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Economic Policy

Dáil Éireann Debate, Thursday - 26 November 2020

Thursday, 26 November 2020

Questions (81)

Alan Farrell

Question:

81. Deputy Alan Farrell asked the Minister for Finance the status of measures being taken to encourage more companies to adopt recommendations made by the task force on climate-related financial disclosures; and if he will make a statement on the matter. [38073/20]

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Written answers

With Government backing since 2012, Ireland has long recognised the importance of sustainable finance for increasing economic activity, employment creation and ensuring that the necessary environmental safeguards area developed and implemented in Ireland and globally.

As a result, we have been strongly supportive of sustainable finance initiatives at EU and wider international levels. Following the launch of the European Commission’s Action Plan on Financing Sustainable Growth in March 2018, we have witnessed significant progress at EU level in the area of sustainable finance, with Ireland engaging constructively on the related legislative proposals. For example, I was delighted that Ireland was amongst a handful of locations to host a virtual workshop during the summer on the EU Renewed Strategy for Sustainable Financial Services with leading Irish companies, academics and EU Commission officials.

Progress on the Taxonomy Regulation and the Disclosures Regulation, which aims to remove barriers to advancing sustainable goals, will be the cornerstone of the EU’s sustainable finance regulatory architecture and this represents a significant step in ensuring that the EU and Ireland will be key players in sustainable finance in the years ahead. For example, the new Disclosure Framework, which is to apply from March of 2021, will provide greater transparency and enable end-investors to compare different financial products in terms of their environmental impact. The application of the Taxonomy Regulation in particular, which will establish a harmonised classification system for environmentally sustainable activities, is essential in this regard.

However, there are also important pieces of the jigsaw yet to be completed and these will be essential to achieve maximum value from the new sustainable finance regime. In particular, the lack of reliable and agreed climate-related and environmental data is currently a key challenge for financial market participants, as the availability of, and accessibility to, high quality and reliable ESG (Environmental and Social Governance) data remains a prerequisite for enabling investors to make well informed and sustainability informed decisions.

The recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD), which seeks to develop consistent climate-related risk disclosures for use by companies, are very important in this regard, representing best practice for companies, opening up access to more sustainable pools of growth capital, meanwhile addressing the needs of investors for greater transparency. The Government welcomes the adoption of the TCFD by those corporates who are already engaged with the taskforce and it is actively encouraging greater take up as more Irish firms look to accelerate and scale their own climate transition plans. For example, Action 29 of the Ireland for Finance Action Plan 2020, Sustainable Finance Skillnet supports the development of several sub-sector focused sustainable finance skills development programmes across banking, insurance and asset management by building a suite of programmes focused on a number of aspects including TCFD disclosure. It is expected that the upcoming Ireland for Finance Action Plan 2021 will build upon this further.

Similarly, we are very supportive of the work of the European Commission through the ongoing revision of the Non-Financial Reporting Directive, which also seeks to address issues in relation to ESG data reporting.

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