This article is the second in a four-part series analysing how Irish Enterprise is responding to the challenge of delivering a climate resilient future. This series is based on a study of 106 sustainability action plans created mainly by large and medium sized organisations who participated in Skillnet Climate Ready Academy’s Sustainability Leaders Programme (SLP) between 2022 and 2023. SLP uses the UN Sustainable Development Goals (SDGs) as a framework to help businesses develop a sustainability action plan. 

Part two of the series covers: 

• The Sustainability Leaders Programme
• Sustainability Materiality Assessments
• Analysis of Areas of Material Concern for Irish Enterprise 
• Key Takeaways Analysing Alignment between Materiality Assessments and the SDGs

The Sustainability Leaders Programme 

In 2021, Skillnet Ireland in conjunction with 20FIFTY Partners launched the Skillnet Climate Ready Academy, an initiative to equip Irish businesses with the skills to tackle climate change¹. Each programme within its suite takes an action-based learning approach delivered through live workshops which are held over twelve weeks. Included in the Academy suite is a range of programmes designed by industry for industry, targeting the development of sustainability, biodiversity, energy, and circularity leaders across Irish-based businesses.

As of 2022, these programmes collectively form Ireland’s first enterprise-led micro-credential climate action programme². The Sustainability Leaders Programme (SLP) equips sustainability professionals with the skills to overcome the challenges of implementing sustainable business practices, transitioning to a sustainable business model and ultimately supporting a decarbonised economy³. To do so, it leverages the UN Sustainable Development Goals (SDGs) as a heuristic device to assist learners in identifying areas key to a business’s resilience⁴.

To complete the Sustainability Leaders Programme, businesses are required to create a sustainability action plan, using the SDGs as its foundation. The output of plans created by Irish enterprises who completed SLP between January 2022 and July 2023 form the basis of this present study.

The sample size consists of 57% SMEs and 43% large businesses, with the most frequent sectors being manufacturing, transport, pharmaceutical, food & drink & ICT, as presented in part one of this series.

Sustainability Materiality Assessments

A sustainability materiality assessment is a critical first step in informing the direction of an organisation’s sustainability strategy and action plan. In its most basic form, if something is deemed to be ‘material’, it is understood to be ‘important or have an important effect’⁵ on a decision-maker or its stakeholders. Materiality can be an important tool for organisations in helping to shape the business strategy, inform decision making and prioritise its areas of focus⁶. In the context of sustainability, the Sustainability Leaders Programme 2022-2023 defined a materiality assessment as ‘identifying the societal and environmental issues that present risks or opportunities to a company while taking into consideration the issues of most concern to internal and external stakeholders’⁷. This is referred to as an ‘outside-in’ perspective on materiality⁸, whereby external challenges are material to a company if they threaten its internal resilience, as represented below in Figure 1.

 

Figure 1: ‘Outside-In’ approach to materiality assessment.

SLP was launched in 2021⁹, prior to the introduction of the EU’s Corporate Sustainability Reporting Directive at the end of 2022¹⁰. CSRD disclosures require materiality assessments which address both ‘outside-in’ risks and opportunities, and ‘inside-out’ impacts of company practices on environmental and social factors¹¹. Whilst SLP has since updated its definition of a materiality assessment to be in alignment with CSRD requirements, this study will assess materiality solely from an ‘outside-in’ perspective, as this was used in SLP during the time of raw data collection.

Analysis of areas of material concern for Irish enterprise

What are the areas that Irish Enterprise perceive as posing risks and opportunities to their resilience and stakeholders? 

