ISFCOE’s Sustainable Finance Research Outputs 2023-24: What to read now and what is coming up.

Reflecting on the 2023 research year at ISFCOE:

The International Sustainable Finance Centre of Excellence (ISFCOE) is a key player in promoting sustainable finance nationally and globally. As part of the national Sustainable Finance Roadmap, it is supported by the Department of Finance, Skillnet Ireland, and the United Nations Development Programme. Through its initiatives in world-leading research, training, and events like Climate Finance Week, ISFCOE engages with stakeholders to provide updated insights on gaps, challenges, and opportunities in sustainable finance. In 2023, the focus was on research activities to support Ireland's goal of becoming a Sustainable Finance Centre by 2025, with key contributions shaping the research portfolio. As more of these are now ready to be published we have written this guide to show what you can expect to read now and over the next few months here at ISFCOE

1.????? Sustainable Finance Skills Deep Dive Study 2023:

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This report is a comprehensive deep-dive study, assessing the impact, uptake, and effectiveness of sustainable finance skills training in Ireland over the last three years (2020-2022). It also aims to highlight existing skills and knowledge gaps and hence how training needs should evolve over the coming years. An overarching focus was on how to support the industry in addressing these challenges, in turn, unlocking the potential for Ireland to position itself as a leader in sustainable finance.

The report was released in November 2023 and among the key findings in the report are that 44% of finance professionals in Ireland feel they are “beginners” on the subject of sustainable finance, including 77% of those working specifically in banking and 84% of insurance professionals. Only 37% of respondents thought they had all the sustainable finance skills and knowledge to carry out their current role most effectively.

With the support of Skillnet Ireland, ISFCOE has trained over 3,000 Irish finance professionals so far, and we are going to build on that number in the years ahead. Ireland is already ahead of other countries in sustainable finance, but we need to stay ahead and to do that we need to increase the skill level of our finance professionals, especially in areas such as biodiversity.

This research highlights critical gaps in the skill levels of Irish finance professionals. The data reveals both substantial skills gaps and a notable demand for training in these areas. Additionally, there is a keen interest in targeted courses tailored to specific career paths within financial services.

Please read the full report, here, https://isfcoe.org/publications/ .

2.????? The Nature of Finance:

Nature faces significant threats globally and in Ireland, with critical indicators showing alarming trends. The decline of nature poses risks to human well-being and, as acknowledged by the European Central Bank, is also existential for the economy. The financial sector is increasingly addressing climate change, integrating climate risk assessments into decision-making. Recently, nature has gained attention in the financial sector, spurred by studies from central banks and initiatives like Business for Nature and Finance for Biodiversity. This report is the first independent assessment of nature-related risks and opportunities for Ireland's financial sector. It aims to raise awareness of the sector's impact on and dependence on nature, encouraging further research on the associated risks and opportunities for Ireland's financial services and economy.

The study is comprised of four main elements:

a)????? Assessment of nature-related risks and opportunities for national lending portfolios

b)???? Assessment of nature-related risks and opportunities for insurance written in Ireland

c)????? Exploration of forward-looking nature scenarios and what they could mean for Ireland’s financial sector

d)???? A proposed Nature Finance Roadmap for Ireland and recommendations to guide future work on this topic.

As a next step, we intend to set up a dedicated working group to guide future efforts in the Nature finance space in Ireland.

Read the full report, here: https://isfcoe.org/wp-content/uploads/2023/12/KPMG-ISFCOE-Dec-23-Final-Ebook-3-MASTER-v3.pdf.

3.????? Sustainable Finance Legal and Regulatory Study:

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The Sustainable Finance Legal and Regulatory study was commissioned by the ISFCOE to assist in the update of the National Sustainable Finance Roadmap (the "Roadmap")[1].? The outcomes of this study are critical inputs to the updated Roadmap, due to be launched in March 2024.? This study was undertaken to assess and build an updated legal and regulatory landscape report and present progress on the previously produced report titled "Ireland as a Global Centre of Excellence for Sustainable Finance – Legal and Regulatory Report 2021” (the "2021 Report")[2].??

The report assesses the legal and regulatory aspects of sustainable finance in Ireland, exploring opportunities and challenges. It emphasizes the need for a holistic, cross-governmental approach to efficiently implement EU-level initiatives. The importance of Irish representation in international forums is highlighted for influencing and shaping the sustainable finance agenda, ensuring leadership in legal and policy initiatives.

