Joint Committee on Enterprise, Trade and Employment díospóireacht -
Wednesday, 27 Sep 2023

SME Energy and Carbon Demands, Green Initiatives and Technology: Discussion

An Cathaoirleach

I remind members who will participate in the meeting remotely that they must do this from within the Leinster House complex.

Today the committee will discuss enabling small and medium enterprises, SMEs, to reduce their energy and carbon demands through green initiatives and technology. Through the Climate Action Act 2021, Ireland is committed to a legally binding target of net zero greenhouse gas emissions by no later than 2050 and a reduction of 51% by 2030. Enterprise in Ireland faces many challenges in implementing a detailed agenda, transition and change to ensure that our sectors are climate resilient and can remain competitive in a decarbonising world. Leadership and support will be essential to drive the necessary changes while protecting and expanding our industrial competitiveness and prosperity.

Today we are pleased to have the opportunity to consider this and other related matters with the officials from Enterprise Ireland, Mr. Leo Clancy, CEO, and Ms Alexa Toomey, department manager for sustainability, renewable energy and agtec. From the local enterprise offices we welcome: Mr. John Magee, head of enterprise in Mayo LEO and chair of the network of local enterprise offices, LEO; Mr. Joe Lowe, head of the local enterprise office, Leitrim; Ms Eleanor Forrest, with Enterprise Ireland LEO centre of excellence; and Ms Elaine Mc Cormack, with Enterprise Ireland LEO centre of excellence.

Before we start I must mention parliamentary privilege and the limitations to parliamentary privilege, and the practices of the Houses with regard to reference that witnesses may make to another person in their evidence. The evidence of witnesses physically present or who will give evidence from within the parliamentary precincts is protected pursuant to the Constitution of the statute by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person by name, or in such a way as to make him, her it identifiable, or otherwise engage in speech that may be regarded as damaging to the good name of the person or entity.

Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

The opening statements have been circulated to members. To commence our consideration of this matter, I invite Mr. Clancy to make his opening remarks on behalf of Enterprise Ireland.

Mr. Leo Clancy

I thank the Cathaoirleach and members. Enterprise Ireland, EI, helps Irish manufacturing and internationally traded services companies to start, scale, and grow their businesses in international markets. We work with export-focused companies across all regions and across all sectors of the economy, predominantly with SMEs, supporting them to improve their competitiveness and productivity and increase innovation, and we help them develop and achieve their full growth potential. This growth results in direct and indirect employment and economic growth across all regions of Ireland. In 2022, Enterprise Ireland client companies directly employed 218,178 people, with 68% of these jobs outside Dublin, and generated more than €32 billion in exports.

Enterprise Ireland’s strategy for 2022 to 2024 is titled Leading in a Changing World. Our mission, as set out at the start of 2022, is to accelerate the development of world-class Irish companies to achieve leading positions in global markets. We also work with our colleagues across the network of 31 local enterprise offices through our centre of excellence to support the growth of micro-enterprises across the country.

It would be helpful to set today’s discussion about enabling SMEs to reduce their energy and carbon demands into the wider policy context. Ireland has committed to reducing emissions, as stated, by 51% across all sectors of the economy by 2030 and to become climate neutral by 2050 with legally-binding sectoral emissions targets established under the Climate Action and Low Carbon Development (Amendment) Act 2021. Looking at the enterprise sector, the Government has established a commitment to delivering a 35% reduction from on-site industrial emissions by 2030. The Climate Action Plan 2023 and the 2022 enterprise White Paper confirm Government’s commitment to supporting the decarbonisation of industry through its agencies, including Enterprise Ireland. The enterprise White Paper sees Government committing to placing decarbonisation on equal footing with job creation and value creation for the enterprise agencies.

Total Enterprise Ireland client emissions in 2022 are approximately 4.4 million tonnes of CO2. This estimate includes client emissions trading scheme, ETS, emissions and an estimate of non-ETS client emissions. From the baseline of 2018, gross Enterprise Ireland client emissions have fluctuated within a relatively modest band, with overall emissions remaining stable. The EU ETS cap and trade system includes the larger industrial emitters which report emissions annually and provide a high-quality dataset. These data show that the largest of our manufacturing clients account for a significant proportion of Enterprise Ireland client emissions. For large emitters and companies embarking on major transformative projects, Enterprise Ireland provides support through the energy and environmental aid measures. This has enabled Enterprise Ireland to aid new capital projects that are designed to the highest environmental standard within EU state aid rules.

Regarding SMEs, while emissions are concentrated in a relatively small number of operations, the incentive to pursue a sustainability agenda is relevant to all businesses we support. Decarbonisation is a national environmental priority but it is also a competitive imperative for Irish enterprises. Increasingly, we are seeing that access to finance, the ability to attract and retain talent and the opportunity to sell into major international supply chains is dependent on companies of all sizes demonstrating a clear commitment to sustainability. In the current climate of high energy prices, decarbonisation also represents a key opportunity for companies to reduce costs. As well as responding to customer demands, decarbonisation also offers Irish firms the opportunity to become leaders in responding to the growing global customer demand for more sustainable products and services.

We have a broad suite of practical measures under our green transition fund to help small to medium-sized enterprises to develop and fund their sustainability plans and stay competitive in the market. There two main areas of support. First is consultancy advice to enable planning and capacity building to begin and continue a green transition and second is capital support to back projects, with up to €1 million available, to assist with carbon reduction, for instance. For firms looking to exploit the opportunities of a low-carbon future, we have measures to support their research and innovation into new or improved products, services, or processes in the areas of sustainability and decarbonisation. Sustainability can no longer be seen as something that is extraneous to core business strategy. Our message to all our clients is that for a business to be resilient and ready to scale, domestically and internationally, sustainability must be at the heart of a company’s growth strategy. Enterprise Ireland also works closely with other agencies in the industrial development field, including our colleagues in the LEOs who are here with us today, the Sustainable Energy Authority of Ireland, SEAI, Údarás na Gaeltachta and IDA Ireland, to ensure there is alignment between our offers to business and so clients have a clear pathway in terms of supports.

I thank the committee for its interest in this critical issue for Irish business. While Enterprise Ireland’s activity in the area has only commenced in recent years, we believe sustainability is vital for the future of Irish business. We have seen an increasing appetite among our client base to adopt sustainability measures and put them at the heart of their business strategy but it is slower than we would like. Clients have dealt with remarkable, time-consuming challenges in recent years, including Covid-19 and significant inflationary pressure on energy and supply chains. However, as those pressures ease, we see companies looking to the future and sustainability is an increasing priority. We will be increasing our support for businesses on this journey over the coming years.

While the committee is rightly focused on carbon reduction today I would add in conclusion that innovative Irish businesses, supported by Enterprise Ireland and local enterprise offices, are also making a global impact in providing solutions in the emerging green economy. While achieving carbon reduction targets is challenging, there is also an incredible opportunity for Ireland, which we have talked about previously at this committee, in green and sustainable products and solutions. We see many Irish businesses, from start-ups to established companies, forging ahead in this area. I thank the committee for its time.

An Cathaoirleach

I thank Mr. Clancy. I now invite Mr. Magee to make opening remarks on behalf of the local enterprise office network.

Mr. John Magee

I thank the Cathaoirleach and members of the committee for the invitation to attend and discuss this important topic. I would like to be associated with the sentiments expressed by Mr. Clancy. I am chair of the local enterprise office network and head of enterprise at LEO Mayo. I am joined today by my colleague Mr. Joe Lowe, head of enterprise at LEO Leitrim.

The local enterprise offices are the first-stop shop for many small business looking to start or grow. Our vision is to develop and sustain a positive enterprise ecosystem at local level throughout the country that will drive new added-value start-ups, facilitate further growth of micro and small businesses, and enhance local economies. Almost ten years in operation, the LEOs are an integral part of each local authority and facilitate close collaboration with various initiatives delivered by the local government sector. From an economic and climate change perspective, local authorities, through their local enterprise offices, play a critical role in putting in place initiatives to stimulate the local economy, to support business in creating employment and in building awareness on sustainability.

As Mr. Clancy outlined, the collaboration with Enterprise Ireland is key to the success of the local enterprise offices and ensures businesses of all sizes are assisted on their development journey from start-up to scaling. Our shared objective is to boost the productivity of established businesses and connect enterprises with innovation opportunities at home and internationally, maximising their growth, job creation potential and sustainability.

The year 2022 was the ninth consecutive year of jobs growth for LEO-backed companies. Some 7,870 new jobs were created by LEO-supported companies last year, a 10% employment increase on 2021. Approximately 84% of new jobs created were outside the Dublin region. Since 2014, 37,863 jobs have been financially supported across our portfolio of 7,221 client companies. These companies are in a diverse range of sectors including engineering, life sciences, cosmetics, technology, food and drink, craft and internationally-traded services. We provide a broad range of supports including mentoring, training, technical and expert advice, as well as financial supports.

