ESG regulations and the implementation thereof in Ireland is primarily governed by the European Union (“EU”) framework.
In 2018[1], the EU published its action plan on sustainable finance, with the aim of creating a roadmap across three categories:
Ensuring capital flows toward a more sustainable economy;
Integrating sustainability into risk management; and
Encouraging transparency.
As a result, the EU has now successfully implemented three significant regulations:
Climate Benchmarks Regulation (“CBR”)[2]: This aims to enhance the transparency and comparability of benchmark methodologies relating to ESG metrics, providing investors with clarity on the environmental sustainability of their investments;
Sustainable Finance Disclosure Regulation (“SFDR”)[3]: SFDR aims to re-orient capital flows towards sustainable investments by increasing transparency by financial market participants whilst ensuring that investors are protected; and
Taxonomy Regulation[4]: This establishes a coordinated taxonomy to classify financial products as sustainable at EU level.
In order to govern ESG regulation, there are a number of bodies, such as the European Commission and the European Banking Authority (please note, this is not an exhaustive list).
Overview of Current and Upcoming ESG Relation Regulation in the EU[5]
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