Climate change a key priority for Irish strategic fund after fossil fuel divestment

Climate change ranks alongside Brexit etc. for state fund

Ireland’s sovereign investment fund, hot on the heels of its pioneering divestment of 38 fossil fuel companies, has now announced that climate change is one of five priority areas as part of a revised investment strategy.

The €7.9bn fund, the Ireland Strategic Investment Fund, completed its €68m divestment early last month as part of the new Fossil Fuel Divestment Act 2018 — making the Irish state one of the first countries in the world to officially withdraw public money from investment in fossil fuels.

ISIF also published an exclusion list of 148 fossil fuel companies like BP, Royal Dutch Shell, Chevron and Exxon.

Now the fund has put climate change alongside Brexit, regional development, housing and indigenous businesses as a key priority in what is being dubbed ISIF 2.0 following a review of the fund’s mandate. It’s in the context of Project Ireland 2040, the government’s overarching policy initiative to make Ireland “a better country for all of us”.

“Our new focused strategy takes account of the significant progress made in the Irish economy and investment climate since ISIF opened for business, and the fact the opportunities and challenges facing the Irish economy in 2019 are very different to those of 2014,” said ISIF Director Eugene O’Callaghan.

Minister for Finance Paschal Donohoe said: “Under the new strategy, ISIF will now target the delivery of a €3bn five-year investment programme which will focus on the key areas of regional development, housing supply, indigenous industry, and projects to address climate change and sectors with the potential adversely affected by Brexit.”Under the climate change plans, ISIF will build on existing investments in renewable energy and carbon emission reduction to support Ireland’s transition to a low-carbon economy.

ISIF has also begun the process of measuring the carbon footprint of its investment portfolio as part of a wider approach to identify, manage and mitigate climate risk across its portfolio. It says its global equity and corporate bond portfolio outperform the global benchmarks for CO2 emissions, and the carbon emissions associated with the ISIF’s investment portfolio were “expected to decline substantially” after the divestment.

“The opportunities and challenges facing the Irish economy in 2019 are very different”

Existing renewables commitments include a €35m commitment to a €250m equity fund from NTR targeting the construction and operation of onshore wind energy projects and a €76m cornerstone investment in Ireland’s first listed renewable energy infrastructure company (Greencoat Renewables); it has backed a €150m equity fund for the development of pre-construction renewable energy projects in Ireland from Temporis Investment Management.

The fund, managed by the National Treasury Management Agency and formerly known as the National Pension Reserve Fund, returned an overall -1.1% in 2018 amid what it said were “challenging market conditions”.