The 'S' in ESG

As with the Summer Horizon Tracker, the commentary section for this Year in Review edition expands the acronym 'ESG' to its full name, reminding ourselves and clients that in addition to regulatory and legislative frameworks addressing environmental matters, the S in ESG stands for "social". As policy supporting environmental regulation has changed in direction and emphasis to outputs addressing climate change more broadly, so will the focus of ESG turn increasingly to social aspects.

The employment law components of ESG play a significant role in building a committed and productive workforce, attracting and retaining key talent (particularly female talent), fostering a transparent workplace culture and promoting legal compliance. These employment law elements fall within both the 'S' and 'G' components of ESG. For example, we see the commitment to promoting diversity, equity and inclusivity ("D, E & I") reflected in a number of areas described in our Employment law section, including changes in relation to paid sick leave, measures increasing pay transparency feeding into gender pay gap reporting, and ongoing management of remote and hybrid working.

Nevertheless the central focus of many areas of our practice relates to issues arising in the area of 'green finance' supporting the drive towards addressing climate change leading to a more sustainable future for us all. Financial reporting, regulatory and legislative initiatives representing efforts to address 'greenwashing' and the interrelationship between various reporting and compliance frameworks will continue to present challenges. Detail is provided by our Financial Services groups in the commentary sections.

Alternative Clean Energy

In the alternative clean energy space, investment is very active. Meanwhile developments are taking place to address relevant planning frameworks and these will be considered in sections that consider the Marine Protected Areas Bill and the Planning and Development Bill 2023 (previously titled the Planning and Development Bill 2022). However, in terms of hydrogen strategy, or a broad based Climate Action Plan, the legislative programme itself in terms of legislation awaiting priority publication, or legislation awaiting priority drafting for the Autumn Session 2023, did not feature any new initiatives in terms of these strategically important matters. However, notable updates in the Autumn legislative programme included the introduction of legislation to address windfall gains in the energy sector, as set out in more detail in Legislative and Regulatory section. At an EU level, the Third Renewable Energy Directive ("RED III") was published which will have a significant impact on the Irish energy sector in the coming years. We have prepared an overview of the key elements of RED III here.

As we mentioned in the Summer Tracker, the Climate Action Plan 2023, provides for an additional 2GW offshore wind to be allocated for the production of green hydrogen as part of an overall alternative energy plan that envisages Ireland 'dialling up' to 9GW onshore wind energy, 8GW of solar energy and 7GW of offshore wind. To this end, the Department of the Environment, Climate and Communications (DECC) opened a consultation on developing a hydrogen strategy for Ireland in July 2022 to gather views on the potential role of hydrogen in Ireland's energy system. The publication of the Consultation Paper follows the publication of the National Energy Security Framework, which prioritised the development of a green hydrogen strategy to reduce Ireland’s dependency on imported fossil fuels. We wrote about the Consultation paper here. In April 2023 a Review of the responses to this Consultation process was published. This is available here. Subsequently a National Hydrogen Strategy was published in July 2023. This is available here.

From a policy perspective, the Irish Government has also recently published Energy Security in Ireland to 2030, a national strategy to ensure security of supply of energy, while delivering on Ireland's climate change targets of carbon neutrality by 2050. This report sets out four high-level areas where action is required, and vital to this roadmap is the development of a renewables-led system.

Read more: Major Policy Developments in Irish Offshore Wind and Hydrogen

Red III On the Horizon

LEGAL AND REGULATORY DEVELOPMENTS