The LEO network is acutely aware of the challenges presented by climate change and the urgent need to decarbonise our economy. Mr. Clancy has already mentioned Ireland’s commitments to reducing emissions by 2030 and climate neutrality by 2050 and how the White Paper on enterprise aligns enterprise policy with the imperative to decarbonise our economy and society. This transition to a low-carbon economy will require the concerted efforts of Government, agencies, public bodies, businesses and broader society, all working together. Sustainability and the decarbonisation of businesses will be a fundamental driver of Ireland’s future competitiveness and the long-term health of the overall economy. The need to decarbonise the economy is changing the way our small companies design, produce and consume goods and services. As Mr. Clancy stated, sustainability is no longer seen from a business perspective as something that is nice to have. It is imperative to businesses' resilience, their competitiveness, their attraction and retention of workforce - indeed, their very future.

LEOs have a wealth of experience in helping time-poor entrepreneurs by meeting their training needs, supporting them with expert advice, promoting their productivity and supporting them with the capital they need to expand and grow. We have used this proven track record to develop and provide appropriate and relevant sustainability supports for small businesses. We seek to help them to become more aware of both the obligations and opportunities presented by emissions targets and provide practical supports in this regard.

There are three key areas of support: first, client-specific expert advice to support a green transformation within the business. The Green for Business programme was launched in March 2021 and provides two days of engagement with a sustainability specialist who reviews the company's carbon footprint and energy; reviews its processes, packaging and supply chain; identifies energy-saving opportunities; and produces a practical sustainability strategy. This is free to the business, with all costs covered by the LEO.

If additional support is required, the company can subsequently avail of GreenStart, which provides a more in-depth professional engagement to improve the environmental performance of the business. GreenStart can provide up to an additional seven days of specialist engagement. Since its launch in 2021, just over €2 million has been spent on providing specialist green consultancy to 1,070 LEO clients.

Once a sustainability strategy is in place, the business can move on to the second phase of its journey, where it can potentially avail of our new energy efficiency grant. This grant supports small businesses to invest in technologies and equipment to make their businesses more energy-efficient. The grant will cover up to 50% of the costs to a maximum amount of €5,000. The scheme aims to reduce the impact of small businesses on the environment and can help them to reduce their own costs to boost their competitiveness. Since the launch of the scheme at the end of May, LEOs have been proactively engaged with our clients in raising awareness of the funding availability and how it can assist their business in progressing their sustainability ambitions.

We have worked with the Department of the Environment, Climate and Communications; the Sustainable Energy Authority of Ireland; the Department of Enterprise, Trade and Employment; and Enterprise Ireland's LEO centre of excellence in the development of these supports. As local enterprise offices, we continue to work collaboratively to identify ways to meet the needs of our clients.

The committee may be aware that just last week the Minister of State, Deputy Richmond, launched a new national marketing and advertising campaigning to drive awareness and generate interest in our lean, digital and green supports via a dedicated new campaign landing page, allinadayswork.ie. The page and campaign are generating positive engagement, with a clear message that identifies how our supports help businesses to save time, money and energy.

There is no doubt that meeting our national climate targets is a challenge but our small businesses are becoming increasingly aware of how they can contribute and make a positive impact. Right now they are challenged for time and resources, however, and LEOs are having to work very hard to ensure that sustainability remains to the forefront of their thought processes.

We work with them to raise awareness of sustainability as a core driver of future growth and competitiveness and to align them to evolving consumer demands and the requirements of shifting business-to-business supply chain environments. We are increasing their awareness of the opportunities presented by sustainability considerations and are seeing small businesses that are insightful and innovative in their entrepreneurship. Only last week, at the National Ploughing Championships, we saw many examples of LEO clients embracing sustainability, with businesses as diverse as compost turners to vertical hydroponic growing to sustainable cosmetics and snacks.

Our Green for Business, GreenStart and energy efficiency grants represent a suite of practical and impactful sustainability supports which we are continually reviewing to ensure they meet the needs of our clients. We are conscious that there is no single silver bullet, though, and it requires a combination of expert advice and grant aid to create a stronger correlation between sustainability, energy efficiency and profitability.

Our small business community has made us proud with its ability to adapt, pivot and retrain through Brexit, Covid, the war in Ukraine and rising energy prices. Time and again small businesses have demonstrated resilience, commitment, and innovation. While some sectors remain challenged, many of those businesses have emerged stronger for the experiences they went through, and I am confident that, with our help, they will rise to the challenges of sustainability and climate action.

Every small business in the country is encouraged to talk to its local enterprise office about sustainability. We are on the ground locally and proactively engaging and supporting these small businesses in the challenges they face. LEOs are committed to playing our part in the Government's response to the climate challenges we now face.

I thank the committee again for its time and look forward to discussing these issues.

An Cathaoirleach

Thank you, Mr. Magee. Now I invite members to discuss the issue with the representatives. We have a rota in place. The first slot is a Sinn Féin one. Sinn Féin has 14 minutes, followed by the Fine Gael slot of 14 minutes.

Deputy Louise O'Reilly

I thank all the witnesses for being here. I apologise for being a little late; I had a Topical Issue in the Dáil Chamber.

This is very interesting. When I read through the submissions yesterday, I noted that a fair amount of work is being done, but there is also a thread running through both the submissions. I do not think it is a reluctance on behalf of EI's client companies; I think there may be a misunderstanding. Let us compare the need to decarbonise etc., which is a very pressing and real one, with what happened with Brexit. It seemed like there was a flashing blue-light emergency with Brexit. Everybody was doing training, there were short courses, long courses and medium-sized courses, everybody was engaged and everybody was really focused. I am not suggesting for a moment that the people in this room are not focused. I am not suggesting either that EI's client companies are not interested. I genuinely believe they are, for the future of their business, for their kids, for all those good reasons. However, I am picking up that little thread of, if not disinterest, maybe reluctance. Will the witnesses talk to me a little about that? Is it the case that this is something everyone would like to do but it is not pressing, whereas Brexit was very pressing and that training had to happen? Do people think other people are doing a better job at this such that they leave it to them? Where is that coming from, and is there anything we can do in here? I am not sure we are often useful, but we do try. Is there anything that can be done from here? Is there anything that can be done to accelerate the level of interest and take away some of the fear businesses have of going too deep into this? Maybe they do not understand. Do the witnesses get my point? I am sorry for being a bit rambling.

Mr. Leo Clancy

I know exactly what the Deputy means, and I thank her for the question. It is the nub of the issue for us. I mentioned earlier that we are not moving fast enough on this as a community in Ireland. That includes the businesses we serve and just how, as a country, we are responding. The Deputy asked if companies are treating this as an emergency in the same way as Brexit, and the answer is clearly "No". They have been so hammered over recent years by Brexit, Covid-19, the consequences of the war in Ukraine and all the other factors, including inflation more recently, that it is just hard to get time and headspace. I might ask Mr. Magee to comment on this further in the context of his client base, but we have definitely not seen a reluctance to engage with the agenda. I was with a client in the mid-west last Thursday and they privately had just had their 100 or so employees in and signed their climate pledge. They are really committed to doing this, but it is taking a bit of time. I talked to them about how they brought their staff in. They had people from different teams coming together to create a green team and to actually focus on it, so they are now enthused and energised. That company is relatively sophisticated, however; it is probably a 150-person company. It is on a good journey now. It will access our support through GreenStart and is looking at GreenPlus to try to drive it on. That is really good, but not everyone is in that position.

We have been asking ourselves what more we can do. Ms Toomey, who joins me on my right, is our head of sustainability. She has done some fantastic work in recent months and is planning some great stuff. I might let her explain some of what we have done with webinars and the training courses that are coming up. Before I hand to her and then on to Mr. Magee, my big concern is how we make it easy for business. With a lot of the things out there, such as training courses or even consultants, you have to give three days to work with a consultant or you have to give four days to a training course, and it is hard for a small business owner. Ms Toomey has some answers that might help us accelerate that. I will hand over to her.

Ms Alexa Toomey

I would not claim I have all the answers but I hope I have some. The Deputy has hit the nail on the head with the things she mentioned in terms of maybe a little fear as to where to start. I do not think any company ever wants a hint of something possibly appearing as greenwashing, so there can be a little fear.

What we are trying to do through webinars and training programmes is bust the myths around this. We are really appealing to companies to just get started with us. We are almost halfway through a webinar series that covers a whole range of topics around sustainability. Decarbonisation among SMEs is a big focus of it, but we are also looking at things such as climate action planning. How do you start? How do you begin to develop a plan? There is green finance. We are looking at environmental, social and corporate governance, ESG, the corporate sustainability reporting directive, CSRD, and all these different topics in one-hour webinars to try to get the topic started and to introduce our team and the offers we have. We are about halfway through that. There is a two-month webinar series. We will review them and see what topics may have been missed or need a little more coverage.

We have also been working on a sectoral basis because we think companies can sometimes learn well from their peers. It is a matter of bringing companies in a specific sector together to talk about the challenges they face that are particular to them.

We will partner with Skillnet to launch a sustainability capability-building programme with it. The whole objective of that programme is that, at the end of its six half-days, one ends up with a sustainability plan for one's business.

We are appealing, particularly to SMEs, to take that first step and develop their plan, and we will get behind them to implement their plan. For a lot of companies which may not have come as far as the company Mr. Clancy met last week, getting started is the big challenge.

Deputy Louise O'Reilly

Yes, that is a challenge.

Ms Alexa Toomey

That is the whole focus of our efforts. We have a big communications campaign around this and we are targeting that first step with our SME base.