This report will be released in the second quarter of the year 2024.

4.????? ISFCOE Net Zero Study 2023: Towards a Sustainable Financial Future in Ireland: Assessing the Gaps, Risks, and Potential in the Transition to Net Zero

Amidst escalating environmental and economic challenges, climate change impacts both natural habitats and global financial systems. Many financial sector companies, alongside governments and organizations, commit to achieving net-zero Greenhouse Gas emissions by 2050. This means minimizing emissions and reabsorbing any remaining from the atmosphere. Meeting these commitments is crucial to limit global warming in line with the Paris Agreement's 1.5-degree target. Achieving net zero requires a fundamental shift toward a greener financial sector, necessitating transformations in business strategy, products, services, investment decision-making, risk management, and operations.

This study conducts a gap analysis on the readiness, risks, and opportunities faced by the Irish financial services sector in transitioning to a net-zero future. The analysis identifies challenges and opportunities related to regulatory, reputational, economic, and technological aspects of the transition. The findings, derived from primary research and presented in structured tables, offer insights to navigate these areas. Recommendations are provided to align the sector with net-zero goals, fostering sustainable growth and operational resilience.This report will be released in the first quarter of the year 2024.

Coming soon – to be notified when it is published and gain early access to insights please sign up for our newsletter here

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5.????? ISFCOE Reporting and Disclosure Study 2023 Charting the Course: Insights into Ireland’s Sustainable Finance, ESG Reporting and Disclosure Landscape

In an ESG-driven world, the financial sector faces a transformative moment, influencing sustainable practices through investments and corporate behaviors. Reporting standards and regulatory frameworks shape this influence, particularly in sustainability reporting. This study explores the sustainability reporting landscape with a focus on the European Union, global standards, and the Irish context. It aims to enhance Irish financial institutions' understanding and preparedness for evolving ESG reporting requirements, evaluating current practices and providing guidance for accurate, complete, and efficient reporting. Key recommendations include refining data, aligning with international standards, integrating sustainability into risk management, and optimizing resource allocation.

This report will be released in the second quarter of the year 2024.

To be notified when it is published and gain early access to insights please sign up for our newsletter here

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6.????? Market Study 2023:

This market study provides a comprehensive overview of the Irish sustainable finance market, covering sustainability themes, recent regulatory developments, and key emerging topics like biodiversity, gender lens investing, and net-zero commitments. As the second annual report following the 2022 publication in 2023[3], this study aims to be a recurring output, annually reviewing progress and results. The accompanying dashboard on the ISFCOE website will offer ready access to indicators tracking Ireland's advancement as a sustainable finance center. The dashboard, linked to the study, will utilize a common set of indicators, including metrics from public domain sources and an annual survey gathering insights from the financial services industry. Regular updates are anticipated.

This report will be released in the second quarter of the year 2024.

To be notified when it is published and gain early access to insights please sign up for our newsletter here

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7.????? Credit Union ESG Skills Report 2024:

The Credit Union, operating on a people-first approach, plays a unique role in Ireland's financial services sector. As a community-run, not-for-profit entity, its mission is to serve the financial and social needs of local communities for mutual benefit. Guided by pillars like Members First and Financial Inclusion, Credit Unions provide affordable financing, promote investment, contribute to charitable causes, and prioritize financial inclusion. With limited competition, they offer a crucial alternative, ensuring fair lending rates. Amidst income inequality and a lack of financial sector competition, Credit Unions become a vital source of credit for businesses, supporting local economies. This report focuses on assessing Irish Credit Unions' readiness for ESG requirements, analyzing knowledge and skills, and aiming to support them in navigating challenges and seizing opportunities in the sustainable finance agenda.

This report will be released in the second quarter of the year 2024.

Upcoming New Research Pieces:

In 2024, ISFCOE seeks to undertake research activities that are designed to advance Ireland’s goal to be a Sustainable Finance Centre by 2025. These research pieces are both an extension of the ongoing research as well as new research ideas. The increasing need for sustainable finance to underpin the rapid transition to sustainability will have a deep, transformative, and lasting impact on how financial and capital markets work. This will therefore focus on advancing training, developing talents, focusing its resources and capacities in support of this transformation, building communities of practice, and bringing in innovation to advance sustainable finance in Ireland and to accelerate the mobilization of capital in support of a net zero, nature positive and just economic transition.

