New legislation requiring large companies to produce reports setting out their impact on the environment could harm Ireland’s reputation as a “business-friendly jurisdiction”, several leading corporate law firms privately warned the government.
European Union rules putting an obligation on large companies to report on their environmental sustainability came into force last year. Several of Ireland’s top corporate law firms took issue with national legislation giving effect to the EU reforms, lobbying government to make a series of changes, documents show.
The Corporate Sustainability Reporting Regulations put an onus on large companies to produce reports setting out their sustainability record. Correspondence shows several of Ireland’s leading firms lobbied minister for enterprise Peter Burke, to shape the legislation giving effect to new regulations.
They warned that putting too much of a “compliance burden” on Irish companies could harm the State’s reputation as a “business-friendly jurisdiction”, as well as hinder its ability to attract foreign direct investment.
The August 26th, 2024, letter was jointly signed by A&L Goodbody, Arthur Cox, Matheson, McCann Fitzgerald and William Fry. The firms said issues had “regrettably” arisen with how they felt the new regulations would operate in practice.
“This has caused confusion among professional advisers and is impacting upon our ability to provide definitive advice to our clients, which is causing concerns regarding their preparations for sustainability reporting,” the letter said. Clarity on the scope of the new rules was “urgently needed,” it said.
The requirements initially apply to companies with more than 500 employees, who will have to produce sustainability reports this year. Companies with more than 250 employees and turnover of more than €50 million will be required to file reports from next year on.
Correspondence from the five law firms argued that exemptions for companies set out in Irish legislation were “inadvertently more restrictive” than the EU regulations intended. The types of companies covered by the new climate reporting requirements seemed to be wider and “inconsistent” with the EU law, the letter said.
The correspondence, which was released to The Irish Times under the Freedom of Information Act, made a series of recommendations for changes. In response, then minister of State for trade Dara Calleary said department officials would carefully consider the submission.
In an October 25th letter, the five firms welcomed the fact that two of the problems they flagged had been addressed earlier that month. However, they asked for further changes given “several high-priority issues remain outstanding” with the new rules.
Their concerns related to “the scope and availability of exemptions,” stating that Irish companies needed to have some certainty “as a matter of urgency,” the letter said. “We make this submission to highlight these priority issues and to request that the department give urgent attention to the preparation of amending legislation,” it said.
A Department of Enterprise spokeswoman said the submission covered “a number of highly technical and complex legal issues”. Department officials were considering the arguments made in the correspondence and would decide what to do next following further analysis, she said.
The European Commission, which is the EU executive that proposes laws, is believed to be considering wrapping requirements to report on sustainability into other new obligations that would make large companies screen their supply chains for human rights abuses or environmental pollution.
The proposed changes being drawn up by commission officials are part of a push to simplify regulations coming from Brussels and cut down on red tape. The new French government recently argued for the reporting burden put on companies by the EU regulations to be “considerably lightened”, as part of planned changes.
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