From Buzzword to Boardrooms
Kavin Aadithiyan
Masters student in sustainability at Trinity Business School
Until not long ago, sustainability was mainly seen from an environmental lens. With concerns about climate change gaining increased public attention, policies and agreements to combat it were passed across the 2010s. The Paris Agreement was signed in 2015, the EU Green Deal was approved in 2020, and Ireland declared a climate emergency in 2019. All of these signalled to businesses that climate and sustainability were on the priority list of policymakers and legislation would follow. At the EU level, the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) were passed to support that agenda.
"For businesses operating on thin margins, additional reporting added costs and time pressures that they felt reduced their competitiveness."
The ensuing backlash led to a reduction in the scope of companies covered by the above legislation (a similar rollback was seen in the EU's 2035 ban on internal combustion engines as well), with the updated threshold covering significantly fewer companies.
While additional reporting does add costs for companies, approaching sustainability from a strategic angle provides a different perspective. Take energy, for instance. Over a period of just 4 years, Irish enterprises have faced two price shocks, with the first resulting in many small companies going out of business as they were unable to manage the sudden increase in input costs. While the recent energy crisis hasn’t seen an increase of the magnitude as in 2022, it is still a shock nonetheless. Reducing energy use, increasing efficiency, and opting for renewable energy shifts an external uncertainty to a predictable variable. Tackling business emissions through reduced energy use and more renewable production is not just a green thing, but a smart thing.
A similar parallel can be seen in a company’s supply chain. In an operating environment beset with uncertainties, being unaware of risks to critical raw material supplies or other areas of the supply chain can significantly impact operations. This is not something completely new - flooding in Thailand in 2011 saw prices of computer storage spike, as nearly half of global production was situated there. Rising heatwaves in India led to lower exports of commodities such as wheat, impacting companies and economies dependent on imports of agricultural products. But the severity and the recurrence of what used to be anomalous events pose challenges to supply chains.
For companies that aim to be forward-looking, assessing vulnerabilities provides protection from such shocks. And a business would only be able to secure a resilient supply chain if it can identify existing vulnerabilities, of which climate is just one component. While a company might not want or need to cover everything sustainability reporting entails, recognising relevant areas and quantifying data shows where it stands. Keeping sustainability at the heart of strategy thus allows a business to stay ahead of the game and position itself as a leader. And even if a business is not mandated to report on sustainability, large organisations are beginning to add requirements in proposals that need data and strategies that would be more easily addressed if a company built it from the ground up.
Businesses are beginning to recognise this. Regardless of legislative rollbacks, companies are holding their ground on sustainability. The most recent survey of Irish SMEs conducted by the Department of Enterprise, Tourism and Employment shows:
Sustainability is no longer just a buzzword. Companies across industries, regardless of size and scope of operations, recognise that it’s a tool that allows them to look ahead, weather storms, and be better prepared to face disruptions. From a time when legislation drove action, sustainability has quietly moved to the boardroom to become another strategic edge.
Kavin Aadithyan
Kavin is a Masters student in sustainability at Trinity Business School. He has previously worked at the intersection of energy and e-mobility, where he broke down the complexities of the sectors to a general audience. His work spanned content, communications, marketing, and PR, as well as a stint in developing datasets for AI/LLM models. When not reading about energy or sustainability, he can be found dreaming about cycling across the greenways of Ireland.