Heather Humphreys (Cavan-Monaghan, Fine Gael) | Oireachtas source

I will discuss amendments Nos. 13 to 15, inclusive, together but propose different approaches to them. I do not propose to accept amendment No. 13. I note this section provides for the establishment of investment funds with various levels of risk into which participants' contributions will be placed. Each of these investment funds will have environmental, social and governance, ESG, principles embedded into their design. In that context, it can be said that each of the fund offerings under the Bill is in fact an ethical fund.

Section 74 sets out the investment rules that will be applicable to contracted service providers. This section ensures that ESG considerations will be taken into account when the investment management providers invest participants' savings.

In addition, section 75 provides that the obligations of the State, under international agreements on environmental, sustainability and climate change must be taken into account in the framing of the investment management contracts. The State's obligations with regard to relevant international agreements, although not needing to be specified in the Bill, include the sustainable finance disclosure regulations, the UN Global Compact and Paris Agreement, which guide the international community on matters such as carbon emissions and investment in unethical assets. The inclusion of these measures ensures that ESG concerns are well represented in the AE system. The inclusion of an additional and highly specific fund would add to the cost of the system which would be borne by the participants. This is because the system is based on a default approach whereby the inertia of participants will mean that almost all of those enrolled will not make an active decision in respect of the investment of their contributions. Evidence in the UK has shown that 99% of those places in nest funds remained in default funds despite a range of alternative options being made available.

Finally, I note that there is not agreed understanding or definition of an ethical fund. Most work in this area, at an international level, has concentrated on a range of environmental, social and governance factors that influence where and how investment occurs with a view to a more positive outcome that might otherwise be achieved if these factors were ignored in favour of pure monetary outcomes. I reiterate that there is no universally agreed definition of the term.

I do not propose to accept amendments Nos. 14 and 15 at this time. However, I believe they merit further consideration. On that basis, I will refer them to the Office of the Parliamentary Counsel to see how they could be accommodated as amendments on Report Stage. Amendment No. 13 differs slightly.

I hope the Deputies will accept the need to do so and will take it that Deputy Ó Cathasaigh's amendments will be revisited on Report Stage.

The two amendments are slightly different. I know they are grouped but amendments Nos 14 and 15 are slightly different. I believe amendment No. 13 would add considerable cost to it.