Denis Naughten (Roscommon-Galway, Independent)
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71. To ask the Minister for Finance the steps taken to date to divest from fossil fuel investments; and if he will make a statement on the matter. [54601/21]

Denis Naughten (Roscommon-Galway, Independent)
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I worked with the Minister to enact the Fossil Fuel Divestment Act 2018. We now need to go much further and ensure the whole financial system divests from fossil fuels. A carbon tax is being charged on our citizens who, in the vast majority of instances, cannot avoid paying it. Yet we are not taxing investments in fossil fuel industries, which make it much harder for people to switch to clean solutions.

Paschal Donohoe (Dublin Central, Fine Gael)
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Ireland was one of the first countries to divest public money from fossil fuel investments. The Fossil Fuel Divestment Act 2018 was signed into law by the President of Ireland in December of that year.  The Act imposes certain prohibitions and restrictions with respect to the investment by the National Treasury Management Agency, NTMA, of assets of the Ireland Strategic Investment Fund, ISIF, in certain fossil fuel undertakings. It prohibits ISIF from directly investing in any undertaking that generates 20% or more of its turnover from the exploration for, or extraction or refinement of, a fossil fuel such as oil, natural gas, peat, coal or any derivative thereof intended for use in the production of energy by combustion.

Where the agency becomes aware that an undertaking in which such assets have been so invested by it is, or has become, a fossil fuel undertaking, the Act requires the agency to divest the assets of ISIF from such investment. The legislation also provides for a restriction on such investment when the investment is of an indirect nature, that is, investment of the assets of the fund in an investment product or in a collective investment undertaking. ISIF has developed a list of 246 fossil fuel companies in which it will not invest, as determined by criteria within the Act.  The list is updated on a semi-annual basis in line with methodology that is aligned to the legislation, as set out on ISIF's website.

Denis Naughten (Roscommon-Galway, Independent)
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That is a very welcome and positive initiative. However, there is little point in the public making monumental efforts to meet the targets set out in the climate action plan if its investments and deposits are being used to fund further oil exploration or increased use of fossil fuels. This year, investors in coal production will have a bumper return and profits. We need to see full transparency from our banks and financial institutions in this regard and we must raise awareness among the public. Fossil fuel investment must be treated just like tobacco investment.

However, this has to be done at EU level and not just domestically. The Minister is president of the Eurogroup. He sits on the Economic and Financial Affairs Council. We need to see measures taken at EU level to force banks, asset managers and listed companies to publish transition plans on how they will divest from fossil fuels and decarbonise.

Paschal Donohoe (Dublin Central, Fine Gael)
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ISIF is already doing this on a national level. It has published a list of the nearly 250 fossil fuel companies it does not invest in, much of it for the reason the Deputy has just outlined in that we believe, as a country, it is appropriate we not invest in fuels and technology that can do more harm to the future of our world and national environment. It was one of the first agencies of its kind to make a move of this nature. The Commission has brought forward what it refers to as taxonomy proposals, brought forward by Commissioner McGuinness. It is looking to break down and segment different kinds of investments based on the impact they can have on our environment and, in turn, use this as a way of influencing and guiding the investment decisions made by financial markets. That work is under way and Commissioner McGuinness published proposals on that a few weeks ago.

Denis Naughten (Roscommon-Galway, Independent)
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Part of the problem is no one knows what green finance means. If Ireland, as a key financial centre, and the Central Bank leads by example and for this to happen throughout the EU, we could provide clarity on what sustainable investment is and the powers to hold financiers to account. We could help to revolutionise this sector and lead to an exponential drive to net-zero emissions. The International Financial Reporting Standards Foundation has announced it will develop a single set of standards on sustainability disclosure requirements. The adoption of this by the International Organization of Securities Commissions would transform the global financial markets. This needs to be spearheaded at EU level by the Eurogroup and EU finance ministers.

Paschal Donohoe (Dublin Central, Fine Gael)
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The Deputy's point about the need to tell people what we are doing is relevant to this debate. Much of what he is calling on me and the European Union to do is happening. I have just mentioned what ISIF has done. Only a few weeks ago, the Governor of the Central Bank wrote to all of the CEOs involved in the insurance sector about investment decisions they make, reminding them of the need to be aware of their commitments under Environmental, Social and Governance, ESG, under more sustainable investment decisions. It may not be a clear name for what it is doing, but through its taxonomy proposals, the Commission is looking to have a common way of understanding the impact of investment decisions on the future of our environment and use that to influence and guide more sustainable investment decisions by investment companies. That work is happening. The point I should consider, off the back of Deputy Naughten's question, is to find ways in which we can better communicate this to a country that wants to see this work done.