Deputy Louise O'Reilly

I am conscious of the time. I do not have my glasses on and thought I had three minutes left. My apologies.

Mr. Leo Clancy

One additional item to add is that we are launching our kickstarter series in October. There will be six workshops up to the end of the year, with 30 companies each. It will be targeted at our SME base - the smaller companies in the Enterprise Ireland base. If it is successful we will open it up to the LEO base and maybe even to companies more broadly next year. Assistance from the Deputy and her parliamentary colleagues in getting the word out to companies would help people to avail of our supports. I will leave it at that and hand over to Mr. Magee.

Deputy Louise O'Reilly

Will Mr. Clancy update the committee with the results of the kickstarter programme?

Mr. Leo Clancy

We will, absolutely.

Mr. Joe Lowe

To reiterate what my colleagues said in terms of hitting the nail on the head, I will point to a PowerPoint slide I prepared on some work we are doing with our client base. The question I asked them was, "Why are you so hard to convince?". This is the challenge faced daily at the coalface. There are issues and concerns around the real and perceived costs of getting involved in this space. There is the short-term focus versus the lack of urgency to an extent, in some microenterprises in particular. We have to understand the businesses we are dealing with in the LEO client base, which are typically small enterprises with fewer than ten employees. There is a perceived complexity to this. There is a degree of whataboutery, sometimes, as in "What about the guy across the road?" and "Why should I adopt this?" We focus on two things, namely, awareness of the importance and, second, the benefits in the context of evolving costumer demands. Where the customer is at right now is a very powerful influencing factor in the kinds of conversations we are having with microenterprises. Right now, the key challenge our clients face is around bandwidth and the capacity they have right now. We are probably beyond full employment. Many of our small businesses are struggling with being a little short-staffed and a lot of them are very busy. They are doing well right now. In that context, they say they know this is important but just not yet. That bandwidth piece is massively important. The reason our green for business programme and energy efficiency grants are so important is that we are helping businesses right now to think about how we can save time, energy and money. These are the things small businesses understand. This is the language we are engaging with them on and in that context we find that pointing out the benefits and showing them how they can save money and time is starting to work in terms of getting the traction we need with the businesses we work with.

Deputy Louise O'Reilly

I thank Mr. Lowe. In terms of the training and the conversations that are taking place, it strikes me that there are a number of ways to do this. Maybe there are not, however, and I am coming at this the wrong way. While one obviously has to look at the process, one also have to look at the people who are working in the companies, even in small companies. Is it part of the process to do something as simple as providing covered bike racks to enable workers to get to work sustainably? Is that part of the process? Does it involve talking to the workforce? I know Mr. Clancy mentioned the company he works with and that all of the workers signed up to a green pledge. Is it intended that that will become the norm? Will Mr. Clancy talk about how that will work in a small company where the person who does the books also does human resources, is the front of house, is probably the cleaner and is definitely the security person? How would those companies bring in all of their staff? Does that form part of the process or is it something that is maybe being left to one side, with the focus being on just the process?

Mr. John Magee

Absolutely, that is part of the conversation. When we deploy a consultant into the small business, initially for two days under the green for business programme, very often they will start with the business toolkit for climate, which is kind of a calculator looking first of all at inputs in terms of energy and water usage and all that sort of stuff. They look at that and try to put in place a baseline, very often for the first time, for a microenterprise. Often, when the consultant leaves they leave the microenterprises with a sustainability strategy that looks at those inputs and at reducing costs but, crucially, we hear time and again that the awareness-raising piece with the staff in the microenterprises is something they are really focused on. They realise that sustainability is not the job of one person in the business; it is a whole-of-business responsibility. In that context a small business owner can wear many hats but they will ultimately be focused on productivity, margins and trying to bring costs down. We focus on those kinds of input costs and seeing how they can be reduced. Is the business on the correct electricity tariff? Is there a way it can reduce water usage? All of these costs are increasing significantly so we focus on the inputs but we also focus on education and awareness raising, and we are hearing that the clients are really interested in those. That then helps them to talk to their customers.

Deputy Louise O'Reilly

Is everyone, not just the owner, involved in the education piece? Is it the intention to bring everybody into the mix on that?

Mr. John Magee

Typically, yes. We see that when microenterprises have done the green for business programme they will have something up on the wall, for example, a sustainability chart of some sort, on which every individual employee identifies ways in which he or she contributes, whether that is in how the employee gets to work or what actually happens around energy use and other inputs when he or she gets to work.

Mr. Joe Lowe

I will add to that. There is usually a dedicated energy champion within the company to drive and identify this. To go back to the Deputy's last point regarding the timelines, the benefit or otherwise of Brexit-----

Deputy Louise O'Reilly

It had a definite stop date.

Mr. Joe Lowe

-----was that there was a definite timeline. Unfortunately, there is a timeline for when we will run into climate and sustainability issues. That timeline was a big benefit in driving people to the table.

Deputy Louise O'Reilly

To be fair, the time is probably now but the question is how to convey that sense of urgency. There was a big ticking clock with Brexit. There is a big clicking clock with climate action but it just does not seem to be translating. That is not a reflection on the work being done because it appears a lot of work is being done. Perhaps it is more of a societal thing than a business thing.

In terms of the green for business companies, a figure of 1,070 was mentioned. Does that refer to the total number of companies that have been through the process or those that have engaged in any way with the process? How does that square up as a percentage of the overall number of client companies? The figure of more than 1,000 companies is very impressive, unless it is from a total of 1 million. What is it in percentage terms?

Mr. John Magee

Since the scheme launched in 2021, 1,070 businesses went through it. That is out of a combined client base of 7,200 companies that we have supported financially.

Deputy Louise O'Reilly

Okay.

Mr. John Magee

Of course, we are working hard now to grow the number of businesses availing of this support. I already mentioned the new marketing campaign that was launched. We want to have more of these conversations and significantly accelerate that 1,070 number. We are really focused on this right now. When a client comes to us - typically the first engagement with us will be through a start your own business programme - we introduce the sustainability piece right from the beginning. It is not something that is bolted on or some kind of an add-on. It is not something to think about subsequently. It is something that has to be hardwired in terms of starting up and the thought process. Building that culture of sustainability in the start-up space is something on which the LEOs are particularly focused. The figure is 1,070 out of 7,200 companies.

Deputy Richard Bruton

I thank the witnesses for their presentations. I have a couple of statistical points. Mr. Magee gave a figure of one in seven of clients taking up the green opportunity. That it is a low figure is probably understandable. Do we have the same numbers for Enterprise Ireland? What are the numbers involved? What percentage of its client base is involved and how much of its budget goes on this sort of work? This is a brief question and I would like a brief answer please because we have a time limit.

Mr. Leo Clancy

We have lower numbers, both percentage-wise and absolute. Since 2022, 171 companies have availed of our decarbonisation and green supports. There were 201 approvals within that, so some companies have come back, having done a start and then a plus and moved on. It is important to say that a lot of our client base has sustainability plans already. We know from our annual survey in 2022 that 34% of companies already had sustainability plans. I think they would be further along than the microenterprises, in many cases. From the start of 2022 to the end of August 2023, we committed €7 million under this heading.

That money is against the overall climate planning fund for business of €55 million, which runs out to 2025.

Deputy Richard Bruton

That is 171 out of how many companies?

Mr. Leo Clancy

Out of about 4,000 companies.

Deputy Richard Bruton

Wow. It is very low. Mr. Clancy said his clients generate 4.4 million tonnes. Is that solely what he calls "on site" or does that include transport and allied emissions?

Mr. Leo Clancy

I believe it is on-site emissions.

Deputy Richard Bruton

The key question is, is Enterprise Ireland taking far too narrow a view of the sustainability challenge? Take food, for example. Some 40% of our emissions come from food globally, which is about 30 million tonnes. Enterprise Ireland is at the pivotal point. It represents food processors and supports them. They are key to all of the opportunities. Apart from just on-site emissions, there is food waste, which is 1 million tonnes. That is another 3 million tonnes of carbon emissions from food waste alone. There is the capacity of the food sector overall to reduce its emissions. Premium payments to farmers from suppliers are needed if we are to see some of that momentum built. There are labelling and packaging issues around how food is presented to consumers, how easy it is to avoid discards and whether there are packaging-free approaches. More fundamentally, are we in trouble in the long term on Origin Green if we do not become leaders in moving the food sector from practices today? They are probably fine internationally but if we want to be competitive in ten years' time, this sector has to see very significant changes. Does Enterprise Ireland not need to have sectoral roadmaps, for the food sector particularly, and probably other sectors, that look at the whole supply chain? I think Mr. Magee got it in a nutshell when he said that the key driver of competitiveness in the long run will be sustainability. We seem to be locked into piecemeal approaches, looking at individual companies and their potential and looking at individual farmers but what is needed is like what has been done in Holland. It put together a sectoral compact for what it calls the circular economy, which looks beyond just carbon emissions to all other supply chain issues. Has Enterprise Ireland given any serious thought to putting that together? It is the missing ingredient - a bigger picture that any company coming to Enterprise Ireland works within and any company dealing with farmers perceives this as the direction of travel. It makes it much easier for everyone. It also does not involve the finger-pointing blame being shaken at the farming community or at someone else. The reality is that we as consumers have a role to play, as do producers and farmers. We need to get that sorted together.

