Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I can put some further information on the record of the House. I note that this de minimis approach has worked well in the experience of ISIF. For example, at the end of 2023, the percentage of fossil fuel exposures in pooled vehicles in which ISIF was an investor ranged from 0% to just under 10%. Further to this, many of the higher exposures relate to emerging markets, for example, India equities of close to 10%, or to emerging market debt strategies within multi-asset managers. It is much more cost and operationally efficient to use pooled fund structures in those jurisdictions. While these levels of exposure may appear high, they represent a very small exposure at the level of the total ISIF portfolio. For example, the largest exposure, the Indian equity exposure of just under 10%, represents 0.02% of ISIF’s total global portfolio.

As the Senator will be aware, the Fossil Fuel Divestment Act 2018 allows for the 15% de minimis to be reduced by order of the Minister for Finance of the day. To do this, the Minister would need sufficient evidence to base this decision on and would need to be in a position to determine the appropriate level to set the de minimis at. If it is to be changed, a decision has to be made as to what level to set it at. This analysis and consideration have not been done in great detail to date. Based on the experience with ISIF, we know it is essential that there is a realistic threshold. In my view, the 1% rate proposed does not strike the balance between the need to invest and the need to retain a certain level of divestment from fossil fuel producers. However, I will ask my officials to examine the issue in more detail and to engage with ISIF on the real-life practice of its investment portfolio. If there is capacity to reduce it, I am willing to do so. I will ask for a more detailed examination of that 15%, given the passage of time, and am happy to revert to the Senator on that.