Speech by the Minister for Finance and President of the Eurogroup, Paschal Donohoe, to the Dublin Climate Summit

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Good afternoon. I am delighted to be speaking at the Second Dublin Climate Summit.

You heard earlier from the Taoiseach, who has set out the scale and scope of the challenges posed by climate change, and the urgent need for all actors to work together to ensure that we rise to meet them.

The challenges are all too clear, but there are also opportunities – opportunities for businesses to grow through being part of the net-zero transition, and for the financial services sector to finance it.

Early movers will be best placed to be competitive in our more sustainable economy, and non-adopters risk being left behind.

At home and abroad, the Environmental, Social and Governance market is developing quickly, and the regulatory framework is evolving to keep pace. This is essential to reduce the risk of greenwashing and to promote consistent and high-quality information for investors.

This is not just a matter for niche investors. These matters are increasingly relevant for all banks, market intermediaries, insurance and pension funds, for stock exchanges, debt markets, ratings agencies, and of course, for regulators.

I as the Minister for Finance have 2 key priorities for sustainable finance: to stimulate climate-friendly investment, and to help ensure it is done properly and in line with the principles we have agreed in the EU and internationally.

On stimulating climate-friendly investment, the government has set out our pathway to a more sustainable economy in the 2021 Climate Action Plan.

This sets out where we want to go in sectors such as electricity, transport, buildings, industry, and agriculture, among other areas. It clearly signals what types of investments are needed and where they are needed. We already understand why they are needed.

Some of the technologies are available, and it is a question of how to deploy and scale them. We also need to help support research into new and innovative solutions.

It is also the government’s role to put in place standards that ensure the quality and the transparency of sustainable investments.

We, as legislators, recognise that it can be challenging for firms to adapt their compliance systems to new regulatory standards, so it is also a priority for us to steer and appropriately support the standards that are set.

I will now outline some of those standards and why they are important.

There is a clear value, when it comes to financial services regulation and when it comes to combatting damaging climate change, to act together at the European level, so that firms operating across the EU can apply the same rules.

This is why Ireland supports the EU Taxonomy for sustainable activities, our common system for what economic activities are environmentally sustainable.

Some conditions are already in place under the Taxonomy, and over the coming years, this will be further developed to cover more environmental goals and economic sectors, and will be regularly updated to ensure it stays aligned with science-based targets and requirements as new technologies develop and emerge.

Having these agreed definitions of what is sustainable will give clarity and security against greenwashing for investors, and will guide and direct confident and, as is intended, increased sustainable investing by States, enterprises and households.

We are also working on a European green bond standard. Through a high degree of Taxonomy-alignment and a common review system, sovereigns and corporates should be placed in a position to use this as a gold standard for sustainable green debt issuance.

The Sustainable Finance Disclosures Regulation is a key piece of legislation to embed sustainability awareness into financial services. It is only right that investors should know about the sustainability risks and impacts they are having, and it will help us to make more informed choices.

I am well aware that firms having to move quickly to put their systems in place to comply with these 2 regulations.

I do encourage you to examine closely the guidance available from the European Commission and to seek further information from the relevant regulators where you need it.

In addition, the Government of Ireland has provided strong and ongoing supports to Skillnet Ireland and its Sustainable Finance Skillnet to provide much needed and market-led appropriate training in these areas.

Building the skills and capacity of Ireland’s financial services sector is a top priority under both the Ireland for Finance Strategy and our national Sustainable Finance Roadmap.

Of course, transparency for non-financial sustainability matters is also vital for governments and citizens to understand the impacts companies are having, and their sustainability trajectories.

For that reason, I welcome the work ongoing on the proposed Corporate Sustainability Reporting Directive to update and clarify non-financial reporting rules, and to bring more companies into scope.

There is clear value in having transparent information about companies’ impacts on society and the environment, and seeing how different companies compare. Many are already reporting on these matters in detail.

Given the interconnectedness of economies and global nature of enterprise, the Directive will play an important role in addressing risks posed by climate change to financial systems and in channelling future investments and consumption towards companies that have a clear sustainability focus.

Through the Taxonomy and legislation on disclosures and reporting, we are putting transparency and investor protection at the heart of our progress to a greener, more sustainable economy.

We are setting clear, consistent and ambitious standards from the outset. We are ensuring the EU can position itself as the global leader in this field, and can gain the trust of civil society that it is serious about urgently tackling climate change.

I mentioned earlier that there are challenges to collecting this information and complying with the reporting requirements.

In addition to staff upskilling, we are looking to data and fintech solutions to support companies in developing and reporting sustainability information.

Advancements in science and technology, including artificial intelligence, allow us to better collect and analyse climate data.

Large-scale datasets are being scaled down to the local and asset levels to enable firms to make more effective decisions. Historical data is being used to build predictive models for short, medium, and long term climate risks.

We are working with our EU counterparts to establish a European Single Access Point by 2024 – to provide EU-wide access, in an efficient and non-discriminatory manner, to information which is relevant to capital markets, financial services and sustainable finance.

Its aims include:

• further integrating the financial services and capital markets in the single market
• supporting the efficient allocation of, and access to, capital, and
• through providing visibility, promoting the development of smaller markets

This will further drive the growth of climate data, and the important transparency it can bring for investors at the heart of decision making, investment, and growth.

Data is the enabler of the change we need, but merely having the data at our disposal is not enough, it is how we use it.

FinTech and the use of technology to assist in meeting our climate and environmental objectives are shaping the financial sector.

As the Minister for Finance, these issues are of strategic importance for my department and for the future development of our economy.

Both FinTech and sustainable finance are themes in the Ireland for Finance Action Plan for 2022, launched by my colleague the Minister of State Seán Fleming, and these subjects were a central focus of February’s virtual European Financial Forum.

With the strategy at its midpoint, we are working on a thematic update, to take account of the acceleration of developments in these trends such since its launch in 2019.

The Ireland for Finance strategy recognises that Ireland is uniquely positioned to benefit from the massive global investment in fintech and disruptive technologies.

This is due in part to our excellent track record in attracting FDI, our entrepreneurial culture, and our unique cluster of international financial and technology firms.

My department works closely across Government and with industry and other key stakeholders to make the most of FinTech opportunities, including through the FinTech Steering Group.

And, under the Sustainable Finance Roadmap, a sustainable finance fintech strategy is being developed for Ireland, so that we can recognise the links between the 2 themes and promote their development in synergy.

Business-as-usual is no longer enough; we must make fundamental changes to how we do business, and how we live our lives.

Governments have a clear leadership role here – to show ambition in the carbon-reduction and sustainable development targets we set ourselves.

We also have the responsibility to guide and support businesses and societies to change and adapt, in order to realise our low carbon transition.

This includes public investments, as well as the standards I mentioned earlier on security and transparency for investors, and facilitating data collection and analysis.

But businesses, and the financial services industry, also can and should show leadership and take on responsibility.

Leadership to develop and invest in the technologies to accelerate our transition.

Responsibility to declare environmental impacts and commit to improving them and to financing that improvement for others.

Now is the time to layer climate risk into strategic decision-making about supply chains, investments, and sustainable growth for the future.

These are issues that are impacting Ireland, the EU and the world and I believe that events such as today’s are vital in maximising opportunities, knowledge sharing, and addressing any challenges that arise.

Thank you for listening.