Ciarán Ahern (Dublin South West, Labour)
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465. To ask the Minister for Finance if he is aware that Irish-based financial institutions hold more than €31 billion in investments in fossil fuel industries; if he will consider imposing sanctions on such institutions and withdrawing favourable tax arrangements they currently enjoy; and if he will make a statement on the matter. [23581/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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I would begin by saying that I am aware that the Irish economy, in common with others, continues to be reliant on fossil-fuel for the greater proportion of its energy. This means that most companies, including financial institutions, hold investments in activities that involve fossil fuel usage. Specifically in relation to financial institutions, as the Deputy may know, addressing climate risks and supporting the transition to a carbon-neutral economy is a key priority of the Central Bank of Ireland, who have responsibility for the regulation and supervision of the financial sector. Within the Central Bank, a climate change unit was operationalised at end-2021 to further the Central Bank’s work on embedding climate risk and sustainable finance considerations into the day-to-day activities of the Central Bank.

In this regard, the Central Bank of Ireland is aiming to strengthen both the resilience of the financial system to climate-related risks and its ability to support the transition to a climate-neutral economy. Broadly, this means that financial regulation seeks to embed climate risk and sustainable finance considerations across its prudential and consumer/investor protection rulebooks for banking, insurance, investment markets and the wider financial system.

I would also highlight to the Deputy that, at an EU level, the Department of Finance has been working with the European Commission and our fellow Member States to put in place ambitious and usable regulatory frameworks aimed at growing the sustainable finance sector while ensuring it is well-regulated. In this context, Ireland is strongly supportive of the EU sustainable finance framework.

The Deputy will also be aware that Ireland was one of the first countries to divest public money from fossil fuel investments with the Fossil Fuel Divestment Act enacted in December 2018. The Act obliges the Ireland Strategic Investment Fund (ISIF) to endeavour to ensure that its assets are not directly invested in a “fossil fuel undertaking”, meaning any undertaking that generates 20% or more of its turnover from the exploration for, or extraction or refinement of, a fossil fuel, that is coal, oil, natural gas, peat or any derivative thereof intended for use in the production of energy by combustion, the holding company of such an undertaking or a holding company with subsidiaries engaged in fossil fuel activity, where the aggregate turnover of the subsidiaries accounts for 20% or more of the group’s turnover on a consolidated basis. Furthermore, ISIF will endeavour to ensure that its assets are not invested in an indirect investment, excluding financial derivative instruments, exchange traded funds and hedge funds, unless ISIF, acting reasonably, is satisfied that the indirect investment is unlikely to have in excess of 15% of its assets invested in fossil fuel undertakings. In this regard, ISIF has developed a list of circa 250 fossil fuel undertakings in which it will not invest, having regard to the criteria in the Act. This list is updated on a semi-annual basis and is available on ISIF’s website.

The recent Central Statistics Office publication on Fossil Fuel Subsidies 2023 may also be of interest. It found that fossil fuel subsidies were €4.9 billion in 2023, up from €4.7 billion in 2022 and €2.8 billion in 2021. The higher levels in 2022 and 2023 occurred as a direct response to the twin energy and cost of living crises in the form of temporary Government support measures such as the Household Energy Credits.

Finally, I would add that my Department undertakes green budgeting analysis of the tax system, which involves analysis of both climate positive and climate negative tax revenues and tax expenditures in the tax system. My Department is actively engaged in the OECD Paris Collaborative, which aims ‘to design new, innovative tools to assess and drive improvements in the alignment of national expenditure and revenue processes with climate and other environmental goals.’ At an EU level, my Department participates in the Green Budgeting Expert Group with other EU Member States.

Green Budgeting analysis undertaken as part of Budget 2025: Beyond GDP - Quality of Life Assessment, examined the tax system as a whole, over the period 2013 to 2022. It also examined the estimated climate impact, in monetary terms, of recent budgets. The analysis of the tax system concluded that the tax system as a whole is climate positive, from a monetary perspective. This climate positive monetary balance has grown significantly over time, from around €2.8 billion in 2013 to €3.9 billion in 2022. Budget 2025 is shown to be strongly climate positive when taking into account the balance of climate positive and climate negative tax revenues, tax expenditures and revenue foregone, from a monetary perspective.