Emmet Stagg (Kildare North, Labour)
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Question 37: To ask the Minister for Finance the ethical investment guidelines which are being adopted in respect of investments and investment vehicles such as the National Pensions Reserve Fund under the remit of his Department; if such investments are made in accordance with United Nations Guidelines on Ethical Investments; and if he will make a statement on the matter. [24968/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
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Under the National Pensions Reserve Fund Act 2000, the National Pensions Reserve Fund Commission controls and is responsible for the investment of the National Pensions Reserve Fund (NPRF). It has discretionary authority to determine the Fund's investment strategy in accordance with the Fund's statutory investment policy of securing the optimal total financial return provided the level of risk to the moneys held or invested is acceptable to the Commission.

The Commission is a founder signatory to the Principles for Responsible Investment. The Principles were launched by the UN Secretary General in New York on 27 April last and have, to date, been signed by 35 of the world's largest institutional investment funds.

The aim of the Principles is to integrate consideration of environmental, social and governance (ESG) issues into investment decision-making and ownership practices. Signatories commit to the following:

1. To incorporate ESG issues into investment analysis and decision-making processes;

2. To be active owners and incorporate ESG issues into ownership policies and practices;

3. To seek appropriate disclosure on ESG issues by the entities in which they invest;

4. To promote acceptance and implementation of the Principles within the investment industry;

5. To work together to enhance their effectiveness in implementing the Principles; and

6. To report on activities and progress towards implementing the Principles.

In announcing its decision to sign the Principles, the NPRF Commission said the launch of the Principles is the beginning of a process which will see the Fund taking account of environmental, social and governance factors in its investment strategies and becoming a more engaged shareholder in the companies in which it invests. It said it would be taking specific measures to implement the Principles. Actions it is planning to take over the first 12 months include:

∙Development and implementation of a comprehensive proxy voting policy;

∙Development of an engagement capacity with investee companies on ESG issues; and

∙Refinement of its investment manager selection process to include specific consideration of ESG issues.

The Commission stressed that incorporation of environmental, social and governance issues into the NPRF's investment and operating framework is a long-term project and it would be taking further implementing actions as its capacity in the area develops.

On my own behalf, I would like to add that I welcome the launch of the Principles. I believe they represent a significant step towards ensuring that investors take into consideration the environmental, social and corporate governance aspects of the businesses in which they invest. The application of the Principles should not only lead to better long-term financial returns but also to a closer alignment between the objectives of institutional investors and those of society at large. I am pleased that the National Pensions Reserve Fund Commission is a signatory to the Principles and is planning to undertake a number of measures over the next twelve months to implement them in relation to its activities.