With an increase in allocation to ESG products, Ireland is becoming a leader in sustainable finance
The European Commission’s Green Deal is striving to make Europe the world’s first climate neutral continent by 2050. To make this ambition a reality, the European Commission’s Action Plan on Sustainable Finance is redirecting EUR one trillion of capital flow to sustainable investments and green portfolios. The strategic framework encourages both public and private funding to create a sustainable economy. As Europe’s second-largest hub for funds and investment management, and a leader in sustainable finance, Ireland plays a pivotal role in achieving this target.
Peter Stapleton, Head of the Funds and Investment Management practice at Maples and Calder (Ireland) LLP, the Maples Group’s law firm, stated, “Ireland plays a key role in this space, as the country provides services to over EUR five trillion in investment fund assets. The EU has taken a global lead in seeking to become the first climate neutral economy by 2050 and, as a result, one of the biggest areas of focus of our clients is sustainable finance. It is estimated that the EU will need EUR 350 billion of capital investment on an annual basis over the next decade to meet its 2050 target. Individual member states and public capital will not be enough, and so the EU plans are designed to encourage private investment with the financial sector needing to play its part. As a result, we are seeing many of our leading clients creating innovative solutions for their investors and driving large funds into sustainable finance. These projects will ultimately have a positive impact on the environment. They also create a unique opportunity for Ireland, as the jurisdiction is already the second-largest funds domicile in Europe and one of the largest in the world. Ireland has a world-class infrastructure, subject-matter experts in this field, and a rapidly developing skills base to service these funds.”
Ireland is already at the forefront of bringing innovative financial products to the market and is mobilizing the financial sector to create new methods to analyze sustainability ratings, establish screening criteria to measure the degree of environmental impact on investments, and evaluate corporate Environmental, Social, and Governance (ESG) disclosures.
As the path to becoming the world’s first climate neutral economy requires a multitude of passageways, an intersection of industries, and contributions from all parts of society, Irish public and private sector leaders are working together to create green financial solutions.
Stapleton mentioned, “At the Maples Group, we have worked very closely with industry bodies, such as Irish Funds, the Irish Government, and the Central Bank of Ireland to foster a world-class environment for those entities to enhance the country’s sustainable finance regime.”
The Maples Group is one of the leading legal advisers and service providers to the Irish funds industry, and its law firm has advised more Irish-serviced funds by volume than any other firm in Ireland for the past eight years running.
Stapleton continued, “Ireland’s market access to the EU, business-friendly legal framework, highly educated talent pool, and distinct position as the only English-speaking common law jurisdiction in the Eurozone, confirms its ideal location for the industry to continue to grow. We have seen a great evolution of the funds industry, and the number of management companies in Ireland has increased exponentially over the last several years. In addition, the newly amended Investment Limited Partnership legislation in Ireland is a strong, positive example of how Ireland is now uniquely positioned to compete at an international level. The enhanced framework strikes the right balance between regulation and flexibility and will play a significant role in raising private capital to meet sustainable investment targets. We hope to further develop as a hub for innovation, digitalization of the global economy, and as a leader in sustainable finance.”