Has Enterprise Ireland identified low-hanging fruit in this sector? There are things like smart controls, shallow retrofits and food waste avoidance - the commercial sector is appalling at food waste. The business sector is worse than consumers, which is frightening. There is transport transformation, switching to lower-emission deliveries like An Post has done with zero-emission deliveries. There is low-hanging fruit that Enterprise Ireland could go with to its client base and create an expectation that within one or two years or whatever, that these things ought to be done and any company that wants to be an Origin Green-type company ought to be doing them. We need to build momentum around this. There are too many little capsules that we are now adopting, trying to get farmers to do one thing or some company to do some energy saving but the bigger picture piece is missing. As used to be said in exam questions, "discuss".

Mr. Leo Clancy

That is a broad and challenging exam question but I will try to tackle the Deputy's questions. We certainly have a narrower view; we look at process emissions, typically, from heat and process technology. That is our core responsibility under the climate action plan. However, we have conversations all the time on other areas in scope two and scope three, for instance, about the food sector, with which we recently had discussions. I personally had discussions with meat companies about work they might do on methane emission reduction with their supply chain, both primary producers and farmers. Last week, at the National Ploughing Championships, I had conversations with Teagasc and Bord Bia about how we might bring together some of our efforts in this space.

Deputy Richard Bruton

The EU has already imposed reporting on larger companies in respect of this whole supply chain. We have not made it a centrepiece of our policy yet.

Mr. Leo Clancy

Companies are aware. It is coming and is in the consciousness of companies that they will be accountable for these things. They are aware in that regard. We do not have those compacts in the same way as other countries but we are smaller and we can connect. If we can get the right discussions going, we will have an impact. I met the head of a large dairy last week which is looking at how to reduce methane and other emissions within their supply chain. Although they work mostly in respect of farmers and the Department of Agriculture, Food and the Marine, we work with them and will work with them on innovation projects. I invited those companies in the meat and dairy sector to come back with innovation and multi-party projects that we might get behind, even from a research and development point of view. There is some very novel stuff we can do. The Deputy made some points about labelling and the circular economy. We have supported some excellent companies in that space including Nutritics on the food labelling side. It is one of the leading companies in carbon assessment of food content. I would say it is world-leading in its field. It is a high-potential start-up company that we are very excited about in terms of characterisation of carbon. We also supported FoodCloud with its innovation efforts and we are very close to it. We are also working on early-stage innovation.

In conjunction with that, we try to bring them to our other clients. Last week, I met a methane reduction company with potential for both slurry-based methane reduction and digestion-based methane reduction. I have already introduced them to at least one large dairy processor - it might be an interesting concept for them to try. We have huge potential to bring these compacts together, albeit we do not have the external statements other countries might have. I am very positive on this. I will ask Ms Toomey if she has anything to add shortly.

In terms of the circular economy and packaging, we support a centre called CIRCULÉIRE at the Irish Manufacturing Research centre. It is entirely dedicated to circular manufacturing technologies. We have supported, through the Dairy Processing Technology Centre and Meat Technology Ireland, that a condition of re-funding those two technology centres has been that they bring sustainability into their research programmes in a significant way. Their members include all the meat and dairy processors.

Deputy Richard Bruton

I recall Chris Horn some years ago talking about research in Ireland. He said that we have to move from launching individual boats to creating an admiralty. In this sphere, Enterprise Ireland needs to think of creating an admiralty, not individual initiatives. They are good in their own right but the future of food depends, in ten years' time, on the correction of a number of things that could go very wrong in our presentation in the food market to win high-margin consumer spend, largely in the European market. My ask is that Enterprise Ireland think about what Chris Horn said about research.

Mr. Leo Clancy

I think we are. I will ask Ms Toomey if there is anything she wants to add and Mr. Magee also wants to contribute on this point.

Ms Alexa Toomey

It has been very well covered in terms of circularity and the focus on processing. The food sector is a really important sector for Enterprise Ireland in terms of the jobs and exports it generates. We work closely with all of those companies on their sustainability plans. We work in partnership with Origin Green and the Sustainable Energy Authority of Ireland, SEAI, to make sure that approach is being taken and that all aspects of sustainability are being looked at.

Our focus is on carbon emitted within the factory gate but we are also working with them on things like bioeconomy circularity, environmental, social and corporate governance, ESG, and how they are looking up and down their supply chains. A good example of that is a capital investment scheme we ran largely for the meat and dairy sectors over the past few years. Part of that scheme, and it was the only criterion that had a mandatory minimum scoring, was around sustainability planning. We looked at the projects both in terms of what companies were going to do specifically on sustainability but, equally, we asked what their overall sustainability plan was and how they were looking up and down their supply chains. It was a major part of the assessment and decision-making on whether companies were awarded funding or not. It is a sector that is very important to us but it is also one where we are conscious, as it is, that sustainability is a very big challenge. We are putting that at the centre of our activities with that sector.

Mr. John Magee

In the context of the circular economy, it is important that we think local and of the local economy upwards. In that context, local authorities are doing work right now in putting local authority climate action plans in place. Many of those will put the idea of supporting the circular economy at local level at the heart of what they are doing. They are putting engagement with local communities at the heart of what they are doing, and are putting in place pilot decarbonisation communities for the first time. That bottom-up approach will unleash the admiralty to an extent. We have to think about this from the bottom up. Those climate action plans will see a whole-of-community and a whole-of-local-economy approach to addressing these kinds of issues.

Deputy Richard Bruton

Are we in injury time?

An Cathaoirleach

The Deputy can go ahead quickly.

Deputy Richard Bruton

Will targets be set for the take-up of schemes, or more global targets for where we ought to be on critical indicators of sustainability, be they the carbon footprint of our food products, the recycling content within our packaging, or 100% recycling of packaging? Will Enterprise Ireland set those sort of targets, which are the markers of success in sustainability?

Mr. Leo Clancy

We have not yet, although we have certain targets. To the earlier question on volume take-up, we have targeted 425 climate interventions with our clients over the three years, including 2022, 2023 and 2024. As I said, we have deployed 201 of that 425 at this point so are broadly on track in that regard. Most of the schemes were launched just over a year ago. We are gaining momentum on that. We have targets. The target we are most focused on and concerned about is the 35% reduction in process and heat emissions from our sector by 2030. That will be challenging to achieve. It is the one that has been at the core of our thinking so far.

We are doing further thinking, in the context of our next sustainability efforts, in respect of what the Deputy said, regarding things such as sustainability content and the circular economy. The targets for what we will and will not do if companies do not meet a bar that might contribute to that target, and what we will do to incentivise companies to hit those targets, are all in the mix at present.

An Cathaoirleach

Senator Garvey has seven minutes.

Senator Róisín Garvey

I will try to keep to the time, which I am very bad at doing. I wanted to speak to the representatives before the committee on this topic for three years so I am very excited they are here.

I just tore back from a PwC Business in the Community event. What was said there is not exactly the same as what the witnesses said. I got a greater sense of urgency at that event than I am getting from them, unfortunately. Scope 3 and small businesses that are unable to feed into big businesses getting their targets right were talked about at the PwC event. It is a major issue. I had a meeting with the Taoiseach, Deputy Leo Varadkar, three years ago who committed a lot of money to helping small businesses to go green and use smart technologies. I have seen very little momentum in three years. I agree with Deputy Bruton. I do not see clear targets.

I will start by asking a few questions. The future-proofing of business is not happening quick enough. Does Enterprise Ireland have the expertise it needs? The girl who was there previously was a lovely woman but she had come from 15 years working for the Irish Farmers' Association, IFA, and had nothing done on climate. I am just worried that we are not getting the right people to help Enterprise Ireland expedite this huge issue. If we are talking about food businesses, a quarter of all the agricultural land in Greece will be underwater over the next ten years. We are not taking this issue seriously in this country. We are one of the most vulnerable countries because we are an island. Our food sector is under significant threat because of climate change. We see today that farmers are unable to harvest 1,000 acres of barley in Cork because of the storms.

This is a climate emergency. Brexit was not an emergency but this is. I do not feel that urgency. Enterprise Ireland stated it did not have targets yet. Why not? We have sectorial targets. I do not see them coming. I do not know why it would not have them. Enterprise Ireland and the LEOs have a huge part to play. I am not saying it is their fault. I just want to know what we need to do to up our game. How does Enterprise Ireland intend to meet sectorial ceilings? Is there a targeted plan? Do the witnesses think Ireland should accommodate data centres that do not have decarbonisation paths, that is, connect to a gas grid? What exactly is being done to support ensuring that happens? We are contradicting ourselves if we allow data centres to be built. We know the story with data centres. The left wing will expand it completely beyond any truth, but let us be honest that data centres have huge energy demands. They should be part of the solutions. Does Enterprise Ireland support them being built? I do not think the future-proofing of businesses is happening quick enough.

