Financial Adaptation of SMEs in Ireland’s Logistics Sector to Rising Carbon Taxes and Decarbonization Policies

1) Research Purpose, Question, and Objectives

1.1) Title of Research

Financial Adaptation of SMEs in Ireland’s Logistics Sector to Rising Carbon Taxes and Decarbonization Policies

1.2) Research Purpose

The aim of this research is to explore how Small and Medium Enterprises (SMEs) in Ireland’s logistics sector are managing the financial impacts of Carbon Tax and decarbonization regulations while maintain profitability.

1.3) Personal motivation

My personal motivation for this research originates from my professional experience in the energy industry in my home country, Brazil, where I worked for five years. Currently, in Ireland, I have been employed for four years in a medium-sized company within the logistics sector. Additionally, I aim to contribute, even in a small way, to the decarbonization process.

1.4) Question

How are SMEs in Ireland’s logistics sector financially adapting to rising carbon taxes and decarbonization policies?

1.5) Objectives:

• To evaluate the financial impact of increasing carbon taxes on SMEs in Ireland’s logistics sector
• To explore the financial strategies used by SMEs to mitigate the operational costs increased by decarbonization policies.
• To evaluate how government subsidies and incentives help SMEs adapt to low-carbon operation.
• To investigate the barriers preventing SMEs from adopting green practices.
• To access the long-term financial viability driven by carbon taxation framework.

2) Literature Suggested

2.1) Contextual and Empirical Literature

The Climate Action Plan 2024 sets the Irish regulatory framework for achieving the target set in reducing by 51% the emissions of greenhouse gas (GHG) by 2030 and accomplishing net-zero emissions by 2050. (Department of the Environment, Climate and Communications, 2024)

In 2024 the projection is Ireland reach only a 29% reduction in emissions of GHG by 2030. The Government of Ireland implemented in 2010 the carbon tax as measure to reduce GHG emissions. The 2024 rate of carbon tax was €56 per tonne of carbon dioxide (CO2), this tax is increased on annually, reaching €100 per tonne of CO2 by 2030. (Oireachtas, 2024)

2.2) Conceptual framework

Institutional Theory analyse how organizations adapt to external pressure imposed by Government (regulative element), industry ( normative element) , and social expectations (cultural-cognitive element) (Scott, 2005). In this research intends to explore how those element influences the Irish logistics companies on the green transition.

Stakeholder Theory suggests the companies need to adjust to the interests of different stakeholders, such as Government, customers, investors, and employees (Freeman et al., 2010).

The use of Institutional Theory and Stakeholder Theory intends to provide a better understanding of SME financial adaptation.

3) Data collection

The primary data will be collected through interviews – qualitative data – from SME owners, financial managers, and industry experts in Ireland.

Professional networks and industry associations will be used to choose participants. Interviews will take place in person, over the phone, through video calls. (Creswell and Guetterman, 2019, pp.251–255)

4) Overview

This research explores how SMEs in Ireland’s logistics sector are adapting to rising carbon taxes and decarbonisation policies. It intends to evaluate the impact of increasing carbon tax, explore financial strategies to mitigate costs increased, evaluate governmental subsidies and incentives, investigate the barriers to green transaction, and access long-term viability. Applying Institutional Theory and Stakeholder Theory this research will explore how internal and external factors influence SMEs financial strategies.

5) Bibliography

Creswell, J.W. and Guetterman, T.C. (2019) Educational Research Planning, Conducting, And Evaluating Quantitative And Qualitative Research. sixth edition. United Kingdom: Pearson Education Limited.

Department of the Environment, Climate and Communications. (2024) Climate Action Plan 2024. Available at: https://www.gov.ie/en/publication/79659-climate-action-plan-2024/ (Accessed: 2 March 2025).

Freeman, R.E. et al. (2010) Stakeholder Theory : The State of the Art. Cambridge: Cambridge University Press.

Oireachtas, H. of the. (2024) Climate | Focus on the Carbon Tax – 26 Mar 2024, 15.00 – Houses of the Oireachtas. Available at: https://www.oireachtas.ie/en/press-centre/news-and-features/20240326-climate-focus-on-the-carbon-tax (Accessed: 4 March 2025).

Scott, W. (2005) ‘Institutional Theory: Contributing to a Theoretical Research Program’.