Over Half Of Irish Medium Sized Businesses See ESG Requirements As A Barrier To International Expansion
- Almost two fifths (38%) of mid-market Irish companies flag time and resources involved as main concern about sustainability compliance
- Approximately four in ten (41%) of Irish medium sized firms have no sustainability strategy in place
A special edition of the Grant Thornton International Business Report (IBR), which provides insights into the attitudes of 10,000 mid-market businesses across 28 economies, has revealed that just over half (51%) of medium sized Irish firms believe that ESG requirements are a barrier to their ability to expand overseas due to different regulations across jurisdictions.
The IBR research also found that the time and resource involved with compliance around ESG regulation is seen as a major challenge for medium sized Irish firms as they navigate increasingly stringent sustainability regulations and standards.
Approximately two in five (38%) Irish companies cited the resource required in terms of staff and time as their chief concern about ESG compliance, followed closely by the speed at which requirements change (33%), and the capital investment needed (29%).
As sustainability requirements are thrust upon medium sized companies due to larger corporates’ supply chain requirements under regulations such as the EU’s Corporate Sustainability Reporting Directive, many mid-market firms have no blueprint to follow.
The IBR research found that four in ten (41%) Irish medium sized companies had not yet developed any sustainability plans or processes such as policy, reporting and data gathering. This stood in stark contrast to their European and global peers where less than one in ten (8%) companies had no strategy in place.
For those Irish firms that have ESG strategies in place, the main benefit they see, according to the research, is an improved ability to access finance such as low-cost loans to fund green initiatives, for example, retrofitting their office or adding electric vehicles to their fleet.
Just over a fifth (22%) of Irish companies single it out as the most important factor encouraging businesses to focus on sustainability. Approximately one in ten firms also see it as an advantage in terms of competing with rival firms (13%) and a similar amount (11%) see green credentials as a means of boosting their brand reputation.
Commenting on the findings of the Grant Thornton Sustainability report, Janice Daly, Partner and Sustainability Lead, Grant Thornton, said:
“Sustainability is moving very quickly from a nice-to-do to a must-do for many Irish businesses as firms quickly realise how ESG regulations are tied to their future business success.
We are increasingly hearing from companies struggling with challenges of being compliant with sustainability requirements. It is important, however, that Irish businesses see sustainability as an opportunity rather than a burden as it can be leveraged as a competitive advantage for those firms who get it right.”
Catherine Duggan, Head of Sustainability in Advisory Consulting at Grant Thornton, added:
“The cost associated with building internal capacity, both human resources and data collection, increases significantly when there is a condensed timeline. Building up knowledge and process gradually will facilitate a smoother transition and allow for implementation challenges to be minimized.”