Packaging is a huge issue. My background is in environmental education and behavioural change around energy, water, transport and waste. I did that for 12 years full time. I then ended up moving into the big business sector to work in social enterprise around waste reduction. I have seen it. There are great examples of big business doing well. I hate to praise the private sector in some ways because the big ones can afford an expert to come in. They seem to have manifested change in the past three years a lot quicker than we did in the public sector. I really question the LEO targets for public sector supports for small business. For example, in County Clare, the green for micro programme target is 17 of 4,000 SMEs but they have done five so far. That is at a cost of €2,500. The budget was for 17 to happen so where are we going with those targets?

I do not believe that small businesses do not want this or do not have the time because they are too busy. That is no longer acceptable. If they are helped to go green, it saves them money. Small businesses like to save money. If we are not getting the demand for the green for micro programme or GreenStart, Enterprise Ireland is not pitching it right. Something is going on that is not right. Every business is struggling with the cost of energy due to the war in Ukraine and other reasons. Why would they not have time to take advice and get grants? We are doing something wrong if Enterprise Ireland is finding it hard for them to step up and engage with this.

Origin Green is total greenwashing. I have no time for it at all, until we up our game and actually start doing things that make a difference and reduce carbon emissions. It was said that carbon emissions are remaining stable. There is nothing stable about carbon emissions not going down. It is complete instability. Enterprise Ireland has a very important job to do because it engages with all businesses. These are small businesses but collectively are 70% of our workforce and have a huge carbon footprint. It is great that big businesses are doing well, including Business in the Community and PwC or whatever. It is not fair, however, that small businesses are not being enabled to contribute in the same way. Consumer demand is there. If businesses are not climate resilient, they are not economically resilient. That is just a basic fact. In the next five to ten years, any business that is not resilient will close down.

An Cathaoirleach

If the Senator wants any answers, she is running out of time. It is up to her.

Senator Róisín Garvey

This will take two minutes. Are there national figures for the green for micro programme? Is it just County Clare where it is doing badly? What are the realistic targets? Green for micro seems like a very good, free, two-day energy audit, which is brilliant, that includes free follow-up advice and direct grants. Something I got in the budget was to make it easier for grants to be linked to audits but it is still not moving. I get frustrated. I just want to know what we need to do to help Enterprise Ireland up the game so that we can prevent our businesses from collapsing because of the climate emergency.

Mr. Leo Clancy

I will start and hand over to Mr. Magee in a minute.

An Cathaoirleach

There is just over a minute anyway.

Mr. Leo Clancy

I will keep it brief. We have targets for the reduction of carbon in the enterprise sector and the deployment of green supports-----

Senator Róisín Garvey

Does Mr. Clancy mean sectorial targets?

Mr. Leo Clancy

Sectoral targets, yes.

Senator Róisín Garvey

I know they are.

Mr. Leo Clancy

Across our entire base, if Enterprise Ireland's client base is treated as a sector, we have been given a target of 35% by 2030 in respect of a reduction in our clients' emissions. That is probably our primary one. As I mentioned, we also have a target of 425 interventions with clients; we are at 201 at present. My earlier comment was that we do not yet have targets in respect of some of the things that Deputy Bruton mentioned around packaging and other matters.

However, we are examining all the areas we might have targets in. We will certainly be expanding the set but we are really focused on carbon. For the big one we are focused on, we have the experience and expertise available to us. We have a panel of 100 consultants who can help. They are all experts in assisting companies in their fields. Our big challenge at the moment is companies' engagement. This is not to blame businesses. They are busy. However, Brexit had an impending commercial consequence that was short term and could have happened at any time. As Deputy O'Reilly stated earlier, it really focused the minds. Decarbonisation and sustainability do not have the same immediacy. I worry about that for my children as well as for the country. It is a challenge we are focused on. It is our biggest focus at the moment. The Deputy's question was about how we can raise awareness and up our game around such things as marketing and communications. We will happily take advice from colleagues, Deputies and Senators on what we might do. We pushed hard recently on our green for micro programme. My colleague, Ms Toomey, worked hard on the Skillnet series that is coming up for sustainability leaders, which is a small group of companies. When we sat down to look at it we realised businesses are time poor. Three days spent with a consultant is an awful lot of time for a small business to commit to so we are starting with a half day course. At the end of that, we will know-----

Senator Róisín Garvey

Is the two day energy audit being scrapped? Is that what Mr. Clancy is saying?

Mr. Leo Clancy

No. I am saying it is hard for businesses to engage with it. It is good, but it can be a big ask for an SME to spend two days going through things with a consultant, in terms of personal time spent.

An Cathaoirleach

I thank Mr. Clancy. The time is up. Do the other witnesses want to answer briefly?

Mr. Leo Clancy

I apologise. I will hand over. The training programme we are offering will be for a half day, maximum. A named individual from the SME and micro-enterprise will participate and we will be able to go back to them for community practice to help to build the other supports. It is a good starting point that we are excited about for the next quarter.

Mr. John Magee

The key action I emphasise is our new campaign, all in a day's work, which is about saving time, energy and money. We are speaking the language of small businesses with that marketing campaign. It was only launched a few weeks ago but we are already seeing traction with it. We have to find a way; Mr. Clancy is absolutely correct. Small businesses are telling us they are really time poor, but they all want to save money. That is why the campaign will be a success. We are confident we will get the traction we need to accelerate our numbers before the end of the year.

Deputy Matt Shanahan

I thank our guests. They have a difficult job and to be fair have been doing it well. Outside the climate discussion, it must be acknowledged that Enterprise Ireland, EI, IDA and the local enterprise offices, LEOs, have done great work. I have stated before in this committee and in the House that we need a framework for the indigenous SME community. The LEOs do a good job. I would like to see an agency similar to EI and IDA for SMEs. I also have sympathy for people in the enterprise sector. It is chicken and egg when we talk about sustainability. It is all right for us to talk about agencies and how they might try to promote greater sustainability among clients but ultimately the customers have a lot do with driving the requirement of sustainability. If two manufacturers are putting steak on a plate, there is no consumer trademark I am aware of to say that one is more sustainable than the other, to enable a consumer to choose to buy it. I hope we will get to something like that but we are a long way from it.

There are major challenges - Mr. Clancy already outlined some of them - especially in the SME space. When I talk about sustainability to owner-operators, the first thing they want to know is how they can achieve it in terms of the bottom line. If it makes sense they will look at it. If does not make sense, how can they put it in place? Mr. Clancy noted the White Paper on enterprise, in which the Government committed to placing decarbonisation on an equal footing with job creation and value creation. I do not see evidence of that. I do not see it in our energy sector, deployment of solar or wind energy or hydrotreated vegetable oil, HVO, biogas. These are the discussions we need to start having.

Deputy Bruton is 100% correct about two things, packaging and food waste. I have worked in these areas and seen the amount of plastic. I had breakfast with my wife recently. We took the plastic trays we were forced to buy the breakfast meal in that morning and dumped them. We have to find a way to get plastic out of the supply chain and to try to encourage manufacturers to do so.

I met Mr. Clancy at the ploughing championships. It was fantastic to see the innovation that was happening with the Enterprise Ireland supported companies, especially in the dairy sector. However, this year the dairy sector will see a reduction of €2 billion in farmers' income and at the same time we are asking farmers to be the first point of sustainability. They are working on razor-thin margins. That extends to our export areas as much of the food we produce is exported.

The main areas I would like the witnesses to speak about is whether we have an overarching framework to look at our energy matrix, as regards what we aspire to and what we can deliver in the next three to five years, in terms of the indigenous employment of wind and solar PV. Solar PV is probably the one we can get into the marketplace the quickest. Under the farm scheme for solar energy a maximum grant of 60% of €90,000 is available, which is approximately €54,000 when a farmer spends €90,000. I challenge anyone to find how many farmers can put €90,000 into solar energy and wait to reclaim the grant. That is one simple area that needs to be looked at. HVO is used to try to take diesel out of fleets. It is in the marketplace and we should be trying to use it.

We need a national overarching policy about plastic packaging. We have to get it out of the supply chain across the world. There are substitutes for plastic. They are generally more expensive and are not as durable. That is a problem because customers will take the cheapest option presented to them.

The dominance of the fast moving consumer goods, FMCG, by the large multiples is another area I have raised in the committee many times. They are crippling suppliers. They are at the vanguard of some of the issues we are talking about, in respect of why sustainability is not being brought into consumer spaces because it does not work, it does not pay. Suppliers are being absolutely slaughtered by the price at which products have to be brought into supermarkets. Will the witnesses speak about that?

Mr. Leo Clancy

I will start. There is a lot there. The overarching framework for the energy sector and HVO are not matters directly for Enterprise Ireland. They are handled primarily by the Sustainable Energy Authority of Ireland, SEAI, and the Department with responsibility for energy, respectively, so we do not have an overarching framework for those matters. However, I will say on the topic that we are seeing good adoption of solar energy by businesses, to the point that, whether or not companies have been supported under the green transition funds, we are seeing a huge number of companies move from off-the-shelf solutions from energy providers or from independent providers to on-site solar energy. I could not count the number of conversations I have had about that with my clients in recent months. That is a good move. Recent SEAI programmes to support business are positive in that regard and have been well-received.

We certainly integrate energy use strongly into our green supports and our sustainability offers. We are conscious of that. HVO is a bit further from our remit, except in respect of some of our clients who manufacture oil boilers and so forth. We are aware of HVO but it is not a direct responsibility of EI.

