Richard Bruton (Dublin Bay North, Fine Gael)
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90. To ask the Minister for Finance the way in which the new EU environment taxonomy will impact on future regulation of the financial sector and projects put forward for funding under green bond funding. [17868/21]

Paschal Donohoe (Dublin Central, Fine Gael)
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In the past number of years, and in particular 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. This includes agreement on the Taxonomy Regulation in June 2020, which together with the Sustainable Finance Disclosure Regulation, will be the cornerstone of the EU’s sustainable finance regulatory architecture.

In particular, the application of the Taxonomy Regulation, which establishes a harmonised classification system for environmentally sustainable activities, will have 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, it can create security for investors and protect private investors from greenwashing. Additionally, it can assist companies in planning for the low-carbon transition.

The EU taxonomy will be an important driver in supporting implementation of the Green Deal, which will simultaneously support the development of the sustainable finance sector. As the Deputy will be aware, the Irish Government has long recognised the importance of sustainable finance as well as its associated opportunities. Reflecting this, sustainable finance is a horizontal priority within the Government’s strategy for the further development of the international financial services sector, ‘Ireland for Finance’. The strategy strives to make Ireland a true leader in the field of sustainable finance, in particular through further enhancing and deepening the base of expertise and activity in sustainable finance. It is important that the financial sector is prepared for the new regulatory regime, and in this vein, the Ireland for Finance Action Plan 2020 contained an action focussed on the development and delivery of educational programmes on sustainable finance, including on the EU taxonomy. Through Action 32: Deliver training programmes in sustainable finance and responsible investment supported by the Sustainable Finance Skillnet, Action Plan 2021 continues this focus on skills development.

Green bonds also play an increasingly important role in financing assets needed for the low-carbon transition. However, currently there is no uniform green bond standard within the EU. Establishing such a standard was a recommendation in the final report of the Commission High-Level Expert Group on sustainable finance. It was then included as an action in the 2018 Commission Action Plan on Financing Sustainable Growth. A legislative proposal is expected to be delivered later in 2021.