A new report from the law firm suggests that many Irish companies remain unprepared for the legal requirements and obligations surrounding ESG compliance.

Around a third (34 per cent) of Irish organisations have not provided sustainability or ESG training for their employees, according to the report.

Just over half (52 per cent) of those surveyed report high board-level engagement on sustainability, leaving nearly half of corporate boards without full commitment to these critical issues.

The lack of preparedness persists despite the EU’s Corporate Sustainability Reporting Directive (CSRD) becoming national law under the European Union (Corporate Sustainability Reporting) Regulations 2024 more than seven months ago. 

Where Irish companies have not established a dedicated sustainability function, it tends to fall under any of a number of areas including compliance, HR, legal, procurement, operations and technical, the research finds.

Larger businesses were more likely to have a separate function, with 76 per cent of companies valued at over €450 million reporting a designated sustainability function.  

When it comes to climate transition plans, the report finds that only 21 per cent of companies have already developed one, with larger firms more likely to have done so. Nearly a third (31 per cent) of businesses have no plan in place at all.

Meanwhile, 69 per cent of companies have implemented a due diligence policy regarding their business partners, yet one in five (20 per cent) have no such policy, and 11 per cent of respondents were uncertain. 

Concerns about ESG compliance extend beyond internal policies. Almost eight in 10 (77 per cent) of Irish organisations expressed significant concern about the risks of greenwashing, highlighting the need for clear and credible sustainability strategies. 

A&L Goodbody’s research comes ahead of the EU’s first omnibus package on sustainability, which is expected to be published next week and is aimed at simplifying sustainability-related reporting and due diligence obligations.

The firm’s research found that six in 10 (60 per cent) of those surveyed are currently exploring IT or AI solutions to help with their sustainability reporting.

The coming omnibus package is one of a series of packages expected this year which aim to reduce the administrative burdens placed on companies, including those relating to reporting, by at least 25 per cent for all companies and at least 35 per cent for SMEs.

The first package includes simplification of reporting related to sustainable finance, sustainability due diligence and taxonomy.  

Jill Shaw, ESG and sustainability lead at A&L Goodbody, said: “Our research highlights the urgency for Irish companies to bridge their knowledge gaps regarding ESG-related legal requirements.

“While the upcoming omnibus package on sustainability promises to simplify obligations, its impact remains to be seen. There is also a risk that streamlining these regulations could ultimately raise the compliance bar for affected companies. Keeping a close watch on policy developments will be crucial.

“As ESG laws and policies evolve, companies must understand the impact on their business operations. Proactively tracking regulatory and policy developments and establishing cross-functional groups can ensure that organisations are aware of and preparing for evolving ESG requirements.

“Companies that prioritise ESG considerations will reap the rewards when it comes to unlocking business opportunities and enhancing their reputation.”