Former director-general of the WHO and chair of the Brundtland Commission on sustainable development Dr Gro Harlem Brundtland opened this year’s Climate Finance Week conference with a clear statement about how we confront the challenges of climate change: “We are all in this together.”
That statement proved appropriate framing for Minister for Finance Paschal Donohoe as he launched Ireland’s Sustainable Finance Roadmap. The Roadmap sets out tangible actions to enhance Ireland’s sustainable finance environment. It will be a key enabler in mobilising much-needed investment. The Roadmap establishes a framework for accelerating the infrastructure to make Ireland a world-leading centre for sustainable finance. It is also a foundation for action in the financial services sector. And those actions require the public and private sectors to work together.
We played an integral role in the development of the Roadmap, supporting Sustainable Finance Ireland in its creation. We also consulted with stakeholders at Insurance Ireland, and in our client organisations.
What are the goals of the roadmap, and where do we go from here?
In July 2021, the European Commission published its renewed Strategy for Financing the Transition to a Sustainable Economy. This reaffirmed its commitment to channel finance towards the achievement of the Paris Agreement. This renewed strategy was an unprecedented step, with the goal of building the foundations for sustainable finance both at a national and European level. To achieve it requires significant investment across all financial sectors. Financing frameworks, both public and private, must support this policy direction.
Furthermore, the EU is developing building blocks for a sustainable financial system. This includes the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR), the Corporate Sustainability Reporting Directive (CSRD), and the European Green Bond Standard.
The reorientation of the financial system towards sustainability is only beginning. But it has a clear trajectory, with real opportunities for the countries, companies and communities that take the lead. The moment is right to take a quantum leap and prioritise this transition.
If the Roadmap is successfully implemented, by 2025 Ireland’s financial services sector should be:
The Roadmap comprises five strategic pillars containing a set of 18 specific priorities. These priorities have identifiable goals, responsible institutes and timetables for their achievement and establishment.
Pillar 1: Developing Talent
Build the knowledge and capability required to meet future workforce needs for sustainable finance skillsets
Pillar 2: Industry readiness
Development of best-in-class insights, tools, and mechanisms for leadership
Pillar 3: Leveraging Digital
Apply digital technology solutions to the ESG data and risk management challenges
Pillar 4: Enabling Environment
Leverage existing structures within the system to underpin the growth of sustainable finance
Pillar 5: Promotion and Communication
Raise awareness of Ireland‘s sustainable finance priorities, commitments and capabilities
Ireland’s first sustainable finance roadmap provides a basis for public and private collaboration to support the transition to net zero. It also aims to ensure the country takes a leadership position in sustainable finance globally.
The number one priority for the financial services sector is to establish credible, coherent plans to implement the commitments to net zero. There must also be governance and oversight from leadership in organisations to ensure those plans are carried through. Regulators will need to set a level playing field, and roll up late adopters. But climate action is not a regulator problem, and the solution should not be regulatory-led.
The Roadmap itself is just that: a roadmap, a vehicle to bring all of us together to accelerate the journey. What we need now is action. We need to begin with the articulation of climate commitments. We need to establish public and private initiatives to mobilise capital in the right directions. We need to support innovation that enables the transition to net zero, as well as solving problems including food and energy security. All those activities need to be adaptable and resilient.
We will see how this Roadmap comes to life, and we hope to see those climate change commitments turn to net zero actions as we look towards COP26 and beyond. The obligations for climate action do not fall only on the public sector and NGOs. But equally, they cannot be led by private enterprise and a system of capitalism alone. The signals of supply and demand will not solve the problems in front of us. Dr. Brundtland is right: we are all in this together, and we all need to get out of this together.
To read more about sustainability in financial services, click here.
