Better reporting on environmental, social and governance standards could boost FDI, accountants tell Leo Varadkar
A better reporting regime on environmental, societal and governance (ESG) standards could become a key part of Ireland’s ability to attract foreign direct investment, tax advisers have said.
he Department of Enterprise, Trade and Employment is conducting a public consultation on the future direction of the country’s enterprise policy with a view to publishing a white paper by the end of the year.
In its communication, Chartered Accountants Ireland (CAI) said it was “essential” that the EU and other international bodies work with regional standard setters to improve ESG reporting.
“Historically, business performance was measured by analyzing financial statements. However, non-financial information is becoming increasingly important for stakeholders to understand how a company addresses ESG issues,” said CAI’s submission.
“Several regulations, voluntary frameworks and standards, along with a substantial amount of guidance, have provided a structure for measuring and reporting this information.”
We believe that a consistent ESG reporting regime will become an important part of Ireland’s FDI offering
However, CAI said this approach had flaws. “The lack of comparability and consistency makes it almost impossible to compare entities, and cross-framework mapping is difficult and expensive. Therefore, consolidated sustainability reporting standards are needed to increase the global reliability and comparability of corporate reporting on ESG issues,” he said.
Progress has been made over the last 12 months towards more consistent sustainability standards at European and global levels to arrive at reporting standards that are “reliable, comparable and promote transparency and consistent measurement of sustainability activity”.
“The Irish government has an advocacy role to play in fostering this cooperation. We believe that a consistent ESG reporting regime will become an important part of Ireland’s FDI offering,” said CAI’s submission.
The body also highlighted the need to support Irish businesses.
“SMEs are feeling inflationary pressures from soaring energy costs, supply chain issues and wage demands,” he said.
“Despite the prospect of a recession, the labor market is tight and staff shortages are impacting competitiveness. The government should allow people overseas to come and work here who are not automatically eligible, easing the administrative burden on employers and opening doors to global talent.
He urged the government to set out “a clear and ambitious strategy” to support the country’s businesses as they face “a variety of mutually reinforcing challenges”.
Business Minister Leo Varadkar announced the Irish Business Policy Review in June.
A ‘high-level’ corporate white paper will then outline the strategic direction of the corporate policy.
It comes at a time of economic uncertainty and concern over Ireland’s reliance on multinational tax.