CAI: SMEs need significant support to meet climate goals

The organisation representing 33,000 chartered accountants in Ireland has said individual businesses are not clear about what they can do in terms of investing in equipment, staff training, and the new sources of energy required for them to play their part in transitioning to a carbon neutral society.

Chartered Accountants Ireland (CAI) Director Brian Keegan said most small and medium enterprises will need significant support from Government if they are to deliver the climate targets for their sector.

The enterprise sector accounts for about 12% of Ireland’s greenhouse gas emissions.

However, research by University College Cork has found that 86% of Irish businesses have not set any commitments to decarbonise, and 67% of start-up company founders and CEOs have no sustainability plan.

CAI said small and medium businesses lack the required skills, knowledge, and capacity to develop and implement climate strategies and take effective action.

They are calling on the Government to implement a list of what they describe as practical proposals and recommendations to accelerate climate action in the enterprise sector.

These include changes to the taxation system to encourage investment, more supports for electric vehicles and charging infrastructure, reducing VAT on sustainable goods, and the introduction of a new “help-to-insulate” scheme along the lines of the help-to-buy scheme for house buyers.

They are also calling for measures to make access to Government grants and green finance easier for businesses, and for additional supports for training and education in the business sector.

A survey of CAI members showed most are not confident that Ireland will meet its climate targets by 2030.

It also revealed that while there is a general awareness that grants, and funding, are available to businesses for climate-positive actions most businesses have not claimed any of these supports and have no plans to do so.

Mr Keegan noted the Government has introduced more than 20 individual business supports including grants and incentives for climate action but said CAI are finding that most businesses are not fully aware of what is available to them and how they can be implemented.

The representative body is calling for accelerated capital allowances for businesses who invest in new infrastructure and other measures to reduce their greenhouse gas emissions and work towards carbon neutrality.

Mr Keegan said the Government should not be looking to tax electric cars in the same way as internal combustion engines. He also called for tax credits for any climate-related research and development conducted by small and medium enterprises.

CAI is looking for Government support in communication and awareness-raising so that all businesses get to understand the role they need to play in achieving Ireland’s climate goals.

They recommend using trusted advisors, peer-to-peer networks, and professional and business associations, and building a strong network of communicators, with representatives from central and local government, business groups, workers, local communities, and social partners to disseminate information.

The report says businesses must be provided with the tools and supports to take effective climate action and that substantial retraining and upskilling of the workforce is essential.

The report by CAI is titled “Achieving our Climate Goals”.

It says:

• Government communications should emphasise all opportunities for businesses taking effective action on the climate crisis. These could include the ability to avail of lower-cost finance in the form of grants and loans, and benefits that arise from decarbonising heating and cooling systems.
• It could also highlight the co-benefits of valuing nature through collective investment in, for example, peatland restoration projects.
• Funding for training should be extended to include fees for expert advisors who can take a holistic view of a business’ specific requirements, and help them to make the right strategic, financial and operational decisions about sustainability.
• There should be tax reliefs for businesses that buy local and/or buy “circular” and reusable products, offer a take-back service and/or offer products as a service, e.g. cooling as a service, mobility as a service.
• The tax system could further accelerate business commitment to net-zero targets by extending the Help to Buy Scheme to include Help to Insulate for buyers of older second-hand homes with a poor Building Energy Rating (BER) would help alleviate the cost of retrofitting.
• Where homeowners and landlords retrofit a property to improve its energy rating, they should have 100% capital allowances against total income in the year the work is done.
• The accelerated capital allowance regime should be simplified for energy-efficient equipment and promoting the scheme to encourage greater uptake.
• The Government could also consider reducing the VAT rate on EVs to make prices more competitive and consider extending the 0% Benefit-In-Kind tax rate on company electric cars to incentivise companies to “green” their company car fleet.
• Apply for an EU derogation to enable a temporary VAT on goods that do not adversely impact the environment, such as organic goods and fertilisers, or goods made from recycled materials.