The Government says a new EU law aimed at tackling greenwashing will strengthen the rules around the social and environmental information which companies have to report.
The Corporate Sustainability Reporting Directive has been signed into law by Minister for Enterprise Peter Burke.
Under the law, companies will have to report in more detail about the impact of their actions and policies on the environment, human rights and social standards.
Companies will have to conduct an audit to provide assurance that the statements fairly present the company's position.
"These regulations provide a helpful structure to companies for preparing sustainability reporting in a clear and consistent way, that gives the relevant information to investors, consumers, and other stakeholders, whilst minimising unnecessary burdens on companies," Minister Burke said.
Set to be introduced on a phased basis, the standards are applicable to large companies from 1 January 2025, and they will require businesses to review their operations and strategically plan in a way that supports society and the environment and helps create a more sustainable future.
Almost two-thirds (63%) of companies say that they are very or extremely confident that they will be ready to report under the new directive, according to PwC’s 2024 Global CSRD Survey.
It found that preparing to report is leading companies to give more weight to sustainability in business decisions.
However, the single biggest concern listed is data availability and quality (59%).
Fidelma Boyce, Assurance Partner, PwC Ireland, said as the countdown to CSRD compliance approaches, it is positive to see companies are largely confident that they will be ready to report.
"However, there is still some way to go, with the majority grappling with complex challenges, particularly the quantity and quality of data required, not only for their own operations but across their value chain."
She said the breadth and depth of CSRD reporting presents a massive challenge as teams work to collect, verify and consolidate many new types of data. "Organisations need a plan for how they are going to define, source, govern and process the data, in a manner to ensure that it is capable of being assured," Ms Boyce said.
"As the CSRD essentially requires sustainability reporting to be on par with financial reporting, leading executives are recognising that sustainability information must be available, accurate, and capable of being assured: not just on a one-time basis, but annually."
Professional accountancy body, ACCA has welcomed the introduction of the Corporate Sustainability Reporting Directive, describing it as the most significant development in the accounting profession in 30 years.
Stephen Noonan, Head of ACCA Ireland urged any companies that have not yet reviewed their environmental footprint, as it will increasingly influence the growth of their business in the years ahead.
"While the standards will only apply initially to large companies, the requirement for all organisations to conform to the directive will be in place by 2028. They must also be ready to provide information relating to their approach and progress in managing sustainability-related risks and opportunities for their businesses," Mr Noonan said.
'‘Although these new requirements are challenging, evidence suggests the effort will bring environmental and social rewards," he said. "That is why we would particularly encourage all SMEs to take small first steps and do what’s possible in communicating sustainability-related information with a view to becoming better businesses."
