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Greenwashing, green finance and emissions: Is Irish business doing its part in the fight against climate change?

Some companies have been more proactive than others but the pandemic may have slowed progress.

Image: Shutterstock/Calin Tatu
This article is part of Business Futures, a series tackling the key issues shaping Irish business today and in the future. If you’re part of that future, you might want to know that The Journal has partnered with UCD Smurfit School to offer one reader a full scholarship for the Modular Executive MBA (EMBA) worth more than €30,000. Find out more here.

“MARKED ESCALATION in social awareness and public engagement” on the issue of climate change in recent years has led to it being recognised as the “defining challenge for this century”.

And yet Irish progress on reducing emissions of greenhouse gases — carbon dioxide, methane and nitrous oxide — remains “very poor”.

This was the assessment of the Environmental Protection Agency (EPA) in its State of the Environment report, a major survey of the situation in Ireland, published last November.

While the agricultural sector accounts for over 35% of Irish emissions, major commercial emitters, as defined under the EU’s Emissions Trading System, account for 25%.

Against a backdrop of growing public and political pressure, Irish business has really only begun to reckon with its own contribution to the current state of affairs.

Some businesses and sectors have been more proactive than others though. In 2018, a host of major Irish companies signed up to Business in the Community Ireland’s Low Carbon Pledge — a commitment to reducing emissions by 50% by 2030 and 100% by 2050 in line with government commitments.

An Post signed up to the pledge in 2019.

The state-owned company has since committed to an accelerated target of 50% reduction in carbon emissions by 2025 with a view to being 100% “net carbon neutral” by 2030, says Nicola Woods, An Post’s chief transformation officer.

“Carbon Emission reduction has been a key focus for An Post since 2009 and became core to our strategy in 2017 when we took big steps in transforming our whole business in order to make it sustainable in the new world of eCommerce and financial services,” she explains.

As a company dependent on a large delivery fleet, cutting carbon emissions was positioned as a key consideration in every investment and growth strategy.

An Post can point to some tangible successes on this front. The company is emissions-free in Dublin, Galway, Waterford and Kilkenny and will be implementing emission-free deliveries in Cork and Limerick in the coming weeks.

Just last week, An Post became the first Irish logistics outfit to sign up to EV100; a push by international businesses to accelerate the shift the electric vehicles. But like so many plans, the pandemic has hampered the drive to cut emissions.

While An Post has managed to cut emissions by a third since 2019, Woods says the pandemic year saw the company’s energy usage increase once again. This, she says, is a result of “supporting the vital Covid-19 safety measures such as increased ventilation and allowing our drivers to bring their vehicles home to reduce the risk of cross-contamination”.

It’s just one example but it speaks to the kind of challenges that even the most well-intentioned businesses face.

Green finance

The pandemic may have also slowed progress on a macro level, experts believe. Although the European Union has made large-scale commitments to tackling climate change under the European Green Deal, the bloc’s response to Covid may have impeded advancements.

For example, one of the main tools that the European Central Bank has used to fight the economic effects of Covid-19 is the Pandemic Emergency Purchasing Programme — an emergency bond-buying initiative rolled out last March.

Its goal: to offset the deflationary effects of the pandemic by buying up large chunks of government and corporate bonds. The trouble is that there has been very little oversight and transparency regarding the kinds of bonds purchased.

“At the moment, the way bond-buying is structured, you end up buying them from large fossil fuel companies. And even within the universe of fossil fuel companies, you end up buying those irresponsible on the climate and not those who actually even try to shift the needle,” explains Dr Theodor Cojoianu, assistant finance professor at Queen’s University Belfast.

He is also a visiting lecturer at the UCD Smurfit Business School in Dublin, where he spent two years as a postdoctoral research fellow.

Cojoianu was recently appointed to the European Commission’s Platform on Sustainable Finance, a permanent expert group established with a view to guiding the EU policy on hitting Green Deal targets.

An important component of those commitments is directing capital flows towards sustainable and green projects. In the teeth of a once-in-several-generations public health crisis, how have European companies fared in the past 12 months? It’s difficult to say at the moment.

“If you look at public equity markets, they’ve performed extremely well, with sustainable funds seeing large inflows of funds and have risen above conventional benchmarks,” he explains.

But it’s a bit less unclear what’s happening in the private markets where you actually have most of the real injections of capital… and whether these went to fossil fuel companies. We are looking into that will hopefully put some, some research out soon.

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Cojoianu’s work is concerned with improving transparency in this area. It’s kind of “academic investigative journalism”, as he puts it.

“I think what [the Commission] needs to do, and what needs to come out of this exercise is to be able to build these tools — accountability and transparency tools — to be able to answer the questions; are we really incentivising this? Are the funds really going to the right place? That’s a big part of our research: following the money.”

‘Greenwashing’

Following the money is also key to eliminating ‘greenwashing’ — the phenomenon of businesses adopting cosmetic, green-tinged policies that do very little to solve existing issues and improve the situation.

As Nicola Woods puts it, “It’s vital that business takes the time to really examine its processes and practices, and those of its wider industry. Beware of quick fix or attention-grabbing gimmicks.”

As part of a Science Foundation Ireland-funded project, Cojoianu has worked on the creation of an artificial intelligence-based greenwashing detection tool. According to a paper published last, the tool “analyses the claims of companies worldwide and contrasts them with the actual performance and activities of companies”.

It’s based framework “co-developed by consulting with over 200 financial services professionals during the concept phase of the project”.

Cojoianu takes heart from government plans to make Ireland a hub for the creation of anti-greenwashing financial services tools by 2025 under its ‘Finance for Ireland’ strategy.

“Pretty much the way you do it with anti-money laundering in Dublin and Belfast, we will be a kind of hub for data for sustainable finance and keeping the financial sector in check,” he says. “So I’m very, very pleased about that.”

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