I agree with the Deputy about plastic packaging. Suppliers also agree. If you take that piece and customer demand, we are seeing a shift. One can argue about whether it is fast enough as regards plastic packaging demand from multiples and a response from suppliers, but we have all the infrastructure to respond. We do not control the market dynamics, as the Deputy will be aware, but we are seeing a huge trend among all buyers towards requiring more sustainability from their suppliers. As was mentioned earlier, that demand will continue to drive change. We are sure that we are ready to help, for example, I mentioned innovations such as Nutritics earlier, the circular bio-economy cluster we support and the Circuléire centre hosted at Irish Manufacturing Research. When a client is ready to move on its sustainable packaging agenda and has the market dynamic that demands it, we are ready to support it. We have supported numerous companies with in-house research and development on packaging. We are seeing an increasing trend in that. The underlying infrastructure is here but we cannot dictate how a market demands it.

Deputy Matt Shanahan

The key points-----

Mr. Leo Clancy

Once the market does that, I am confident that our clients will be ready to respond. Mr. Magee might like to come in here, with the permission of the Cathaoirleach.

Mr. John Magee

On the Deputy's point about packaging, we are working really hard at a start-your-own-business programme level and in the various interactions we have with businesses that are starting up. We give them messages that are as simple as asking them to use less, use renewable and design for net zero. Recently, we saw that a small company that started up in County Cork is delivering its products by cargo bike. That is an example of the circular economy being made real at local level. We are seeing start-ups that are starting to think like that. It will be a bigger transition for the bigger companies, and maybe also for the Enterprise Ireland clients. However, at the start-up stage, there is a massive opportunity to get that thought process and culture embedded because they are at that crucial start-up point. We are seeing businesses starting to find ways. They are increasingly mindful of reducing packaging and waste and requiring less input. These are small shoots but we are seeing the culture starting to shift.

Deputy David Stanton

I welcome the witnesses and thank them for the work they are doing. A little while ago, I had an interaction with some business people who engaged with LEOs and were fulsome in their praise of the supports and help they got. I thank the witnesses for that.

The message coming across to all of us, which is one with which I think we all agree, is that more needs to be done, both faster and deeper. How many companies or businesses are on the books of the LEOs across the country and how many are not?

Mr. John Magee

There are 7,200 companies in the national LEO portfolio. They are companies which will have received what we typically call "measure 1 financial support". However, our reach is much broader in each of the counties. We do not have an exact figure for County Mayo but we understand there are approximately 5,000 companies there. Approximately 10% of those, or maybe a little less, will have had some sort of engagement around the financial support. However, our reach is much broader in the context of our training, mentoring and general guidance. A significantly broader cohort of companies at local level are engaged with LEOs. We do all sorts of training programmes in areas such as financial skills, marketing skills, etc.

Deputy David Stanton

I am conscious that time is tight, and I thank Mr. Magee for his response. Are the LEOs proactively engaging with all those companies with respect to the decarbonisation and sustainability issues that have been discussed?

Mr. John Magee

Absolutely. The new energy efficiency grant is open to businesses-----

Deputy David Stanton

Yes, I know it is open but I am asking if the LEOs are either physically or digitally knocking on businesses' doors and making them aware of what is available?

Mr. John Magee

Absolutely. At a local LEO level, each of us will have various kinds of digital marketing campaigns. We are involved in local networks and we work closely with local chambers of commerce. In my county, we are about to put in place our annual ideas month, which is in October. We have a programme there to look at the tourism sector and how we can build more sustainability into that-----

Deputy David Stanton

That is fine but, so far, that does not seem to working with them. I think we are agreed that more needs to be done here. Have the LEOs considered the possibility of a person physically knocking on the doors of companies and having a conversation, rather than putting something up on the web? We are all bombarded with messages, emails and everything else and we never read more than half of them. From the point of view of politicians, it is hard to beat canvassing by knocking on the doors and getting a face-to-face interaction. This is the old foot-level thing.

Mr. John Magee

I agree. LEOs speak about this consistently. This is where we see the issue at this time. Small businesses are bombarded by messages, emails and social media. We are finding that the best way to get traction may not necessarily be by way of a cold call, but by making a phone call requesting to call out and stand in the premises of the business. These visits will be to understand clearly what the business is struggling with, for example, time or costs, in order that we can solve the problem for it. That is why our new campaign is important for those key messages. We fully understand that and we are doing it. Our business advisers throughout the country are doing that boots-on-the-ground work on a daily basis to engage with clients and, in many cases, to try to convince them of the merits of this. As the Senator says, we must let them know and understand that we have products that can satisfy their pinch points around energy inputs, time and saving money. We are doing that boots-on-the-ground work and we are focused on that-----

Deputy David Stanton

I am sorry to interrupt but time is very tight and the Cathaoirleach is very strict in that regard. I am joking with him.

I encourage that approach of going out to the business and standing in the premises, as Mr. Magee said, so that they can engage face to face. It is hard to beat that. I would be interested in getting some feedback at a later stage. Perhaps we can come back and look at this in six months to see whether the LEOs have done more of that and whether it has worked.

On the climate toolkit for business, how is that working? The environmental aid scheme 2014 has been extended until the end of this year. I ask Mr. Clancy to tell us a bit more about that. Are companies engaging and how is it working?

Mr. Leo Clancy

I will ask Ms Toomey to cover the climate toolkit in a moment because she is more familiar with it and I will start with the environmental aid scheme. We have been making approvals under the environmental aid scheme for large capital infrastructure improvements that are material carbon reductions. We intend to continue with that. We are engaging heavily with clients, as we mentioned. We have spoken a lot about SMEs today but larger measures are probably where the biggest gains are to be had. We are currently estimating. Companies have their own plans for decarbonisation and these will take them so far. They will look at the trajectory of the carbon taxes, as well as the requirements for their business in terms of sustainability. We are looking at what we can do to further incentivise them beyond that.

Deputy David Stanton

It is my understanding that the budget for that scheme is €150 million annually. Can Mr. Clancy give us an idea of how much has been spent in the years since it was introduced in 2014?

Mr. Leo Clancy

We can get the numbers.

Ms Alexa Toomey

I have them.

Mr. Leo Clancy

At this point, I will hand over to Ms Toomey to address that and the climate action toolkit.

Ms Alexa Toomey

The figure Deputy Stanton mentioned is the amount Ireland can approve under the environmental aid scheme. That is the limit set by the European Union. I will go back as far as 2016 as I do not have the 2014 figure in front of me. Enterprise Ireland has provided funding of €48.6 million in environmental aid to companies.

Deputy David Stanton

Is that since the scheme started?

Ms Alexa Toomey

It is since 2016. That is the Enterprise Ireland portion of it. In addition, the green transition fund launched last year. A specific part of that is for capital investment and we provided €5.8 million in funding to six companies under that scheme. Those companies have made a commitment to remove more than 12,000 tonnes of carbon from their businesses. We are engaging in terms of capital supports through environmental aid with our enterprise base and we will continue to do that over the coming years. We are seeing an acceleration in the level of inquiries and interest by companies about using those funds. We will continue to deploy them.

The climate toolkit for business has been developed by the Department of Enterprise, Trade and Employment. It is a useful toolkit to which we direct all our clients, especially those SME clients which may not have a full understanding of how urgent this is and that this is on their doorstep. It is a useful tool that shows scope 1, 2 and 3 emissions for companies that have the data to input in the toolkit. It is a very useful starting place.

Deputy David Stanton

Does Ms Toomey have figures on usage?

Ms Alexa Toomey

I do not have a figure because the Department of Enterprise, Trade and Employment manages it and it is available to a much wider group than clients of Enterprise Ireland and LEOs. That is one of the first places to which we would direct any company that does not have that figure.

Deputy David Stanton

I will conclude with this point. Mr. Clancy said in his opening address that sustainability can be seen as something extraneous for businesses, but it should be part of their core business strategy. It is a bit like diversity and inclusion at the moment; it is at that level. Customers, businesses and investors are looking at sustainability as a key issue. I agree with Mr. Clancy on that. I encourage Enterprise Ireland and the LEOs to continue their work and to accelerate it even further, as my colleagues have also been encouraging them to do.

An Cathaoirleach

We will move to a second round. Deputy Bruton will be followed by Senator Garvey.

Deputy Richard Bruton

This has been a very useful discussion. The takeaway for me is that we should move to developing the sorts of sectoral compacts that have been pretty successful in the Netherlands.

I certainly think of food, and you can see it in construction and probably in engineering. It is where you start to look at the whole responsibility, from, as Mr. Magee rightly said, design - they say 80% of environmental damage is baked in at the design stage - right through to the discarding and managing of waste. That is what they have done and it seems to bridge the siloed approach we have developed. Do the witnesses see merit in the committee recommending to the Government that it adopt a big tent approach in some key sectors which we want to be at the forefront of sustainability in ten years' time? We want to know what that means and what changes now, as well as to communicate and develop the momentum, much of it coming from the interaction. Processors can influence what farmers do. Supermarkets can influence what processors do. Consumers can influence what supermarkets do. There is a gain from this big tent approach. Would that pose difficulties for the witnesses? Would it be a productive use of our time to promote that idea?

