Monday, 1 February 2021
Nithe i dtosach suíonna - Commencement Matters
Greenhouse Gas Emissions
I thank the Minister of State for coming to the Seanad today. I raise a crucial matter relating to Ireland's efforts to combat climate change, particularly the absolute necessity to ensure significant and tangible reductions in the emissions of greenhouse gases for the protection of our natural environment, the health and well-being of our citizens and the prevention of catastrophic climate and biodiversity collapse.
As the Minister of State is aware, the Environmental Protection Agency released a report last week analysing Irish greenhouse gas emissions for 2020. Somewhat unbelievably, the report indicates that even with the dramatic decline in economic activity and travel arising from the Covid-19 pandemic, Ireland still only reduced its carbon emissions by less than 6%, falling short of the flagship commitment in the programme for Government to achieve a 7% reduction every year. In this context, it is clear that radical action is needed across all Departments and sectors of our economy to make the fundamental shift in both policy and mindset needed to decarbonise the economy, especially as economic activity picks up again after Covid-19. I raise, therefore, one specific part of the suite of measures needed to revolutionise Ireland’s climate response today, the introduction of legislation requiring private companies operating in Ireland to make mandatory public disclosures on the greenhouse gas emissions arising from their activities in the State. Such a measure is built on the principles of transparency and accountability, the idea being that if companies are required to publish their emissions every year, public scrutiny, pressure and environmental considerations will cause them to adopt policies that will reduce their emissions.
Commercial, industrial and public services accounted for almost 15% of Irish emissions in 2020. In 2017, the Carbon Majors report found that just 100 companies had been responsible for 71% of global emissions since 1988. Corporations make significant contributions to global emissions and must be held to account. Climate justice is not possible if State responses only focus on targeting individual consumption through carbon taxes, impacting on low income communities with low carbon footprints the most and without also tackling the big polluters on the other end of the scale, which create the most carbon emissions.
Legal requirements in this area have been adopted elsewhere, notably in the UK. I am currently drafting legislation in a similar vein that would require companies to make annual disclosures of their greenhouse gas emissions to the Minister, crucially including emissions not just from directly owned sources but indirect emissions arising from business activities and their supply chains, known as scope 3 emissions. The requirements would be phased in for large companies first, similar to the requirements under the Government's proposed gender pay legislation. There would also be a system of graduated fines for companies acting in bad faith in respect of inadequate emission reductions. I would also like to see these same requirements made of public bodies in the spirit of fairness and also to allow Departments and State bodies to demonstrate real climate leadership. However, ideally I would like to see these proposals come from the Government, which is why I have tabled this matter. Will the Minister commit to introducing such legislation, particularly that which includes so-called scope 3 emissions?
Ireland has so many large multinational companies headquartered here that by introducing strong requirements, we could feasibly create a global shift in corporate environmental accountability. Considering Ireland’s reputation internationally as a global climate laggard, this would be an incredible legacy for the Department. Many of our larger companies are already participating in such a scheme voluntarily through the extremely worthwhile work of Business in the Community Ireland and its low carbon pledge for businesses. What I am proposing is that we simply make such a scheme statutory. I thank the Minister of State and look forward to his response.
I am very pleased that this matter has been selected for discussion today as it is an area in which I have a particular interest. The Intergovernmental Panel on Climate Change has demonstrated that global emissions must be reduced to net zero within the next few decades to avoid a dangerous increase in global temperatures. The programme for Government sets out how important the next ten years will be in addressing the climate change and biodiversity crisis.I am determined, through my delegated functions, to play my role. One of the first actions upon my appointment was to seek how we could make company law fit for purpose and address the need for more robust environmental reporting measures. It was at this stage I was informed that the work was under way in the EU Commission and I believe it would be premature to pre-empt this work. However, preparatory work has begun.
Last year, Senator Ruane and I met to discuss the company requirements with regard to reporting on greenhouse gas emissions. The current system of environmental reporting has been in place since 2017. Large companies in Ireland with more than 500 employees are required under company law to report on their impact on the environment such as their greenhouse gas emissions or to explain if they do not.
The current rules derive from EU law and encompass approximately 6,000 large global companies operating across the EU. Reporting is not limited to greenhouse gas emissions and can include anything material in terms of a company's impact on the environment. The information allows investors, consumers, policymakers and other stakeholders to make choices based on the environmental performances of the companies. It encourages companies to develop an environment-focused approach to their business but to be clear and honest, as it stands what we have is not fit for purpose. The process of comply or explain will not lead to the necessary or effective change in decarbonisation in this country. This needs to be improved and it is my intention that it will be improved.
I am committed to seeing reform in company law in this space. I have written to key stakeholders signalling what is happening and that I will seek their views when the draft legislative proposal is published at the end of quarter 1 this year. This will also be an important opportunity to reflect on what has been done and, given the extraordinary global upheaval, forge an effective approach to raise the transparency of the environmental information provided by undertakings in all sectors and result in lasting change for the better.
Many companies are keen to develop their reporting in this area and to differentiate themselves on the basis of their responsibility in regard to the environment and climate change. As legislators, there is an onus on us to require this in a clear and a consistent way, give the maximum relevant information possible to consumers and other stakeholders and minimise any unnecessary burden on companies.
To complement the consultation process, I will convene a forum to build on feedback. I will work with stakeholders across the different sectors, inviting their feedback and experience, ensuring that measures introduced are proportionate to the size of the respective companies and developing workable solutions that will ensure businesses are working towards reducing their environmental footprint and thus greater transparency for all. This will need cross-party co-operation and political leadership to ensure real and effective change is carried through, particularly as we navigate the pandemic recovery. It is my intention that decarbonisation is part of that recovery.
I look forward to working with the Senator. We can work together on the Bill she proposes and across all the different political parties because this is not just an interest unique to me or to her. Many Members of this House, and the Dáil, have a similar interest. I look forward to working with all Deputies who have an interest in this issue and ensuring that we bring forward legislation later this year that is fit for purpose.
I thank the Minister of State. I welcome his contribution, especially the reference to working together. I know there will be differences in the way we view this moving forward but it would be good to find common ground and work from that point. I have one question. If needs be, can he commit to going further than the EU legislation? We have been operating under an EU directive on non-financial disclosures on companies since 2017, which has been inadequate. The Minister of State cannot pre-empt what the Commission will bring forward but can he commit to taking it further if the EU legislation does not go far enough?
I welcome this discussion.There is passion and enthusiasm in the House in respect of this matter. The current requirements are not fit for purpose when it comes to the process of comply or explain. We want to change that. However, I cannot commit to going further on something that I have not even seen yet. I am awaiting whatever directive comes from the EU. I have already written to the various stakeholders seeking their inputs and views.
We will work together but let us wait to see what the EU publishes. If it is not good enough, we can certainly improve it. That does not have to be what we aspire to achieve. That might be the base but we have to wait and see what is published. When it is published, we will get together and have stakeholder engagement. I look forward to Senator Ruane playing a leading role in that regard. As stated, we will bring forward new legislation that is fit for purpose and robust and that will serve both companies and the environment well. Many companies are already publishing a great deal of data on a voluntary basis. Some companies are ahead of us on this and realise that they have an important role to play.