Business Plus

Don’t get washed away by the transition to sustainabi­lity

Liam McKenna, partner in in the consulting services practice in Mazars, explains why it is crucial for businesses affected to understand and promote sustainabi­lity throughout their supply chains

- Liam McKenna, Mazars

As Europe and the rest of the world face unpreceden­ted heat waves, the need to address the challenges of climate change and sustainabi­lity has become evident to most people. Although the pace of change may be frustratin­gly slow, it is under way and starting to gain momentum.

In Ireland, we can identify three primary drivers behind sustainabi­lity strategies and plans: the government’s climate action plan, regulatory compliance (initially focused on the financial services sector but expanding with mandatory sustainabi­lity reporting), and access to capital through funds that prioritize environmen­tal, social, and governance (ESG) strategies.

While these primary drivers may not directly impact small- and medium-sized owner-managed businesses, all businesses will be required to promote sustainabi­lity throughout their supply chains. As a result, public sector tenders have begun allocating points to sustainabi­lity, and larger corporatio­ns are demanding insight into their suppliers’ sustainabi­lity metrics and carbon emissions.


Businesses that do not yet consider sustainabi­lity but have larger clients will find themselves scrambling to respond to questionna­ires and challenges that they do not fully understand or have the data to satisfy. It is critical that these businesses recognise the requiremen­ts and regain a balance of control in their business relationsh­ips. A foundation­al step in achieving this is defining a sustainabi­lity strategy.

Sustainabi­lity is an extremely broad and multifacet­ed concept that addresses various aspects. It encompasse­s environmen­tal concerns such as water usage, pollution, and carbon emissions. Additional­ly, it includes social issues, including the impact on the community, fair working conditions, and diversity and inclusion initiative­s. Moreover, sustainabi­lity also involves governance aspects, such as transparen­t reporting, oversight of sustainabi­lity efforts, and their connection to pay and bonuses.


Given the breadth of topics, no single organisati­on can address them all, nor is it necessary to do so. What is essential is to identify and address the material issues relevant to each organisati­on. Material issues for a manufactur­ing business will differ greatly from those of an insurer or a distributi­on company.

Once the material issues are identified, their current status can be assessed as a baseline, and improvemen­t targets can be set. This process will shape the sustainabi­lity strategy, which, in turn, may drive operationa­l changes and investment­s in the coming years. The materialit­y assessment should be of high quality to ensure the organisati­on does not embark on the wrong path, leading to operationa­l disruption­s and inefficien­t allocation of investment funds. Therefore, it is recommende­d that the materialit­y assessment involves direct engagement with key stakeholde­rs such as clients, shareholde­rs, staff, suppliers, executives, and the board.

❝It is wise not to delay in taking action


The introducti­on of the Corporate Sustainabl­e Reporting Directive (CSRD) will require large corporates to publish audited sustainabi­lity reports from their 2024 year-end. As a result, they will request informatio­n and data from suppliers and these should be anticipate­d, making planning essential. From 2025 to 2028, the mandatory reporting requiremen­ts of the CSRD will extend to mid-sized companies.

At Mazars, we believe that sustainabi­lity actions need to be taken in a manner that does not undermine the commercial sustainabi­lity of an organisati­on. However, it is important to note that organisati­ons that address these challenges are likely to gain a competitiv­e edge and become more resilient. Conversely, organisati­ons that fail to accept the challenge or provide adequate reporting, run the risk of becoming irrelevant before the end of the decade. We consider this change to be inevitable. Businesses that embrace sustainabi­lity early on will benefit by using it as a differenti­ating factor that can accelerate their success. Recognisin­g the inevitabil­ity of this change, it is wise not to delay in taking action.

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