Wednesday, 24 November 2021
Companies (Emission Reporting) Bill 2021: Second Stage
Alice-Mary Higgins (Independent)
I know the Minister of State has been engaging very constructively with my colleague, Senator Ruane, and I commend her and both Tadhg Browne, her current assistant, and, of course, Sebastian McAteer, who has done really important work in developing this legislation. I am very proud to have this Bill brought forward in the name of the Civil Engagement Group. In the short time I have, I will focus a little on why this represents best practice, some of the strengths within the Bill, and why we need it now. I urge the Minister of State to reconsider the proposed delay of one year in moving forward on this issue.
As regards some of the strengths of the Bill, the measurements are based on the United Nations Environment Programme greenhouse gas, GHG, indicator guide, which is best practice as put together by the United Nations, and the standards put forward by the Global Reporting Initiative, which is an independent international organisation. An important aspect of the Bill relates to its supplementing of some of the areas in which measures are already in place. For example, it adds to the measures under the emissions trading scheme or the non-financial reporting directive. It is important that the Bill accounts for scope 1, involving direct emissions from under control sources, scope 2, involving indirect emissions from the generation of purchased electricity, and, crucially, scope 3, which looks at other indirect emissions in the supply or value chain. This is the direction of travel. Scope 3 emissions are crucial to measuring and understanding the real impact in terms of emissions. That means that every part of the chain is considered, including transport, inputs, materials and further outcomes. That is what I would call real world reporting on carbon emissions.
We know that, in the end, one cannot argue with science or the reality of emissions. The problem at the moment is that a large amount of emissions are not being measured, captured or tracked. That is why global practice now is to look at scope 3. The emissions trading scheme will need to move to chart 3. The Minister of State will be aware that the EU corporate sustainability reporting directive that is currently being developed will also, crucially, address scope 3 emissions. This is a chance for Ireland to be ahead of the curve on this.
To be clear, this is something that many businesses really want. Good businesses want to be recognised for having quality supply chains and properly tracking their emissions. Members need not take my word for it. I refer to annexe 5 of the European Commission's impact assessment on corporate sustainability reporting. A survey carried out for the Commission by the Enterprise Europe Network with small businesses right across Europe found that more than half of them were already getting requests for environmental, social and corporate governance, ESG, reporting. SMEs in particular were finding reporting to be of great importance in the context of being able to access the supply chain. It was also important for larger corporations and companies in the context of being able to be part of supply chains, while larger companies found it to be crucial so that they could account for their supply chain. Some 68% of them stated that what they wanted were clear standards.
What is offered in the Bill is a clear standard on corporate emissions reporting that will stand up and can be put into practice. This legislation should progress through the Oireachtas this year in order that by next year Ireland will be in a position to have teased out any issues that exist in order to ensure we have best practice in terms of corporate emissions reporting. That would mean that we would be positioned to be ahead of the curve.The climate action committee is currently considering the Circular Economy Bill. When the circular economy directives kick into effect and we really start tracking supply chains, when the arrangements concerning environmental and social governance, ESG, supply chains come through and when the directives on corporate sustainability reporting come through, Ireland would be in a position to have put in place good practice and to have skilled up its companies to make them ready to lead in driving best practice across the EU and in accessing contracts in respect of ESG. This is because the companies would have a clear mechanism. There would not be an ad hocapproach. At present, some companies are tracking things in their own way. It is ad hocin that the companies are tracking using different mechanisms. We do not have a clear State role in that regard so we do not have clear marking of how emissions are tracked in the State. This relates to those who are trying to make crucial choices within companies. There is a lot of focus on the consumer choice. Sometimes there is an excessive focus on the consumer choice point, but we really need to think about choices within company management and boards of governance. Those in company management do not have consistent information about their own company, nor do they have, crucially, comparator information they can look to across the sector so they can learn from best practice. Since being held to account is not being anticipated, it is harder for companies and individuals on boards of governors who want to prioritise these issues to push them up the agenda and make the case internally for better and best practice and for more environmentally sustainable practice.
I wanted to highlight that this is an opportunity. By delaying for one year, we are not only delaying the opportunities that would flow from this Bill and from Ireland leading on this matter but we are also creating jeopardy. There can be a danger if emissions are not to be tracked for another year or two. It will take time, even after the Bill passes, to put the arrangements in place. We could end up with companies recognising at the last minute that they are required by Europe to do reporting and not having what they need in place. When this happens, it results in the kinds of situations we are seeing now, whereby individual sectors are saying they cannot comply because what is required is too hard for them, and that they cannot make the changes. It results in the kind of crisis-framing that is being introduced inappropriately on peat and haulage. It is crisis-framing rather than opportunity-framing.
I appreciate that the Minister of State has engaged constructively but I urge him to look to how we can move forward on this legislation. I wish it were not being delayed for a year. If it is to be delayed for a year, I ask that Government time be allowed when it comes back so it can speedily move through Committee and Report Stages. We have heard a lot about Ireland being a leader. The objective is to make Ireland a leader in this area rather than having it dragging along behind the requirements and doing what it did in the past, that is, making excuses sector by sector rather than embracing compliance and higher standards and leading the way.
The Bill is very clear. It is positive in that it contains offences for those who do not comply, even though I believe they are quite weak. I would like to see them strengthened. It is important that the Bill allows for public bodies to show leadership in this area.