Eamon Ryan (Dublin South, Green Party)
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Question 126: To ask the Minister for Finance his views on whether legislation is needed to amend the National Pension Reserve Fund after the revelation that the fund has invested in companies that assist the internationally discredited Government in Sudan. [33202/06]

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. 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 launched by the UN Secretary General in New York on 27 April last. The aim of the Principles is to integrate consideration of environmental, social and governance (ESG) issues into investment decision-making and ownership practices. They stem from a growing view among investment professionals that ESG issues can affect the performance of investment portfolios. Investors fulfilling their fiduciary (or equivalent) duty therefore need to give appropriate consideration to these issues, but to date have lacked an appropriate framework for doing so.

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 and I am pleased that the National Pensions Reserve Fund Commission is a signatory to them.