ireland An Post signed up to the pledge and has committed to an accelerated target of 50% reduction in carbon emissions by 2050 and achieving net zero by 2030, according to Nicola Wood, the chief transformation officer at An Post. Wood explains that carbon emission reduction has been a priority for An Post for many years and became a core part of their strategy in 2017 after the business implemented major changes to transform the entire business into eCommerce and financial services. Being dependent on a large scale delivery fleet, reducing carbon emissions was considered a top priority in regards to their overall investment and growth strategy.
An Post has experienced some level of success – the business is now emissions-free in Dublin, Galway, Waterford and Kilkenny and intends to implement emission-free deliveries in Cork and Limerick. An Post has made a commitment towards accelerating the transition towards electric vehicles, but the pandemic has had a direct impact on their progress.
Woods explains that during 2020 the business experienced a rise in its energy usage levels due to a consequence of the business supporting vital Covid-19 related safety measures, such as increased ventilation and allowing drivers to bring vehicles home to reduce cross-contamination risks.
Green Finance
Industry experts believe the pandemic may have hindered progress on a smaller scale. The EU has made clear large scale commitments to tackling climate change, but the implications of Covid may impede the anticipated level of progress.
One of the core parts of the European Central Bank’s programme to alleviate the economic impact of Covid-19 is the Pandemic Emergency Purchasing Programme – an emergency bond-buying scheme launched last year. The goal of the programme is to offset the deflationary impacts of the pandemic by acquiring large portions of government and corporate bonds. The problem is that there has been very little consideration and transparency regarding what bonds are purchased.
According to Dr Theodor Cojoianu, assistant finance professor at Queen’s University, Belfast, bond-buying is structured in a way that you generally end up purchasing them from major fossil fuel companies. Dr Cojoianu believes that often bond buying supports those businesses that are not attempting to shift their focus towards cleaner alternative sources of energy. Cojoianu recently joined the European Commission Platform on Sustainable Finance, a specialist group dedicated to supporting the EU policy on achieving Green Deal targets. An important element of these commitments is to shift capital flows towards sustainable and green projects. Dr Cojoianu believes the Commission needs to deliver more accountability and transparency, to be capable of answering key questions such as , are funds really going to the right place?
Greenwashing
Following this path and understanding where the funds are going is vital to eliminating potential issues of ‘greenwashing’, where businesses implement what is perceived as green-focused policies, but in reality they do little to solve existing issues or improve the overall situation.
It’s important that businesses take the time to properly assess the processes, practices and the wider industry, avoiding quick fix solutions. As part of a Science Foundation Ireland -funded project, Cojoianu has been working on the development of an AI-based greenwashing detection system. According to a recent report, the tool measures the claims of businesses and compares them with actual performance and activities.
Cojoinau welcomes the government plans to make Ireland a focus for the development of anti-greenwashing financial services tools by 2025, under the Finance for Ireland strategy. Cojoinau highlights that the plan will represent a hub for data for sustainable finance and ensure the financial industry remains in check.