The National Sustainable Finance Roadmap: Charting the course to sustainability in the finance sector

We are feeling the heat. Record temperatures are being recorded across the globe with heatwaves sweeping the UK and mainland Europe. It goes without saying that should such extreme weather anomalies become more frequent, we could see our economies, our ecologies and our societies collapse under the weight of the challenge.

The IPCC presented the findings of its third and final contribution to the ‘Sixth Assessment Report on Climate Change’ in April and set out in no uncertain terms the scale of effort required on an international basis to curb runaway global warming. The warning from UN General Secretary António Guterres was stark, “we are on a fast track to climate disaster.”

The same report stated however, that with intensive action and global cooperation, runaway climate change can be brought to heel. Amongst its prescriptions for transport, agriculture, construction, etc., the report highlighted the critical role that the finance sector can play in this regard.

Ireland’s Sustainable Finance Roadmap

Launched by Minister Donohoe, T.D. during Climate Finance Week Ireland 2021, the national ‘Sustainable Finance Roadmap’ was designed as a pathway through which the Irish-located finance industry can meet the challenges climate change presents while maximising the opportunities that the transition to a net zero future creates.

Developed in conjunction with the Department of Finance, UNDP FC4S, as well as other stakeholders, as a priority measure under the Government strategy for International Financial Services, ‘Ireland for Finance’, the roadmap was designed to allow industry to capitalise on the opportunities, for instance in the area of fintech that climate finance presents, as well as providing support and direction for stakeholders on how best to approach climate finance.

The necessity for a concrete strategy to reduce carbon emissions has not been lost on the Irish finance industry, which is embracing the sustainable agenda in growing numbers.

Developing Talent

The Sustainable Finance Roadmap offers real and tangible solutions and with the buy-in of industry, is already achieving results.

The first Pillar of the roadmap centres around the development of talent, that is building the knowledge and capability required to meet future workforce needs.

A key driver of this aim is the ever-growing suite of sustainability-related courses which are being developed by the Sustainable Finance Skillnet with the participation of industry.

Supported by Skillnet Ireland, over the past two years, the Sustainable Finance Skillnet has commissioned the development of new courseware and promoted courses aimed at addressing the talent gap in sustainable finance and aiding finance professionals in their efforts to upskill, with input from industry. To date, over 3,000 Irish-located finance professionals have benefitted from Sustainable Finance Skillnet support.

Further details regarding a new, world-first, Professional Diploma in Sustainable Finance for Compliance Professionals, were announced at the start of this month, with several more new and innovative courses to follow throughout the year.

Speaking at a Sustainable Finance Roadmap update meeting in May, United Nations Development Project Sustainable Finance Hub Director, Marcos Neto, stated that Ireland is, “the only country in the world, that has a country-wide skills programme on Sustainable Finance.”

“Europe is ahead of the game and perhaps Ireland is ahead of the game within Europe. To see the Irish talent development agenda recognised in such a way speaks to the progress being made in the area.” – Marcos Neto

Task Force on Climate-related Financial Disclosures (TCFD)

June saw members of the Irish-located financial community and large corporates gather for the final session of the Irish TCFD campaign, which was launched by Mark Carney and Minister Donohoe during Climate Finance Week 2020. Working to build capacity among the 35 campaign members, the campaign is aligned with Roadmap ‘Action 4’, to build capacity and ensure best practice in reporting and disclosure.

The event which was attended by Minister of State at the Department of Finance, Sean Fleming, T.D. highlighted the importance of industry cooperation when it comes to formulating a collective response to sustainability demands.

Keynote Speaker and TCFD and Climate Risk Program Lead for the United Nations Environment Programme Finance Initiative (UNEP-FI) David Carlin said the event marked a “tremendous foundation” upon which Irish industry can develop strategies and responses to their mounting obligations when it comes to reporting around climate and nature related issues.

“TCFD offers this comprehensive framework for thinking about the governance strategy, risk management and metrics and targets that organizations are going to set in order to approach climate change, both the physical as well as transition risks,” he said, “and with this information, institutions can be better prepared internally.” – David Carlin

Development of the Sustainable Fintech Strategy

The growth of Ireland’s Fintech industry continues apace and with it comes the need to explore the connectivity with the growth in sustainable finance.

This is in keeping with ‘Action 10’ of the Sustainable Finance Roadmap – Developing a Sustainable Finance Fintech strategy and is being co delivered with the Fintech and Payments Association of Ireland (FPAI) and supported by PWC with input from stakeholders across the banking and fintech sectors.
The first meeting of the Sustainable Finance Fintech Strategy steering committee took place in June with the participation of Aiaze Mitha, Digital Ambassador, UNDP.

It is anticipated that the Fintech strategy will be published during Climate Finance Week Ireland 2022 in October.

Enabling Environment

Sustainable Finance Ireland was named as an Observer to the newly established Climate Risk and Sustainable Finance Forum, hosted by the Central Bank of Ireland last month.

The forum was established so as to develop a shared approach to the understanding and management of the risks and opportunities posed by climate change to the financial system, and falls in line with Pillar 4 of the Sustainable Finance Roadmap which deals with enabling an environment to underpin the growth of sustainable finance.

Its membership comprises members of the Irish-located financial community as well as climate change experts, representative bodies and representatives from the Central Bank.

The Forum will meet bi-annually with minutes of each meeting to be published within four weeks of the meeting taking place.

Deputy Governor of the Central Bank, Sharon Donnery said, “This initiative provides a unique opportunity for the Central Bank, industry, climate change experts, and other stakeholders to share their expertise and insights on how we can build a common approach to address climate risks in the financial system.”

“This is the responsibility of everyone in the financial system and we are strongly committed to furthering this very important work.” – Sharon Donnery

Separately, the Central Bank also published its inaugural Sustainable Investment Charter last month.
The Charter was developed by the Central Bank as the latest in a series of measures to embed climate change and sustainability considerations into its own operations.

The Road to Climate Finance Week Ireland 2022

Climate Finance Week Ireland 2022 will mark a full year of the Sustainable Finance Roadmap in action.
This year’s event, in addition to attracting thought leaders and stakeholders from across the globe to promote and discuss developments in the sustainable finance agenda, will also see the delivery of one of Sustainable Finance Ireland’s foundational goals, the international Sustainable Finance Centre of Excellence.

The Centre of Excellence will partner with the United Nations Development Programme (UNDP) hosted Financial Centres for Sustainability network (FC4S) network and will focus on the practical acceleration of the sustainable finance agenda at a policy, regulatory and market level.

With sustainable finance activity surging globally, the centre will lead on research and development activities aimed at supporting the design, development and launch of innovative financial mechanisms and will provide a true and permanent home to sustainable finance in Ireland.