1. Implementing the Nature Finance Roadmap:

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The recently released report by the Centre on Nature of Finance proposed a Nature Finance

Roadmap to position Ireland as a leader on the nature finance agenda. The Roadmap is built around

five pillars to: Develop talent; Improve industry readiness; Leverage digital and data; Create a

nature-positive enabling environment; and Enhance communications and engagements on nature and finance risks and opportunities. As a next step, we would like to put forward the nuances of the roadmap in an implementation framework and work with the stakeholder network to implement the five elements. This study has also presented us with an opportunity to bring together an industry working group and network to engage businesses in addressing their direct and indirect impacts, dependencies, and opportunities for nature-positive actions.

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2. Developing a Sustainable Finance Data Roadmap for Ireland:

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The research aims to create a data roadmap for sustainable finance in Ireland, guiding the integration of data-driven strategies to promote sustainability in financial practices. This roadmap outlines steps and milestones crucial for collecting, analyzing, and leveraging data to inform decisions, support positive social, environmental, and financial outcomes. With a focus on environmental, social, and governance (ESG) factors, the roadmap addresses the need for a dedicated approach to building a knowledge hub and a dashboard for the upcoming Market Study. The proposed data roadmap includes establishing objectives, identifying stakeholders, standardizing data collection, improving reporting requirements, ensuring data quality, fostering collaboration, providing education and training, regulatory support, and promoting transparency and evaluation. A well-structured data roadmap can empower Ireland's financial sector to address global sustainability challenges and contribute to building a more sustainable and responsible financial system, requiring collaborative efforts from various stakeholders for success.

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3. Transition Planning for the Financial Sector in Ireland:

This study aims to design a plan for credible corporate climate transition plans aligned with the Paris Agreement's temperature goal and the net-zero commitment. Intending to combat the risk of greenwashing in transition finance, the plan, informed by extensive stakeholder consultations and an industry survey, will offer a comprehensive overview of existing transition finance approaches. Recognizing the critical role of financial institutions in achieving a carbon-neutral economy, the study emphasizes the strategic and dynamic nature of transition planning. It provides internally and externally relevant information, serving as a disclosure of a firm's competitive positioning, opportunities, and strategic risks. The forward-looking perspective of transition plans, coupled with external uncertainties, necessitates a dedicated study to guide firms in achieving a smooth transition to sustainable finance in Ireland. The study will particularly focus on activating alignment within the context of financial stability, the integration of risk management with transition finance, and the regulatory landscape for transition.

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4. Understanding Social, Gender and Inclusive Finance through the Lens of Sustainability

This study aims to understand and address challenges and opportunities in social, gender, and inclusive finance initiatives in Ireland. Social and inclusive finance, also known as impact or ethical finance, seeks to address social and environmental challenges while promoting financial inclusion and responsible investment. The financial services industry plays a role in catalyzing gender equality. Financial inclusion alone doesn't ensure gender equality; it requires equal access to a full range of financial services and accompanying education. The UNDP's Financial Centres for Sustainability Network launched a Gender Finance Charter, providing an opportunity to study and implement elements of the Charter in Ireland[4]. Key research points include gender lens investing, social impact investing, diverse leadership, microfinance, microcredit, and leveraging technological innovations to bridge the financial inclusion gap.

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5. Dashboard and Knowledge Hub Update:

The sustainable finance sector is ever-evolving, especially from the policy, regulatory, and market landscape perspective.? We have ongoing efforts to keep the market research updated and the knowledge hub (legal, policy, regulatory, market), in absolute alignment with the changing scenarios. The purpose of this research activity is to continue updating the dashboard and the knowledge hub on the ISFCOE website. The knowledge hub and the dashboard will form a critical knowledge resource for the stakeholders’ learning and development needs.

[1] https://www.sustainablefinance.ie/sf-roadmap/

[2] Available at https://sfskillnet.sustainablefinance.ie/wp-content/uploads/2022/11/Regulatory-Study_Final.pdf

[3] https://isfcoe.org/sustainable-finance-market-report/

[4] https://fc4s.org/3425/