Dara Calleary (Mayo, Fianna Fail) | Oireachtas source

I thank the Senators for raising this matter. Senator Gavan has been in touch with me on it as it relates to a number of issues.

A proposal for a directive on corporate sustainability due diligence, CSDD, was published by the European Commission on 23 February and addresses corporate behaviour and due diligence processes for the companies within its scope. The proposal focuses on establishing a system within company law and corporate governance to address adverse human rights and environmental impacts arising from companies' own operations, their subsidiaries' operations and their chain of activities. The proposal will apply to companies across all sectors of the economy, including regulated financial undertakings in the financial sector.

I am aware of some media reports, and the concerns that have been expressed in this debate, that suggested that Ireland wanted the financial sector to be excluded. Ireland did not seek the exclusion of the financial sector from the proposal. However, during the discussions at EU working party meetings, a number of practical issues were raised about the inclusion within the directive's scope of financial products, namely, alternative investment funds and undertakings for collective investment in transferable securities. This contrasts with the approach taken in the sustainable finance disclosures regulation, SFDR, which covers financial market participants rather than financial products. In the interests of policy coherence and effective implementation, a similar approach has been sought in respect of the CSDD. These financial products are no longer within scope. However, a key point is that financial market participants remain within scope.

An issue was also raised regarding the applicability of the proposal to pension institutions operating national social security schemes, as their purpose in this instance is to carry out a primary social function rather than investment. The proposal now provides discretion to member states in this regard.

There has been a great deal of discussion of this proposal at EU working party level. While there were areas within the proposal where we would have welcomed more ambition, including value chains, in light of the negotiations that took place and in the spirit of compromise, I will participate in tomorrow's meeting to strengthen Ireland's position further and will table my concerns about the value chain proposals.