A new report from EY Ireland reveals that 81% of Irish businesses have significantly enhanced their sustainability efforts in 2024, marking a 19% increase from 2022. The survey, which involved 200 senior decision-makers across both public and private sectors, underscores the evolving importance of Environmental, Social, and Governance (ESG) practices for companies looking to secure financial growth and resilience.

Derarca Dennis, EY Ireland Partner and Sustainability Services Lead, commented, “It’s very encouraging to see a shift amongst Irish businesses towards a better understanding of sustainability, its impact on the bottom line, and a real desire to create a more sustainable business approach across all sectors.”

The report highlights that 74% of businesses rate their sustainability initiatives as ‘established or better,’ a rise from 61% in 2022. Additionally, 15% of businesses view their sustainability efforts as ‘industry-leading,’ doubling from the previous year. However, 35% of businesses admit they are still not doing enough, an increase from 17% in 2022.

Several factors are driving this heightened focus on sustainability. Increased pressure from stakeholders, the necessity of ESG compliance for accessing capital, and the importance of sustainability in mergers and acquisitions are all influencing business strategies. A notable 65% of businesses reported more inquiries from stakeholders about their sustainability efforts, while 58% of companies believe that ESG commitments are now essential for securing capital. Furthermore, 30% of businesses evaluate the sustainability practices of target companies during M&A negotiations.

At the same time, businesses are grappling with new regulatory challenges. EU regulations like the Emissions Trading System and the Corporate Sustainability Due Diligence Directive are top concerns for 65% and 62% of companies, respectively. Greenwashing has also emerged as a significant issue, with 35% of businesses expressing concerns over misleading ESG claims, up from 13% last year.

Dennis also noted, “We need to continue to see more organisations having advanced discussions with suppliers and putting sustainability reporting systems in place. Technology will have a critical role to play in supply chain engagement.”

The report highlights that 50% of businesses now use technology to track and verify supply chain data, essential for ensuring compliance with new sustainability regulations.