The business of sustainability in 2026: opportunity and risk

No longer an abstract concept, Ireland’s sustainability challenge is now shaping day-to-day business planning across the value chain, writes Russell Smyth

The reality of Ireland’s sustainability challenge is starting to hit home; we are not on track to meet our national climate targets. Ireland is “projecting in the mid to high 20s” in emissions reductions by 2030, just half of the legally binding 51 percent goal.

In parallel, shifting geopolitics are reshaping policy priorities, markets and supply chains, adding uncertainty to planning and investment decisions.

Together, these trends signal a disorderly climate transition ahead, marked by abrupt policy shifts, heightened transition risks, market volatility, stranded assets and uneven technological deployment.

Against this backdrop, sustainability in 2026 is no longer defined by distant ambition but by nearterm resilience, commercial pragmatism and strategic repositioning.

The themes expanded upon in this article reflect these realities; they are reshaping the operating environment for Irish corporates—demanding a more adaptive, riskaware and opportunitydriven approach to sustainability in the year ahead.

The pathway to CSRD clears

The European Union (EU) has agreed on changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), including revised scoping thresholds and reporting requirements through the European Sustainability Reporting Standards.

These changes significantly reduce the number of companies required to report in Ireland and reduce the extent of the required public disclosures on sustainability, whilst enhancing interoperability with other standards.

The simplification is a welcome outcome of the EU’s first Omnibus Simplification Package, adopted in February 2025. What was becoming a tick-the-box exercise on reporting is now a more operational, value-driven approach to sustainability.

The Omnibus clarification has prompted immediate action across Irish corporates, which are now driving forward on sustainability performance management and reporting with confidence.

Those organisations no longer in scope of the CSRD are pivoting towards alternative sustainability frameworks.

The International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards are now either adopted, or in the process of being adopted, in more than 30 jurisdictions globally.

Further, the voluntary reporting standard for SMEs (VSME) has been recommended by the European Commission for those organisations falling out of the scope of CSRD.

Undoubtedly, the greatest challenge facing organisations reporting on a voluntary or mandatory basis now is accessing credible and robust data.

Those companies that move forward in 2026 with clear priorities and stronger data and reporting processes will be best positioned to meet rising regulatory and stakeholder expectations.

A fractured world: geopolitical impact

Geopolitics continue to drive a disorderly transition at the global level, reshaping sustainability priorities and slowing regulatory convergence.

While sustainability has been deprioritised in some political contexts, Ireland remains committed to green initiatives aligned with the EU’s competitiveness agenda, balancing economic resilience and the green transition amid ongoing political turbulence.

Domestically, we expect to see a continued focus on tangible climate initiatives aligned with the commercial realities facing Irish businesses today.

In an era of fractured global cooperation and fiscal tightening, businesses that adopt revenue-driving, low-carbon solutions will be best placed to maintain and improve their market position.

Supply chain transparency moves centre stage

A combination of increasing regulations and risk exposure is driving action on supply chain sustainability in Irish businesses.

Trade tensions, raw material shortages, extreme climatic events and ethical concerns have put a spotlight on the need to build resilience in supply chains to protect market value.

As a result, procurement and supplychain teams are demanding greater transparency from suppliers—and with public scrutiny intensifying, the associated risks are growing.

One of the most significant challenges for Irish corporates is accessing data on greenhouse gas (GHG) emissions from suppliers. Encouragingly, shared investment in supplier training and capacity-building is beginning to deliver tangible improvements in the quality of emissions data.

Traceability and due diligence are no longer optional. Digital product passports, along with other requirements, are enabling real-time monitoring and proactive risk management.

Sustainability is a commercial value driver, and any opportunity to drive operational excellence across the lifecycle of products and services will be seized upon by those leading on supply chain sustainability.

The circular economy is accelerating through the new Global Circularity Protocol, meanwhile, signalling a shift towards designing products for reuse and resource efficiency.

Alongside regulations such as the Ecodesign for Sustainable Production Regulation and enhanced supply chain transparency through the CSDDD, these developments reflect a shift beyond intent to implementation, as organisations prioritise accountability and visibility to build resilient supply chains.

Powering ahead: navigating Ireland’s energy squeeze

This year will be a decisive one for Ireland’s energy transition. With 400 megawatts of onshore wind generation capacity currently in construction, alongside the continued expansion of solar photovoltaics on the grid and on rooftops across the country, renewable generation is expected to reach record levels in 2026.

It has been acknowledged that Ireland will miss its 2030 renewable electricity targets, however, and the near-term focus has shifted to maximising the number of renewable projects under construction by 2030.

Delivering the grid upgrades outlined in Price Review 6 (PR6)—the largest ever investment in grid modernisation for 2026–2030—will be critical to maximising the volume of renewables that can be integrated into the power system.

