Written answers

Tuesday, 24 May 2016

Department of Finance

Ireland Strategic Investment Fund Investments

Photo of Róisín ShortallRóisín Shortall (Dublin North West, Social Democrats)
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107. To ask the Minister for Finance to introduce legislation to direct Ireland's strategic investment fund to invest only in carbon neutral and carbon negative energy funds and to ban its future investment in fossil-fuel extraction or burning; and if he will make a statement on the matter. [11447/16]

Photo of Michael NoonanMichael Noonan (Limerick City, Fine Gael)
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The Ireland Strategic Investment Fund (the Fund) was established in December 2014 under the National Treasury Management Agency (Amendment) Act 2014, with a mandate to invest on a commercial basis in a manner designed to support economic activity and employment in Ireland.

The first investment strategy of the Fund was published in July 2015.  It sets out the long-term strategic direction for the Fund, and states inter alia that the "energy (allocation) will include a significant element of renewables investment". The Fund also commits to operating to high international standards, investing in line with both the Principles for Responsible Investment (PRI), which focus on the management of environmental, social and governance factors to improve sustainability of investment returns, and the Santiago Principles, which are the globally accepted best practice principles for sovereign investment funds.

To-date, any exclusions from the Fund on the basis of ethical considerations are those mandated by legislation. In this regard the only relevant legislation impacting on the Fund's investments is the Cluster Munitions and Anti-Personnel Mines Act 2008.

In relation to carbon neutral and carbon negative energy funds, the ISIF has a close working relationship with the Department of Communications, Climate Change & Natural Resources and is committed to investing in the energy sector is a manner that is consistent with the State's commitment to make the transition to a low carbon, climate resilient and sustainable economy. This State commitment is reflected in the Climate Change and Low Carbon Development Act 2015 and in the Paris Agreement, signed recently by Minister for the Environment, Community and Local Government on Ireland's behalf.

In line with its investment strategy, the Fund has been seeking investments that are consistent with broader Government policy and, in particular, the theme of decarbonisation.

To date the Fund's investment commitments in this regard include:

- significant investments in renewable energy generation - via a joint venture with NTR, via an investment in the Irish Infrastructure Trust and via financing of Gaelectric and Mainstream Renewable Power by Bluebay SME Credit Fund (in which ISIF has been the cornerstone investor);

- Dublin Waste to Energy project, which will have capacity to process up to 600,000 tonnes of waste when complete and generate clean renewable energy for up to 80,000 homes;

- forestry; and

- a designer and manufacturer of high power density high efficiency power supplies.

I am informed by the NTMA that it will continue to seek out further investments for the Fund that are consistent with its mandate and are aligned with national decarbonisation and energy security objectives and with the Government's broader energy policy. The investment pipeline for the Fund currently includes possible opportunities in the areas of biomass, wind, waste management and solar.

The Fund's current investment holdings in fossil fuel companies are among the legacy global investments inherited from its predecessor fund, the National Pensions Reserve Fund (NPRF), which are being gradually sold over a period of years to finance investments in Ireland, as they materialise. 

The National Treasury Management Agency (Amendment) Act 2014 also provides that the Fund shall review its investment strategy after 18 months of operation and that in reviewing its investment strategy shall consult with the Minister for Finance and the Minister for Public Expenditure and Reform and that the Minister for Finance may consult with other Government Ministers as appropriate.  The issue of whether legislative changes are required in relation to any aspect of the Fund's investment strategy will be considered as part of the review to be conducted in the second half of 2016.

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