Thomas Pringle TD

Dáil Q: Fuel Divestment – how the NTMA can help tackle climate change

environment

QUESTION NO: 3

DÁIL QUESTION addressed to the Minister for Finance (Deputy Michael Noonan)
by Deputy Thomas Pringle
for WRITTEN ANSWER on 12/10/2016
To ask the Minister for Finance if he will support a recommendation to divest the Irish Strategic Investment Fund as an outcome of the mid-term review of the ISIF investment strategy this Autumn (details supplied); and if he will make a statement on the matter.

REPLY.
I am informed by the Ireland Strategic Investment Fund (ISIF) that its shareholdings in companies outside Ireland are held in the global portfolio. The global portfolio has been restructured and is being sold over time to fund Irish investment commitments as they arise, in keeping with ISIF’s mandate to invest on a commercial basis to support economic activity and employment in Ireland.

In terms of Fossil Fuel exposure, ISIF’s equity holdings in the Energy sector are valued at €11 million (0.14% of ISIF’s assets under management). ISIF is also invested in circa. €97 million of short term fixed income investments in energy corporations representing just over 1% of the ISIF’s assets.

Such investments should be considered in the context of ISIF’s Irish portfolio and its significant commitment to renewables. ISIF’s investment strategy is aligned with government policy and the State’s commitment to make the transition to a low carbon, climate resilient and sustainable economy. The strategy states that ISIF’s €800m energy allocation will include a significant element of renewables investment. To date such investment commitments include:

€44 million for the €500 million Dublin Waste to Energy project.
€35 million commitment to NTR’s onshore wind fund.
Investment in Bluebay SME credit fund which has made loans to Gaelectric and Mainstream, Irish headquartered renewable energy developers.
Being a cornerstone investor in the Irish Infrastructure Fund (IIF) which holds a number of Irish onshore wind assets, forestry, and a designer/manufacturer of high power density high efficiency power supplies.

As part of its on-going commitment to operate to high international standards ISIF has recently published its Sustainability and Responsible Investment Policy which is available online at:

http://www.isif.ie/wp-content/uploads/2016/07/SustainabilityandResponsibleInvestingPolicyJuly2016.pdf.

The Policy emphasises climate change as part of the integration of Environmental, Social and Governance (ESG) into its investment decision making.

Many major funds internationally have made significant divestments from fossil fuels such as coal, while other such funds have adopted an approach of engagement with energy companies to establish their strategy and positioning for the transition to a low carbon economy.  ISIF continually reviews its carbon exposure and the investment case for companies that may not be aligned with the long term transition to a low-carbon economy.

The National Treasury Management Agency (Amendment) Act 2014, which established ISIF on a statutory basis provides that ISIF shall review its investment strategy after 18 months of operation and that in reviewing its investment strategy shall consult with the Minister for Finance and the Minister for Public Expenditure and Reform, and that the Minister for Finance may consult with other Government Ministers, as appropriate. This review will be completed in Q4 2016 and the issues of decarbonisation and Ireland’s long term transition towards a low carbon economy are being considered as part of this process.

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