However, significant supply chain and labour constraints are anticipated as global peers rush to upgrade critical electricity infrastructure simultaneously.

This year will also be important for offshore wind. Those Offshore Renewable Electricity Support Scheme (ORESS) 1 participants that submitted planning applications in 2025, are awaiting decisions.

The success of these projects will also depend on substantial investment in port infrastructure. Any delays risk deepening the anticipated shortfall against 2030 renewable electricity targets.

Progress on large-scale energy storage and renewable generation can help to mitigate the shortfall, but grid readiness is critical.

Overall, affordability and competitiveness will dominate energy-policy discussions in 2026 as the cost of Ireland’s energy infrastructure buildout increasingly flows to consumers and businesses.

Climate adaptation: boardroom imperative

While decarbonisation and mitigation efforts are essential to limiting the progression of climate change, the reality is that climate extremes and environmental degradation are already creating significant challenges for Irish businesses.

These adverse impacts include the undermining of asset integrity, disruptions to supply chains and a direct challenge to the traditional “business as usual” model. Importantly, these issues are projected to become more frequent and severe in the coming years.

The Environmental Protection Agency’s National Climate Change Risk Assessment has identified windstorms as the most immediate climate risk facing Ireland. In addition, the threat of flooding is set to escalate due to an anticipated increase in extreme rainfall and rising sea levels.

This evolving risk landscape means businesses can no longer afford to wait for regulatory directives to shape their approach to climate resilience.

Now, it is imperative that they take proactive measures to adapt and strengthen their operations against these threats—protecting value, minimising operational disruptions and securing long-term business continuity in an increasingly volatile environment.

Nature poses material business risk

The risk posed by nature is now as much financial as it is environmental. Business leaders are increasingly recognising that nature-related risk is no longer a distant concern, but a material risk impacting many sectors, both in Ireland and globally.

It encompasses challenges concerning water quality, flood resilience and agricultural productivity—and it is putting commodity supply chains and asset values under pressure.

In Ireland, the poor state of habitats and the incoming EU Nature Restoration Law are expected to influence planning, land use and investment decisions.

Even with narrowed CSRD requirements, European lenders and investors are placing more emphasis on Taskforce on Nature related Financial Disclosures, making voluntary reporting a smart move for Irish businesses.

Practical challenges remain, including conflicting demands for land and a sizeable nature finance gap, but ignoring these risks will ultimately cost more than compliance.

The message for 2026 is clear: understand your business’s nature-related impacts, risks and dependencies, and start integrating nature into strategies and transition plans now to protect long-term value.

Preparing for carbon linked trade impacts

From 2026, the EU’s Carbon Border Adjustment Mechanism (CBAM) shifts from a reporting-only requirement to a border control measure for Irish businesses, introducing financial obligations and customs enforcement.

For Irish businesses importing more than 50 tonnes of steel, aluminium cement and fertilisers annually, goods may not be released where importers do not hold authorised declarant status.

CBAM turns GHG emissions into import costs, with importers purchasing and surrendering CBAM certificates relating to emissions. Obtaining supplier emission data may result in lower costs than default values, making 2026 a critical year to strengthen supplier terms and governance.

Artificial intelligence: solution or stressor?

The sustainability paradox inherent in artificial intelligence (AI) will be a defining theme this year, reflecting the tension between its ability to streamline operational workloads and its growing environmental impact.

While AI has the potential to be an enabler of climate action, its energy demands are projected to quadruple by 2027, potentially increasing emissions.

To ensure AI accelerates rather than undermines sustainability goals, organisations will need to actively manage resource intensity, prioritise clean energy and embed responsible practices into AI deployment strategies.

The implications for business

Our top sustainability themes for 2026 make one thing clear: the sustainability challenge in Ireland is no longer an abstract concept. It is commercially material and already shaping day to day business decisions beyond your value chain.

The question for you is how to take control in a disorderly transition. The answer lies in moving beyond compliance to a forward-looking and commercially grounded transition strategy. This will require:

• Robust transition planning, incorporating scenario analysis that reflects physical, market and policy risks.

• Embedding climate and nature considerations into core investment decisions, recognising their growing financial materiality.

• Leveraging transition finance, including green and sustainability linked instruments, to fund decarbonisation and adaptation.

• Strengthening supply chain preparedness, with digital traceability, strong supplier governance and CBAMcompliant data collection.

• Aligning reporting frameworks, such as the CSRD, IFRS Sustainability Disclosure Standards and TNFD, to build trust, efficiency and stakeholder confidence.

If your business acts early, it will not only mitigate escalating risks, but you will also position yourself to capture advantage in a market that increasingly rewards low carbon, transparent and resilient business models.

Russell Smyth is Partner and Head of Sustainable Futures and Corporate Finance, KPMG Ireland