State’s wealth fund holds €70m shares in polluting firms

The State’s main sovereign wealth fund holds more than €70 million worth of investments in some of the most polluting industries on the planet.

An analysis by two leading environmental researchers reveals Ireland's Strategic Investment Fund (ISIF) maintains a portfolio of shares in oil, coal and fracking companies, the bulk of them in North America.

The most high-profile is TransCanada, the company behind the controversial Keystone XL project, which aims to bring oil extracted from Canada's vast reserves of tar sands to US refineries on the Gulf coast.

US president Barack Obama recently invoked his presidential veto to block the project on environmental grounds but Republicans have vowed to continue campaigning for it.

‘Non-existent harm’

The fund also holds shares in

Peabody Energy

, the world’s largest privately-owned coal company, which recently described climate change as a “non-existent harm based on flawed assumptions and conjectures”.

The audit of the fund's holdings was conducted by Joseph Curtin, climate expert with the Institute of International and European Affairs (IIEA) and University College Cork (UCC), and Paul Deane from UCC's Environmental Research Institute. It values the fund's fossil fuel assets at €72 million, based on 2014 market values.

The assessment comes as a growing number of funds, including those held by the Norwegian government, the Guardian newspaper and Stanford University, are pledging to shed their holdings in 'dirty' industries on foot of a UN-backed fossil fuel divestment campaign.

While the ISIF's holdings in this area represent a modest portion of its total €7.4 billion portfolio, it has made some big returns from investing in fossil fuel firms, most notably TransCanada, whose stock has rocketed 500 per cent since 2000.

Low carbon economy

In their analysis, published on the IIEA’s website, the authors question whether these holdings are consistent with the Government’s aim of moving

Ireland

to a low carbon economy by 2050.

“While the ISIF is developing its business plan and finding its feet, there is an excellent opportunity to consider divesting its investments in fossil fuels, or at least to follow the Norwegian government lead by divesting from coal initially,” they said.

“One could argue that this would have little or no global impact given the very small scale of the investments. However, the small scale of the holdings would make total divestment very simple to achieve.

“The impact could be very great in terms of the global leadership that it demonstrates in the lead-in to the climate negotiations in Paris later this year”.

In a statement to The Irish Times, the ISIF said its holdings in fossil fuel firms were among a series of legacy investments inherited from its predecessor, the National Pensions Reserve Fund.

“These legacy investments are being sold by the ISIF over time to fund Irish investment commitments as they arise, in keeping with the ISIF’s new mandate to invest on a commercial basis to support economic activity and employment in Ireland,” it said.

Any exclusions on the basis of ethical investment criteria had to be mandated by legislation, the ISIF said, noting the Cluster Munitions and Anti-Personnel Mines Act 2008 as the only relevant legislation so far.