Richard Bruton
Question:95. Deputy Richard Bruton asked the Minister for Finance if he will indicate the plans for Ireland to adopt the European taxonomy in investment. [22784/24]
View answerTuesday, 21 May 2024
Questions (95)
Written answers
We are well aware that Ireland and the rest of the EU needs to substantially increase sustainable investment over the next decade. This investment cannot come solely from governments, private investors must crowd in and the taxonomy will encourage and guide investors to identify and channel money towards genuinely “green” investments.
As the Deputy knows, the EU taxonomy for sustainable activities is a harmonised classification system for environmentally sustainable economic activities. The Taxonomy has a significant role in supporting the mobilisation of capital towards sustainable investments through providing common definitions to companies, investors and policymakers on what constitutes an environmentally sustainable economic activity. Large companies and financial services providers report on their portfolios’ alignment with the Taxonomy.
This Taxonomy is based on six EU environmental objectives. For an economic activity to be considered Taxonomy-aligned, it must make a substantial contribution to at least one of these objectives, and do no significant harm to the others, in addition to complying with regulatory technical standards and minimum safeguards. The objectives are:
• Climate change mitigation;
• Climate change adaptation;
• Sustainable use and protection of water and marine resources;
• Transition to a circular economy, waste prevention and recycling;
• Pollution prevention and control;
• Protection and restoration of biodiversity and ecosystems.
The Taxonomy Regulation entered into force on 12 July 2020. Under the Taxonomy Regulation, the Commission devised a list of environmentally sustainable activities by defining technical screening criteria for each environmental objective through delegated and implementing acts.
The Delegated Acts covering climate adaption and mitigation including nuclear and natural gas investments have been agreed and are in place with company reporting having commenced. A further Delegated Act on the four remaining environmental goals (circular economy, biodiversity, water/marine and pollution) was adopted in June 2023, applying as of January 2024.
This week, the Commission is expected to give a positive assessment of Ireland’s modified recovery and resilience plan, which includes a REPowerEU chapter. The plan is now worth €1.15 billion (in grants) and covers 11 reforms and 19 investments. The Commission is also expected to endorse Ireland’s first payment request for €324 million under the Recovery and Resilience Facility.
The Recovery and Resilience Facility Regulation includes important substantive conditions from the EU Taxonomy for Sustainable Finance in its climate tracking methodology as it incorporates technical screening criteria for certain intervention fields and associated coefficients.
Ireland’s modified plan has a strong focus on the green transition, allocating 50.2% of funds to support climate objectives.
The Taxonomy’s effect on investment is primarily by encouraging investors and consumers to make more sustainable decisions through science-based definitions of sustainability and with transparent reporting and disclosures of sustainability impacts and risks. It allows investors to confidently invest in both projects and/or companies that have a substantial positive environmentally sustainable impact.