Government approves Climate Action Framework for the Commercial Semi-State Sector

Minister for the Environment, Climate and Communications, Eamon Ryan, secured government approval for a new Climate Action Framework for the commercial semi-State sector (the Framework), which will help ensure that they can play a lead role in Ireland’s transition to a carbon neutral economy and society.

The Framework will apply to every commercial semi-State company and comprises of a series of five commitments as follows:

• governance of climate action objectives
• emissions measurement and reduction target
• emissions valuation in investment appraisal
• circular economy and green procurement
• climate-related disclosures

The commitments reflect requirements that apply to the public sector more generally, as set out in Climate Action Plan 2021 – in relation to the measurement of carbon footprint, green public procurement and carbon pricing in capital evaluation. Two of the commitments (governance of climate action and financial disclosures) are specific to the commercial semi-State companies. By signing up to the Framework, each commercial semi-State company would be entering into the commitments it contains.

Launching the Framework, Minister Ryan said:

The Climate Action and Low Carbon Development Acts 2015 to 2021 place an obligation on public bodies, including commercial semi-State companies, to carry out their functions in a manner that is consistent with our national climate action ambitions. The Framework provides a means for the commercial semi-State companies to demonstrate how they are meeting their obligations under the Acts.

The commercial semi-State companies are separate organisations to the government, operating under the direction of a board of directors and with a commercial mandate.

The commercial semi-State sector refers primarily to 22 companies. Approximately 42,000 people are employed in the sector. Many of the companies, such as Bord na Móna, CIÉ, Coillte, EirGrid, ESB and Gas Networks Ireland, and their subsidiaries, operate in sectors that have a key role to play in the transition to a carbon neutral Ireland.

As these organisations continue their work on the development of key pieces of infrastructure, it is essential that climate action is taken into consideration in all aspects of their business. The Framework reflects the exemplar role that many organisations within the sector will play in the decarbonisation of Irish society and also recognises their separate nature.

The Framework was prepared by NewERA and the Department of the Environment, Climate and Communications, with input from the Department of Public Expenditure and Reform. NewERA will report biannually to the Minister for the Environment, Climate and Communications on the implementation of the Framework.

Separate nature of commercial semi-State companies

The nature of commercial semi-State companies is such that a separate (climate) framework was required for them, that would set out how they could achieve wider public sector goals in relation to climate action. The nature of the Framework also reflects the separate nature of the companies and the responsibility of the board and management of each company for their day-to-day operation.

Section 15 of the Climate Action and Low Carbon Development Acts 2015 to 2021 places an obligation on public bodies, including organisations in the commercial and semi-State sector, to, in so far as practicable, perform their functions in a manner consistent with:

• the most recent approved Climate Action Plan
• the most recent approved national Long Term Climate Action Strategy
• the most recent approved National Adaptation Framework and approved sectoral adaptation plans
• the furtherance of the national climate objective
• the objective of mitigating greenhouse gas emissions and adapting to the effects of climate change in the State

In line with Climate Action Plan 2021 a public sector climate action mandate now applies to all public bodies, with the exception of the commercial semi-State sector, the school sector and Local Authorities. The Framework fulfils a role comparable to that of the public sector mandate for the commercial semi-State sector and, therefore, provides a means for the commercial semi-State sector to demonstrate how they will meet their obligations under the Act.

The Minister for the Environment, Climate and Communications will now write to relevant shareholding Ministers to ensure that their respective shareholder letters of expectation are updated to include the commitments covered by the Framework.

NewERA, a business unit within the NTMA, provides financial and commercial advice to Government Ministers and departments in relation to State owned companies across a range of sectors.