ESG: keen to be seen to be green

Dominic Carman

Some Irish lawyers suggest that ESG regulation is creating conversations rather than creating work; others point to ESG being in every deal. So, who’s right?

Amid a sustained re-evaluation of how business impacts society, environmental social and governance (ESG) is still riding high on corporate agendas – at least for companies operating in Europe, which is at the vanguard of implementing ESG regulation. The shareholder-first mantra, once championed by Nobel Prize winning economist Milton Friedman, has given way to stakeholders first, or arguably, society first. Beyond compliance with measurable components of sustainability, the momentum for change also derives from consumer preferences, investor pressure and risk management. Ireland is emerging as a more proactive EU member state in driving ESG change domestically, although it will miss its carbon reduction targets by “a significant margin”, according to the country’s Environmental Protection Agency, (EPA). The EPA projects a reduction of 29 per cent in Greenhouse Gas (GHG) emissions in Ireland by 2030 compared to a target of 51 per cent. Nevertheless, having a business strategy based on sustainability alongside transparency of ESG metrics has become a strategic (and increasingly legal) imperative for every responsible business operating in Ireland, even though a majority of business professionals still see ESG as “just a marketing exercise”, according to some recent surveys.