Ireland’s Parliament has approved a bill forcing the country’s €8bn sovereign wealth fund to divest from fossil fuels by 2022, in a move some claim could mark the first national ban on investing public money into the industry.
The majority of the lower house, except members of ruling party Fine Gael, voted on January 26 in favour of The Fossil Fuel Divestment Bill 2016 which, if enacted, will redefine the Ireland Strategic Investment Fund’s (ISIF) mandate to ensure that its assets are not invested directly or indirectly in fossil fuels, banning any future investment after the five-year transition period.
ISIF is managed by the National Treasury Management Agency.
Organisations backing the Divest-Invest movement, such as Trócaire and The Sainsbury Family Charitable Trusts, claim that if the Bill is enacted, Ireland would become the first country to prohibit investment of public money into the fossil fuel industry.
A recent report by Arabella Advisors about divestment found that commitment to some sort of divestment from fossil-fuel companies totalled $5 trillion in the year to December 2016, including institutional investors and individuals.
Introduced by Thomas Pringle, an independent parliamentarian, the Bill received enough support to continue the legislative process and thus be referred to the Committee on Finance, Public Expenditure and Reform, where stakeholder hearings will be held. The start date of this process hasn’t been published yet.
Asked when the Bill could become an enforceable act, Pringle told RI: “Realistically, it could become an act by the summer. After completing passage in the Dáil [lower house] it then has to go to the Seanad [upper house] and be passed there before being enacted. It all depends whether we can keep the momentum going now and get the committee stage started without delay.”
The voting record (90 versus 53) shows that all political parties supported the Bill, except for Fine Gael, whose leader and Ireland’s Prime Minister Enda Kenny opposed it.
Asked about the reasons to object the Bill, a spokesperson for the Department of Finance referred RI to a transcript of the debate in Parliament, whereMinister Damien English explained the Government’s position not to support the Bill at this particular time.
From the amendments to the Bill tabled by Fine Gael, it is understood the Government considers that ISIF has already in place a sustainable and responsible investment policy; that the majority of the €800 million allocated to energy is invested in renewables; and that its portfolio exposure to fossil fuels is limited.
Selina Donnelly, policy officer at Trócaire, told RI that ISIF’s exposure to fossil fuels is actually greater than considered by the government, based on research (commissioned by Trócaire) from Toronto-based research firm Corporate Knights. It found that ISIF had investments in at least 152 companies in the fossil fuel sector, with a value of €133 million – or 12.2% of all stocks owned by ISIF as of December 31, 2015.
“Had the ISIF sold off its fossil fuel stocks at the beginning of 2015 in favour of investing in clean energy companies, it is estimated the fund would have accumulated €22 million more at the end of 2015, while lowering the portfolio’s carbon footprint by 48%. It is estimated that retaining fossil fuel investments cost the ISIF €100 million over the past three years,” the research study stated.
According to Pringle, Ireland lags behind its commitments to mitigate climate change. He said it is currently the eighth highest producer of emissions per person in the OECD. In addition, it is one of the two countries in the EU that has not reached the 2020 targets for emissions reductions, which could cost Ireland €6 billion in terms of non-compliance costs.
Pringle’s Bill was first discussed at the Dáil on January, 19, the day before Donald Trump took office officially. Eamon Ryan, member of the Dáil and Green Party leader, said then it was a happy day in the eve of Trump’s inauguration as President of the US.
“We have the numbers to pass this divestment bill. What an answer to him and his Secretary of State, Rex Tillerson, that this house, in the name of Ireland, we’re going to be selling your Exxon Mobil shares, sir, because we do not believe in the future that you stand for.”