Irish companies are more anxious about trade shocks than their European counterparts, the European Investment Bank (EIB) has said, and have begun to build up their inventories as insurance against future disruptions.
Firms in the Republic are also significantly less likely to have invested in or plan to invest in mitigating the impact of climate change on their operations, according to the bank’s latest investment survey report.
Based on a poll of some 13,000 EU companies conducted last year, including a representative sample in the Republic, the report gauges the investment priorities of firms across the bloc.
While 90 per cent of survey respondents in the Republic said they had taken at least one action to reduce greenhouse gas emissions, just 43 per cent of businesses in the Republic have invested in climate change mitigation plans, compared with almost half in the EU at large.
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Three-quarters of companies here said they have already experienced physical risks associated with climate change, compared with the EU average of 66 per cent.
Yet companies in the Republic were less likely to have invested in climate change adaptation strategies or new insurance products to cope with potential losses.
On a more positive note, and with trade tensions ramping up between the US and the EU, companies here are more concerned than their European peers about access to commodities and raw materials.
In response, “Irish firms are prioritising the build-up of stocks and inventory, investment in digital inputs tracking, and the diversification of suppliers to strengthen supply chain resilience”, the EIB said.
“Irish companies have been proactively strengthening their supply chains and ensuring their long-term competitiveness,” said Debora Revoltella, chief economist at EIB group.
“In the current geopolitical context, resilience will be further tested. As the EU bank, the EIB will continue to support investments that enhance resilience, sustainability, and innovation.”
The overall investment outlook for firms in the Republic remains “positive”, the bank said. Some 80 per cent of Irish survey respondents said they were satisfied with investment levels over the past three years and expect to prioritise investing in expansion in the future.
However, Irish firms were negative on the political and regulatory climate and reported a heightening of investment barriers last year compared with 2023, in areas like labour market and other business regulations as well as access to finance.
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