European Commissioner for Financial Stability, Financial Services and the Capital Markets Union Mairead McGuinness has described the package of new EU measures on sustainability as "ground-breaking".

The European Commission yesterday set out a long-awaited system to classify what kinds of economic activity and financial investments can be properly deemed as green.

As well as contributing to the EU's climate goals, officials claim the move will help the EU become a leading global player in "sustainable" finance, and that in turn could help the Irish financial services sector.

The new rules are designed to attract private investment towards any activity which will contribute to Europe's climate goals.

They aim to prevent "greenwashing", where firms overstate their green credentials as a selling point.

Speaking on Morning Ireland, Mairead McGuinness said the new measures will bring clarity for companies about what they need to report and also confirm what economic activities and investments are "green".

Companies will want to comply with the rules as it will secure their future in the EU or globally, Ms McGuinness added.

She said it about having to re-engineer the financial system and "in short to green finance in order to finance green."

"It is a very hard-edged practical approach to changing how our economy operates in order to address the climate challenge and this is our first target," she stated.

The new measures will bring transparency so investors will have information to make considered choices about where they want to invest their money, and companies will know what they need to do to be sustainable in the long term, according to the Commissioner.

"It is an issue discussed globally and these new rules moves it from fine words into action.We don't have time to waste in this matter," she added.

Ms McGuinness said the Commission will also look at other issues around bio-diversity.

She explained there is an obligation on large listed and unlisted companies to report on their impact on the climate.

Explaining the enormity of the transition, she said the biggest change will be to get capital markets to focus on those companies that are transitioning towards sustainability.

She said the EU work is to make sure the information is clear and usable and everyone knows "where we are heading."