The green finance revolution for Munster businesses

Founded in 2014, Passive Sills is the latest business to identify the advantages in the economy’s zero-carbon transition. Enterprise Ireland is supporting Irish businesses through this process and last month launched a €10m Climate Action Enterprise Fund to help companies compete in a low-carbon future.

“Compliance is a huge issue. Building physics is coming into construction, unless you understand it and have everything right, then you’ll be wrong,” he said.

For Passive Sills, their competitiveness in a reduced carbon score is an important target in their approach to new business. A supplier that can keep a construction project’s carbon score low is going to be ahead of other applicants for tenders, said Mr Beausang.

For Kathleen O’Regan, Enterprise Ireland’s environmental advisor, the sooner companies transition the better for the climate, and also for the business sense of future savings and regulation change.

“Large companies looking to reach zero carbon emissions are going to be looking at their supply chains and how companies fit into that supply chain so companies are going to be affected by international business decisions,” she said.

This ripple effect from corporations making the zero-carbon transition offers opportunities to lenders in green finance responding to investors’ demands for Environmental, Social, and Corporate Governance (ESG).

“Investors can really play a role in the ESG agenda and thereby drive the change that we so desperately need,” said Fabiola Schneider, a researcher with the European Commission’s Platform on Sustainable Finance based in UCD.

Ms Schneider said companies ahead on ESG matters are also viewed as better borrowers from a risk perspective. As well, she said demand for green finance will prove resilient across the economy during the transition.

The longer-term perspective of institutional investors is critical for a zero-carbon economy according to UCD finance professor, Andreas Hoepner.

Financing the sustainability transition makes sense from a 20-year perspective if you are working with a pension fund, he said.

Governments are often able to work with these actors as many of them are publicly owned, he said, using employee pensions funds as an example. A recent example of this institutional shift is the €1.75bn raised by AIB in 2020 in green bonds, despite the global shock of the pandemic.

However, for Michael Hayes, global head of renewables at KPMG, this process needs to move beyond institutions.

“We need to move the battleground to individual citizens around the world,” he said. “Without meaningful involvement from citizens around the world, I don’t think we will be successful on climate.”

Last September Ireland committed to matching the European Union’s aim to reduce carbon emissions by 55% by 2030. This requires a massive capital challenge according to Mr Hayes. He focuses on the private wealth held around the world that has not yet been activated in this pursuit.

“Over the next five years Irish businesses are going to be pursuing very ambitious decarbonisation policies,” said Mr Hayes and points out this will require new capital investment and individual investors will become part of the solution.

“I believe the green revolution will throw up a whole suite of new investment opportunities and we will build the type of products to sell to investors around that,” he said.

Investors will need to see intent for these adaptations from corporations though, said Mr Hayes.

Passive Sills hopes to pursue these adaptations in the future through its competitive environmental standards.

“We are not going to be going backwards, people are very slow to change in construction but change is the way it is going to be going forward. If you work with the regulations, they work to your advantage,” said Mr Beausang.