Mr. Leo Clancy

I will not stray into policy. The Government has set out a climate action plan and strategy so I do not want to comment on policy. We would welcome a discussion about how we might do anything possible to further sustainability efforts and climate action. We would be very welcoming of the conversation if the committee made that recommendation. We would be happy to participate. It is a matter, in the end, for policy because it spans more organisations than ours and more Departments than our parent Department. We are happy and open to engaging with anyone who has ideas about how we can accelerate, as members have said.

Senator Róisín Garvey

I got a bit carried away in the first section. I will try to talk less and let the witnesses talk more. Coming from that event, there was a sense that there is an emergency. I worry about the LEOs. I do not know if they have the capacity. They were working with businesses of between one and ten employees; now that figure is up to 50. I do not know if they have the resources or people needed. That is a big jump. As matters stood, with companies of between one and ten employees, many SMEs did not engage with LEOs. There is something around the PR that is missing. I do not know what it is. They should have in-person events. A lot of it seems to be online stuff. They could offer an event for free that will tell small businesses about the free grants they can get or something like that. "Green for micro" is weird language and people still do not know what circular economy is. There are grants to go green. Another way must be found to sell this. It is all about selling it.

The half-day course sounds much better than a two-day energy audit and I would love to find out more about that. I find it confusing. As my party's spokesperson on enterprise, trade and employment, I focus on supporting SMEs. I still find it tricky to navigate the websites and Departments. Businesses are busy. It has to be made easy for them to understand the supports that are available. Why are targets like 17 for the entire year so low in the LEOs? Is it a capacity issue?

I saw the descriptions of the companies that can apply to be the mentor to carry out that auditing. It was far removed from any real expertise in carbon reduction, energy or climate. I found that quite worrying. I got it sent to me by somebody in the LEOs. The companies that carry out the mentoring are not allowed to advertise that they have done it. That might encourage other people. It is just a list of random companies. None of them jumped out at me. I had no clue about any of them. Why would I pick one of them to come into my place for two days? I have never heard of them. If I heard them say they had done so and so, that might be different. I do not know why they are not allowed to advertise. I am not sure what that is about. Maybe the LEOs can advertise them.

Packaging is still a huge issue. Friends of mine have an organic gardening business. They supply vegetables and it is killing them that they have to wrap everything. They are organic growers with 60 acres. They have worked really hard, starting with 2 acres, and are supplying huge businesses all over the place. There is something wrong there. Even if the packaging is biodegradable, recyclable and vegetable-based, we all know that is a joke at this stage. We have to reduce plastic, as previous speakers have said. I do not know where that has to come from but we need to help Enterprise Ireland and the LEOs to do it.

The LEOs mentioned the circular economy. I have no faith in our local authorities pioneering that. It is not their expertise, or their job per se; even if it is, there is nothing really happening. There might be the odd stand randomly thrown up around the place to say they care about SDGs and the circular economy, but it is not happening. The environmental awareness offices do not have the capacity. I do not know if the new climate offices have the expertise or capacity either. I worry and I would like to see something happening because we are three years into this Government with a lot of funding gone into going green and I do not see it happening.

I did not get an answer on the data centres. Is Enterprise Ireland supporting data centres that are not going to be part of the solution around energy demand, district heating and the gas system? I would like to see more sectoral targets come down to help the small business sector.

Mr. Leo Clancy

I will start on data centres and then hand over to Mr. Magee because the bulk of the question related to LEOs. I had experience in respect of data centres in my previous role as well as this one. Enterprise Ireland does not support data centres directly, apart from a few small local providers. They are mostly IDA Ireland clients so I will not speak about them. The sector is important for our exporting and manufacturing base and our electrical and mechanical services companies. It is a sector we see as very valuable to Ireland. We do not take a policy view on its energy demands or how that might be managed. That is beyond our remit as an agency. From an industrial point of view, we see significant value from the data centre players, not just in Ireland but also in enabling exports.

Mr. John Magee

I thank the Senator for the questions. I will try to deal with them in the round, to an extent. I do not agree that the targets are low. It needs to be understood that our sustainability goes beyond what we do in terms of green for business and even the energy efficiency grants. There is, for example, the work we do in our student enterprise programme. We are doing a lot of work with second level students. We will all have a category at county level in relation to sustainability, baking that right into the culture piece. In terms of our national enterprise awards at local and national level, we have a sustainability focus on that. I am working at the moment on the Mayo business awards and we have a sustainability focus on that. There is a huge amount of awareness-raising work happening. LEOs are doing work on training and mentoring. We have lean supports, a lean programme and a digital for business programme. All these programmes, if you think about them, are actually about sustainability. At their core, they are about trying to find a way to be more efficient, reduce inputs and digitise processes. All of those help reduce emissions and play into the broader sustainability agenda.

The Senator mentioned our broadened remit this year on a pilot basis. Typically, we have worked with businesses of up to ten employees. We now have the opportunity to work with businesses of up to 50 employees. It is a subsection of the economy. Typically, it is for businesses which are not yet clients of Enterprise Ireland but are on an export or international journey. That is massively important in the context of national enterprise policy. Crucially, green for business is open to businesses throughout all sectors of the economy of up to 50 employees. We understand the value of engaging in door-to-door, hand-to-hand combat, working with businesses on an individual basis and convincing them we have a product that can help.

Senator Róisín Garvey

I deal with small businesses all the time. My sister runs two of them. They are the backbone of north Clare, where I come from. In Clare, nearly all our jobs are in the small business sector. They feel too many workshops are being offered on mentoring. Many small businesses know what they need to do; they just need financial help. There are start-ups that need help and might not know what to do but there are businesses that have been operating for many years and are sick of being asked to come to events that are not of help to them. They see a lot of money being put into consultants, mentors and workshops that are not really relevant for businesses that want to go green and want to know if there are supports to help them.

Mr. Magee mentioned transport and cargo bikes. That is brilliant. Does he know how many of those we have in Clare? We have one business that has one cargo bike in the entire county. There should be loads of them in Shannon, Kilrush and Ennis but nobody is doing anything about them. The LEOs have never mentioned them. For the guy who has it, I helped to buy one. He did not get a grant for it at the time; now we have introduced a grant for cargo bikes. All these things are being said but they are not manifesting on the ground, with the best will in the world.

I do not know if it is the LEOs' fault or whose fault it is. The LEOs should step away completely from the local authorities and should not be embedded with them at all. I sometimes think the local authorities seem to be steering the LEOs and their priorities. Sometimes there is a small business that has only been in operation for one or two years, yet it is the one mentoring these businesses that have been there for 30 or 40 years because it is kind of trendy and cool. We need to get it right. There is a lot of expertise already in small businesses that are at this for a long time, and maybe they are the ones that need to be used more to engage with the businesses that are coming on board.

Mr. John Magee

I will address the point around mentoring. We had an initiative locally, Mentor Mayo, where we took very experienced business people across a range of sectors and brought them into the ecosystem to augment our paid mentors - this was a voluntary mentoring programme. It was very instructive in terms of getting that intergenerational piece, with the older businesses mentoring the newer ones that are coming through.

We are working very hard throughout the country on the awareness-raising piece of having those conversations. To an extent, we share the frustration around this. We would love there to be more take-up of the Green for Business programme and our energy efficiency grant. With regard to the pipeline for the energy efficiency grant, some 150 companies have started the process of applying for that grant throughout the country and we are pushing that daily and having those conversations.

We concur that we want our microbusiness community to play their role and to grasp-----

Senator Róisín Garvey

How is 17 small businesses out of 4,000 a good target? I feel the LEOs’ targets are quite low.

Mr. Joe Lowe

The Senator has put her finger on it. This is a new pilot project. The Senator mentioned the circular economy and sustainability. The mainstream businesses are not aware of those terms and what it is possible to get from programmes like this.

Senator Róisín Garvey

Energy costs are the biggest challenge they face so now is a good time. They should be dying for this kind of stuff.

Mr. Joe Lowe

We are strongly selling that to them. Again, there is a question of timelines. With regard to the energy element, they have to root out all of their old bills for the last 12 months and look at their energy use, so it takes a bit of time for them to engage with the consultant, when the consultant is appointed.

With regard to expertise, there is growing expertise in the area and the consultants are expert in different sectors. When a client rings up and looks to get a consultant, we can advise them of consultants who have worked in this area before and what their expertise is.

Senator Ollie Crowe

I thank our guests for taking the time to attend. It is clear from the opening statements that a lot of good work is happening in most areas. I want to make a couple of points and ask a couple of questions.

Mr. Magee highlighted that it is a challenge for LEOs to ensure sustainability remains at the forefront of SMEs’ priorities. How much of a difference is there in the different local authorities in terms of demand? Obviously, Mr. Magee and Mr. Lowe can primarily speak about Mayo and Leitrim. However, from their interactions with colleagues and knowledge about work being done across the local authorities, do they believe there are significant differences regionally in terms of interest from SMEs around sustainability and, if so, what measures could be taken to raise interest in those areas which are most challenging?

