EY Survey Finds Funding Constraints Slowing Corporate Sustainability Progress

Key Takeaways

• Funding Constraints: 56% of respondents identified funding as a barrier to delivering sustainability strategies.
• Implementation Gaps: 52% remain at an early or developing stage, while only 23% are actively delivering and tracking decarbonization progress.
• Geopolitical Pressures: 68% reported that political, geopolitical and regulatory developments are affecting sustainability strategies.
• Skills Shortages: 35% identified capability gaps, particularly in supply-chain due diligence, nature and biodiversity, and sustainable finance.
• AI Governance: 43% ranked governance and risk concerns among their top three barriers to using AI for sustainability.

Deep Dive

More than half of organizations surveyed by EY Ireland remain at an early or developing stage of sustainability implementation, with funding shortages emerging as the biggest obstacle and fewer than a quarter actively delivering and tracking progress on decarbonization.

The EY Ireland State of Sustainability Survey 2026 found that 56% of respondents identified funding as a barrier to delivering their sustainability strategies, followed by skills and capability shortages at 35%. Nearly a third, 32%, said it was becoming more difficult to justify sustainability investments within their organizations.

The findings suggest that businesses have made greater progress establishing sustainability governance and reporting systems than implementing the operational changes needed to meet their commitments. Some 52% of respondents described their organizations' sustainability strategies and implementation as early stage or developing, while only 24% considered them advanced or leading.

The survey comes as political uncertainty, regulatory developments and competing financial priorities influence corporate sustainability decisions. EY found that 68% of respondents said political, geopolitical and regulatory developments were affecting their sustainability strategies, including 18% who described the impact as significant.

The research was conducted through computer-assisted telephone interviews in October 2026 with 200 respondents holding senior sustainability positions or responsibility for sustainability within their organizations.

Funding Pressures Expose Gaps in Implementation

Despite years of investment in sustainability policies, reporting and governance, many organizations have yet to establish the resources needed to deliver on their environmental commitments.

The survey found that a combined 41% of respondents had either not measured an emissions baseline or had measured emissions without setting reduction targets. Another 15% had established targets but lacked a funded transition plan. Only 23% reported actively delivering and tracking progress against their decarbonization commitments.

EY said the findings reflected a growing emphasis on the cost of implementing sustainability programs, particularly as organizations face competing demands for investment.

The financial pressures are also affecting how sustainability is considered in broader business decisions. Some 53% of respondents reported that political, geopolitical and regulatory developments were influencing funding and investment decisions, while 47% identified effects on resource allocation. Supply chains were the most frequently affected business area, cited by 60% of respondents.

EY Ireland Assurance Partner and Sustainability Services Lead Derarca Dennis said organizations were increasingly assessing sustainability alongside wider financial and operational considerations as geopolitical uncertainty, changing regulation and economic pressures influenced investment decisions.

The survey also identified climate-related events, including El Niño, as an additional concern for organizations exposed to supply-chain disruption and physical climate risks. EY said these pressures were encouraging businesses to examine third-party dependencies, supply-chain resilience and exposure to natural capital risks more closely.

Specialist Skills Shortages Persist

Funding was not the only constraint identified in the research. More than a third of respondents reported skills gaps, with shortages becoming particularly pronounced in specialized areas of sustainability management. Some 40% identified significant capability gaps in supply-chain and human-rights due diligence, while 33% reported shortages in nature and biodiversity expertise.

Those findings stand alongside relatively widespread adoption of human-rights policies and procedures. According to EY, 73% of respondents reported having human-rights policies and processes in place, and 71% said their organizations conducted sustainability and human-rights due diligence across supply chains.

The continued shortage of specialist expertise suggests that organizations may have established formal procedures without developing all the capabilities needed to implement them effectively.

EY said the nature of the skills challenge had changed from previous surveys, which identified broader shortages in regulatory knowledge, project management and general sustainability expertise. The latest findings point to growing demand for technical knowledge that can support implementation and business decisions. Technology capabilities have also developed unevenly.

The proportion of organizations reporting a sustainability data-management system rose to 62%, compared with 57% in 2025. However, only 44% reported having a greenhouse gas calculation system, while 39% had robust climate scenario analysis and resilience planning.

Another 45% reported having systems supporting voluntary and mandatory ESG regulatory reporting. The survey also found that sustainability considerations were not yet consistently influencing financial decisions.

Some 32% of respondents identified sustainable finance as a significant skills gap. Meanwhile, 29% said their organizations either did not consider sustainability in financing and investment decisions or did so primarily in response to regulatory or stakeholder expectations. Only 13% reported actively using sustainability criteria when allocating capital.

The findings show that sustainability has become more closely connected with corporate planning and reporting, but its influence over investment decisions remains limited at many organizations.

AI Adoption Brings Additional Governance Concerns

Artificial intelligence is attracting growing interest as a means of improving sustainability reporting, analyzing data and supporting operational decisions, although governance concerns and implementation costs remain significant obstacles.

The survey found that 42% of respondents identified sustainability reporting and insights as the area where AI offered the greatest potential. Other anticipated applications included due diligence, risk management and improvements in operational efficiency.

However, 43% ranked governance and risk concerns among their three leading barriers to using AI for sustainability. Implementation costs followed at 41%, while 37% identified shortages of skills and talent. The findings also raised questions about how organizations account for the environmental consequences of adopting AI.

EY reported that 36% of respondents gave little consideration to AI's environmental impact, despite expectations that the technology could support sustainability objectives. The issue is particularly relevant to organizations seeking to use AI to improve resource efficiency or reduce emissions, given the energy consumption and associated environmental costs of the technology itself.

John Ward, EY Ireland Partner and Head of Health Technology, said AI could help organizations optimize complex systems, reduce waste and improve resource efficiency. He also emphasized the need to measure both the environmental costs of AI and the sustainability improvements it could deliver.

EY's findings suggest that organizations increasingly recognize the potential of technology to support sustainability programs but face practical challenges in funding, governing and implementing those systems.

Across the survey, the difference between established sustainability processes and measurable progress remained pronounced. Although governance and reporting capabilities have become more widespread, relatively few respondents reported actively delivering and tracking decarbonization progress or consistently incorporating sustainability criteria into capital allocation.

The research points to continued pressure on organizations to demonstrate the financial value of sustainability initiatives as they compete for investment. That challenge is likely to be especially significant for businesses still working to fund transition plans, develop specialist capabilities and incorporate environmental considerations into routine operational and financial decisions.

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