• SDG 12 – Responsible Consumption and Production (65%) and SDG 13 – Climate Action (65%) are the most frequently aligned SDGs to the material concerns for businesses, with 2/3 of all materiality assessments identifying risks and opportunities aligned to these SDGs (Figure 2).
• Materiality statements referencing either SDG 12 – Responsible Consumption and Production or SDG 13 – Climate Action represent 90% of the dataset. 
• This is followed by SDG 7 – Affordable and Clean Energy (42%). 
• Whilst three of seven environmental SDGs (highlighted in part one of this series) are referenced heavily in materiality assessments, water and biodiversity do not feature as prominently. 
  • SDG 6 – Clean Water and Sanitation was linked to 21% of materiality assessments which identified the importance of ongoing access to water to an organisations’ continued operations. 
  • SDG 15 – Life Below Land was linked to 13% of materiality assessments, and only 5% of materiality assessments identified the material importance of SDG 14 – Life Below Water as a factor with potential impact on their business.

 

Figure 2: Frequency of Top 4 SDGs Linked to Materiality Assessments.

SDG 12 – Responsible Consumption and Production

A deeper examination of the materiality assessments linked to SDG 12 – Responsible Consumption and Production in Figure 3, highlights that of the 65% of materiality statements linked to SDG12:

• Reduction of resources consumed and / or produced by enterprises is a core focus of nearly 1/3 of assessments (32%). 
• Waste and Materials management is cited in 18% of these materiality assessments.
• The term ‘Circularity’ is present in 16% of materiality assessments.
• ‘Recycling’ is referenced less frequently (9%). 

 

Figure 3: Frequency of materiality assessments linked to SDG 12 which reference circular methods.

Material Importance of Economic and Social Pillars to Irish Enterprise Sustainability Planning

Whilst the SLP scope focuses on climate resilience, findings show enterprise factors in the material importance of the economic and social pillars in their materiality assessments. 

When the economic SDGs are assessed against enterprise materiality assessments:

• As seen in Figure 4, nearly 1/5 of Irish enterprise is concerned with SDG 8 – Decent Work and Economic Growth (19%), a potential reflection of its inherent link to businesses¹². 
• This is followed by SDG 10 – Reduced Inequalities (12%), which enterprises primarily understand through employee opportunity. 
• SDG 11 – Sustainable Cities and Communities (9%) and SDG 9 – Industry, Innovation and Infrastructure (6%) are linked to materiality assessments to a lesser extent. 
  • These figures are notable given thematic alignment between these SDGs and the two largest sectors in the dataset, Manufacturing (15%) and Transportation (14%).

 

Figure 4: Frequency of economic SDGs aligned with Irish enterprise materiality assessments.

When the social SDGs are assessed against enterprise materiality assessments:

• As seen in Figure 5 a low proportion of assessments indicate risks and opportunities posed by employee experience of SDG 3 – Good Health and Well-Being (15%) and SDG 5 – Gender Equality (13%). 
• SDG 17 – Partnerships for the Goals, SDG 4 – Quality Education and SDG 16 – Peace, Justic and Strong Institutions are linked to materiality assessments, but to a much lesser extent. 
• Neither SDG 1 – Poverty (0%) or SDG 2 – Zero Hunger (0%) could be aligned with any of the material concerns listed by enterprises. 
• Despite the materiality approach for these cohorts and the programme’s focus on climate resilience, Irish enterprises are attending to the social SDGs where there is an evident link to the betterment of their employees.

 

Figure 5: Frequency of social SDGs aligned with Irish enterprise materiality assessments.

Key Takeaways

• Materiality assessments linked to either SDG 12 – Responsible Consumption and Production or SDG 13 – Climate Action represent 90% of the dataset.
• Of the 65% of assessments linked to SDG 12 – Responsible Consumption and Production, 1/3 relate to consumption and production reduction methods.
• Biodiversity does not feature prominently in materiality assessments as posing material risks and / or opportunities to business.
• SDGs aligned with the prosperity of the enterprise and their employees are factored into enterprise materiality assessments, albeit to a lesser extent than the environmental SDGs.

Engage with the authors of this series Aisling O’Connor, Maria Kelly and Colm Gaskin and the wider Academy team on Climate Action and Upskilling at climatereadyacademy@20fiftypartners.com