Mr. John Magee

LNo, we are not seeing any significant regional divergence in regard to this particular support and we find that it is broadly consistent. We have an LEO network meeting and we bring all of the heads of enterprise together. We are hearing a very consistent message being fed back to us right now that businesses, small businesses in particular, are starting on a sustainability journey, starting to understand the associated potential and starting to identify the economic and commercial opportunities. They are becoming more and more attuned to the need to reduce input costs, as the Senator said, and energy costs are currently a huge challenge. Nonetheless, it is a broadly consistent story across the country in regard to our rolling out of this particular programme.

Senator Ollie Crowe

To follow on from Senator Garvey, do the witnesses believe there should be more uptake on it?

Mr. John Magee

We would hope for more uptake on it and that is something we are working daily to try to drive on. The State has put in the support and we get support from Enterprise Ireland and a budget from the Department. We are very happy that we have the supports we need but we are also acutely conscious of the need to continue our work on an individual-by-individual basis to convince businesses, to bring them on board and to get them to avail of the supports we have, such as Green for Business, GreenStart and the energy efficiency grant, because these supports can save them time, energy and money right now. We are absolutely conscious of the need and a key focus for us right now is that individual business by individual business engagement.

Senator Ollie Crowe

Mr. Clancy highlighted that significant funding is available for SMEs from Enterprise Ireland under the green transition fund. As we are aware, that fund was launched a little over a year ago, so it is still relatively early. Can Mr. Clancy provide additional details on the interest from SMEs and the funding that has been distributed or is in the course of being distributed?

Mr. Leo Clancy

Since the start of 2022, given there were some prior offers available before the launch in July of last year, we have had 201 approvals under the decarbonisation scheme. We can break that out against the new offers as well. That funding totals €7 million committed so far to business and it is in the process of drawdown. The momentum is growing on this and some of the measures that we mentioned earlier around training, engagement and marketing are ramping up on an ongoing basis. We are pushing very hard on this and we have a strong pipeline of interest in this area.

Deputy Matt Shanahan

It needs to be acknowledged that we have two separate streams of business going on here. The Enterprise Ireland people will know that Enterprise Ireland is largely export-focused. A large number of the companies that would be engaged with Enterprise Ireland have very good market intelligence in terms of where they are going, and they would understand the benefits of sustainability and how they might market them, and they would also understand the benefits to the bottom line of putting that in. That is one side. To me, the small business sector is a different sector, and I know it reasonably well and have worked in it for a long time. To follow Deputy Bruton’s point, if the committee is to make recommendations regarding all of this, I would like to see us looking for a separate agency to manage the LEOs and the small business area.

One thing that strikes me from the discussion today is that it is about the bottom line for small businesses. When we talk about sustainability and all of that, there is generally a cost and unless a business can see a saving or a market advantage, it is very hard to convince the business to go for that. Maybe one of the things the LEO co-ordinators could look at is some kind of a sustainable quality trademark, whereby people would go through some process with the LEO. They could outline their business area and what they are doing, and the LEO could do some form of mini-audit and allow the businesses to represent themselves as being on that programme and communicate that to their customer base. That is probably the first thing.

Senator Garvey spoke about the urgency and we all feel the urgency, but it has to be driven by the markets. If the market is not demanding it, it is very hard to ask people to change their business, change what they are doing and add costs to their business if they cannot see it helping them to survive and stay profitable.

Mr. Joe Lowe

The LEOs are very well placed. Up to ten years ago, we had the county enterprise boards and, in certain counties, we developed a very strong relationship with our clients. There is a certain element of trust in the engagement with our clients and they are then inclined to come to training programmes, take advice on capital expenditure and so on. The LEOs are very well placed to roll out these types of programmes. We are very much aware of the needs of our clients on a county basis. It is a timing process. We had the same experience with the trading online vouchers given that, when we started off, it took a long time to get companies to engage. Now, invariably, we are issuing thousands of them every single year. This trajectory might be on the same line. We are very well placed to do that. We have the confidence of the micro-enterprise sector and I think we are in a good position to roll out programmes such as this.

Deputy Matt Shanahan

I agree wholeheartedly. It is not a criticism, by the way, and I just think there is a lot more that we can do. As Senator Garvey highlighted, there are many established businesses that do not go to the LEOs; they are the people who need to be attracted into this and there has to be some reason for them to engage. That is what I am talking about.

Mr. Joe Lowe

I agree entirely. I was involved in a business myself. Some people never want to engage with agencies such as ours. They just do their own thing and they drive on, and they do not want to get involved in filling out forms. I agree entirely.

Deputy David Stanton

I ask both organisations what engagement they have had with the energy providers with respect to their involvement in assisting companies to reduce costs and, in particular, reduce the use of energy.

With respect to companies using solar power, are there issues if the use of solar panels leads to a huge reduction in the purchase of electricity from a company? Can they be penalised if the amount of energy they use from companies goes below a certain amount? Will the witnesses finally outline their engagement with SEAI, what kind of work if any they do with it, and the kind of relationship they have?

Mr. Leo Clancy

I am happy to start on those, and I will ask my colleague, Ms Toomey, who works closely with SEAI to pick up on that specifically. We do not have day to day involvement with the energy providers. We are aware of them, we know who they are, and we have contacts with them. When issues arise we are able to reach out, but it is not an ongoing dialogue. SEAI has more day to day relationships. Ms Toomey will cover that.

I am not aware of penalties, but it is increasingly becoming a debate as to what needs to happen for standing charges and other things, as companies become more self sufficient in energy. I presume that is what the Deputy means. It is not something on which we are informed. We are not part of that policy debate or any policy discussions. No client at any point has told me that they have been directly penalised because of the deployment of solar. It is quite the opposite actually. We see a lot of people buying term energy deals from the energy providers or from Irish companies, startups like Urbanvolt. Companies like that will install solar on-site and it is always positive. That is what I hear.

Ms Alexa Toomey

On SEAI specifically, we work really closely with them. The team there managing business supports would meet regularly with ourselves. In Enterprise Ireland we have long-standing relationships with our clients. We look at all aspects of their business. SEAI is specifically looking at their energy use and energy spend. How it works in practice is that we engage with the teams in businesses. We obviously have our own supports. A lot of those are around building capability, building knowledge, building awareness, training teams and that side of things. When it gets into the capital supports we have our own, which are focused on decarbonisation within the factory. SEAI can also help with that, but it helps with things like solar panels and micro generation on site. It can go a little broader than we can in some ways. It can help with car connections and those kinds of things. We work very much hand in glove. From a client point of view we want to make sure they have a good experience of working with two agencies, and do our best to make it easy and clear for a company.

Senator Róisín Garvey

I make the point that the market does not need to demand it anymore actually, because the climate emergency is demanding it.

Deputy Matt Shanahan

The market.

Senator Róisín Garvey

The fact is that in the next seven to ten years in Ireland, we will see small businesses that are not climate resilient closing down. That is the most important thing. It needs to be clarified that it is not about economics and being market driven. We are where we are.

An Cathaoirleach

We are going to get nowhere.

Senator Róisín Garvey

Small businesses that are not preparing something for export have often been told that the LEOs are only dealing with startups preparing something that can be potentially exported. I do not know if they go to Enterprise Ireland or where they fit in. Some businesses have come to me looking for supports that have been told they are not preparing something that can be potentially exported. Mind you, I think everything could be potentially exported if they were clever enough. With the circular economy, there are zero grants for second-hand equipment. Some equipment can be very good, and can be inspected and be fit for purpose. However, there are no grants for second-hand equipment, whether it is production, milking machines or packaging machines and any of these things, which cost a lot of money. It would save Enterprise Ireland money, and it would save the client money if there were plans for second-hand equipment deemed to be still fully functional. When a company scales up there is a lot of technical equipment left gathering dust because nobody can afford to buy it as there are no grants for it. That would be important as well.

Mr. John Magee

Second-hand equipment is supportable. Most LEOs will actually do that, so long as it is under a certain age, say eight-years-old, and there is a certification as to it being re-purposed or fit for use.

Senator Róisín Garvey

Is there a system through Enterprise Ireland where that certification is available? Does it exist?

Mr. John Magee

There is not a formal certification process. Typically, if you are a small manufacturing company wishing to buy a piece of equipment and you approach a LEO, we will seek some evidence that piece of equipment has not previously been grant aided by the EU. We would want the idea of a machine being double paid for. If that is certified, or comes with a warranty of sorts, or is fit for purpose then at a local or individual level our business advisers will engage. If we are satisfied that the machine is fit for purpose then we will look at granting that.

Senator Róisín Garvey

Several businesses have contacted me to say they have been told that is not the case. A baker and a cheesemaker went through a LEO and they were told: "Sorry, we do not fund second-hand." Will I tell them that is not true?

Mr. John Magee

Again, I cannot comment on an individual LEO. However, I can say that generally speaking that is the approach.

Senator Róisín Garvey

Mr. Magee is the president, is he?

Mr. John Magee

We would certainly look at funding that.

Senator Róisín Garvey

Brilliant.

An Cathaoirleach

I thank the witnesses. This concludes the consideration of today's matter. I thank all of the representatives for assisting the committee in its consideration of this important matter, which we will further consider as soon as possible. That concludes our business in public session for today. I propose the committee goes into private session to consider other business. Is that agreed? Agreed.

The joint committee went into private session at 11.16 a.m. and adjourned at 11.31 a.m. until 9.30 a.m. on Wednesday, 4 October 2023.