Jack Chambers (Dublin West, Fianna Fail) | Oireachtas source

The Minister of State, Deputy Carroll MacNeill, and I have listened with interest to the contributions from Deputies on the Private Members' Bill put forward by Sinn Féin. I will try to respond to some of the issues raised. I also want to acknowledge the presence of the ambassador.

As Minister of State, Deputy Carroll MacNeill highlighted in her opening remarks that the Government understands the motivation behind the Bill. I acknowledge many of the contributions made during the debate. As might have been expected, the Bill has prompted a wide-ranging discussion on Israel and the illegal settlements in the occupied territories.

Despite this, the concern of the Minister for Finance, Deputy Michael McGrath, is handling legislative proposals relating to the NTMA of which ISIF is part. The Bill specifically proposes that ISIF would not invest directly or indirectly in a list of companies named in a UN database produced by the UN Human Rights Council in 2020. The level of investment by ISIF is relatively small compared with the overall size of the fund nationally or globally. It is not obvious that a straightforward divestment by ISIF would carry the same message as expected arising from the Bill. ISIF has a proven track record as a responsible investor.

It has been highlighted that ISIF has already divested on a voluntary basis from investing in tobacco companies and in companies which manufacture nuclear armaments and, under legislation, from companies involved in the production of cluster munitions, anti-personnel mines and fossil fuels. This forms part of its sustainability and responsible investment strategy. The strategy builds on the ISIF's longstanding commitment as a responsible investor and a steward of public assets by protecting and enhancing both the long-term value of the fund and the reputation of the NTMA and how it delivers its mandate.

There is a strong case to be made for it being more appropriate for ISIF, as a responsible investor with international credibility, to continue to maintain small shareholdings. Doing this supports engagement with a view to encouraging companies to take their human rights applications seriously. As of now, as part of its wider sustainability and responsible investment strategy, including in relation to the issue of companies operating in the illegal Israeli settlements in the occupied territories, the ISIF pursues active ownership through its engagement manager, EOS at Federated Hermes. Within this, human rights is a key theme and Federated Hermes engages according to the UN guiding principles on business and human rights framework and the OECD guidelines for multinational enterprises.

It is important the Government's approach on this issue is understood. The Government is proposing a timed amendment of nine months to the Private Members' Bill for a number of reasons. The effect of this Bill will be that the NTMA would not be able to invest in any company listed on the database of companies operating in the illegal Israeli settlements in the occupied territories and that the NTMA could not invest, directly or indirectly, in any company which is on the UN database. While the Minister for Finance understands the motivation behind the Bill, given that the Bill is based on a UN database which is not fit for this purpose, has not been updated since it was established in 2020 and does not have any clear basis for amendment going forward, and in light of the fact that there are no specific sanctions or remediation requirements for businesses appearing on the list, some time would have to be taken to explore a more legally sound basis for considering legislation in this area.

In some cases, it has been argued the report is too limited and does not cover all businesses that could be involved in business activities within the illegal Israeli settlements in the occupied territories. The issue of divestment for the illegal Israeli settlements in the occupied territories presents challenges that had set it apart from previous approaches by the ISIF were legislated for in the Oireachtas, such as divestment from fossil fuels in the Fossil Fuel Divestment Act 2018, or disinvestment from companies engaged in tobacco or nuclear weapons. The other examples were generally readily identifiable. In the case of companies that trade with Israel and are active in the illegal Israeli settlements in the occupied territories, there is a much wider range of companies that may be involved across all sectors and states. As a result, there are particular problems with the Bill as drafted. It is not obvious that it would be possible to agree legislation which is based solely on a once-off UN database. There would need to be legal certainty as to whether this is possible or appropriate, or whether other legal approaches might be needed. No legal advice has yet been obtained, given that the Bill is now only coming up for consideration, but in the event there was consideration of working on the detail of the Bill, such advices would be required.

It is also understood that companies cannot be removed from the database, even if they were no longer invested in the illegal Israeli settlements in the occupied territories, and that no new companies which may have an investment in these territories have been added. Thus, if this legislation was to be enacted, it would still be possible for ISIF to be invested in companies engaged in activities within the illegal Israeli settlements in the occupied territories, while respecting the detail of the legislation. It is not obvious that the proposed legislation may even be appropriate or comprehensive enough to deal with the relevant issues raised by the publication of the Bill.

The proposed timed amendment allows the Government to consider a more comprehensive approach in determining whether there may be a more nuanced approach which could be adopted. Divestment may not be the immediate answer in seeking to persuade companies of their human rights obligations. The more responsible choice may be with persuasion and engagement as a first step. On this basis, there is a strong case for maintaining engagement in order to maintain influence on the human rights consciousness of the companies concerned. It has been noted that legislative and non-legislative solutions have successfully achieved similar outcomes. Time was taken to introduce appropriate legislation with respect to investment in fossil fuels and cluster munitions.

It is also important that there is a sound legal and informational basis for the State to take action in this area that it can stand over. These legislative changes are useful models, but further consideration is needed where there is consideration of investment across a wide range of companies not linked to any business-specific activity, as was the case with divestment from fossil fuels or munitions. To allow appropriate time to consider the implications and explore the possibility of such an approach, the Minister for Finance, Deputy Michael McGrath, has received Government approval today for tabling a timed amendment for a period of nine months. The timed amendment allows for further consideration of the Bill, given that its drafting raises specific legal and practical questions. As drafted, it is not likely to achieve its intended purpose. It is appropriate to consider whether a combination of legislative and non-legislative approaches could be adopted which would achieve an appropriate human-rights based outcome. Bringing forward the timed amendment also allows the consideration of all potential legislative and non-legislative approaches.

The Government has also agreed to the Minister for Finance writing to the Chair of the Select Committee on Foreign Affairs and Defence to seek a report on how this matter could be successfully progressed and to the CEO of the NTMA to encourage the NTMA board and senior management to accelerate the development and adoption of voluntary exclusionary lists, similar to those that exist in the cases of munitions and tobacco, that can be applied in conjunction with the proposed Bill.

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