Ireland’s Fossil Fuel Divestment Act: A Call for Urgent Amendment

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Updated: 7th December 2023

Independent TD for Donegal, Thomas Pringle, is calling on Government to close avenues toward investment in fossil fuels, as he brings forward a motion this week to strengthen his Fossil Fuel Divestment Bill.

Deputy Pringle said: “Ireland took a leadership role in global climate action when The Fossil Fuel Divestment Bill 2018, which I introduced, made Ireland the first country in the world to divest public money from fossil fuel companies. The bill received cross-party and Government support.

“In the years since that bill was passed, the focus on financing has moved on, and we must ensure our legislation keeps up with the research into the broader impact of the global funding of harmful fossil-fuel industries,” he said.

Deputy Pringle will bring his Motion re Increased Fossil Fuel Divestment to the Dáil on Wednesday.

Deputy Pringle said: “The Act is principally concerned with fossil fuel exploration as opposed to all fossil fuel use, with a limited exception that still allows for investment from the Irish Strategic Investment Fund in fossil fuel use.

“A section in the Act includes an exclusionary clause that permits indirect investment in fossil-fuel undertakings, and exploitation of legislative loopholes within the wording of the Act are undermining the purpose of the legislation. This motion will call on Government to amend the Act to widen its reach to include all funds within the Irish Strategic Investment Fund.

“My motion also calls on Government to signal its commitment to a sustainable and zero-carbon future by endorsing the development of a Fossil Fuel Non-Proliferation Treaty,” he said.

In September of this year, Deputy Pringle called attention to a report from ActionAid Ireland that showed the need for Government to review the scope of the Act and extend it beyond fossil fuel “undertakings” to include “fossil fuel utilization”.

Deputy Pringle said: “My motion would also call on Government to allow for a review of the Act every three to four years to make sure the intent of the legislation is being met, among other actions. We must develop meaningful steps to protect the climate and the future for our children and our world, while we acknowledge the significant role of SMEs and Ireland’s agri-economy.

“We must also ensure that investments made by the ISIF are not contributing to the damage that fossil fuels and agribusinesses cause.

“Ireland should be proud of the global standard we set in fossil fuel divestment. I believe we can continue our leadership role in this crucial issue of our time by taking the steps necessary to make this bill as strong as it can be and as strong as it must be,” he said.

Here are the proposed amendments to the Fossil Fuel Divestment Act:

That Dáil Éireann acknowledges that:

— the Fossil Fuel Divestment Act 2018 is something that Ireland should
remain proud of in its capacity of setting a global standard;
— the purpose of the Act was to mandate the movement of financial
investments by the Ireland Strategic Investment Fund (ISIF) away from
fossil fuels, thus encouraging continued future investment in renewable
energy and infrastructure;
— the United Nations reports that fossil fuels, namely coal, oil and gas, are
by far the largest contributor to global climate change, accounting for
over 75 % of global greenhouse gas emissions and nearly 90 % of all
carbon dioxide emissions;

also acknowledges that:

— there is an urgent and necessary requirement to amend the Fossil Fuel
Divestment Act 2018;
— the purpose and ethos of the Act is being undermined by the
exploitation of legislative loopholes found within the wording of said
Act;
— the Act is principally concerned with fossil fuel exploration only, as
opposed to all fossil fuel use, with a limited exception, which essentially
still allows for investment from the ISIF in fossil fuel use;
— Section 49A (1) contains an exclusionary clause that permits indirect
investment in fossil fuel undertakings to be made in financial derivative
instruments, exchange traded funds or hedge funds;
— while the Act in its original form brought about significant change,
reviewing it in practice over the last five years has afforded us insights
into issues that must be addressed;

— on January 2023, Irish financial institutions held US$ 13.2 million in
bonds and shares attributable to fossil fuels in the Global South, of this
the ISIF held US$ 11.2 million, mostly in bonds issued by Chinese electric
utility company State Grid Corporation of China;
— at the beginning of 2023, the ISIF also held US$ 12.5 million in bonds and
shares attributable to agribusiness in the Global South, of this, the ISIF
held US$12.1 million and Waystone34 accounted for the majority of the
remaining investments;
— these investments are contrary to the spirit of the 2018 Act and
demonstrate that investments are still being made in the fossil fuel
industry and therefore the Act must be amended to ensure that such
loopholes cannot be availed of via indirect investment and financial
vehicles;
— although falling outside the scope of the 2018 Act, reports show that
investment managers registered in Ireland held US$ 6.2 billion in bonds
and shares attributable to fossil fuels and agribusiness in the Global
South alone which indicates that the Fossil Fuel Divestment Act 2018 is
an important step but a modest one;
— as outlined clearly in the 2023 ActionAid Report, there is a significant
need for the Government to consider the scope of the Act and the Act
should extend beyond fossil fuel ‘undertakings’ to include ‘fossil fuel
utilisation’, which should be defined in a manner that targets economic
entities that fall within an agreed bracket so as to strike a balance that
allows for meaningful climate policy while acknowledging any existing
barriers within the renewable infrastructure;
— a limitation of the 2018 Act is that investments in companies that
depend on fossil fuels, such as agribusiness and agrichemical
companies, are not prohibited by the Act thereby allowing for the
continued financing of environmentally damaging activities;
— industrial agriculture, and the unsustainable food system that it
supplies, is also a major source of greenhouse gas emissions, with the
IPCC reporting that Agriculture, Forestry and Other Land Use sector

accounts for 13-21% of greenhouse gas emissions globally from four
main emissions sources: carbon dioxide emissions from land use
change, including deforestation to make way for agriculture; the
production and application of synthetic nitrogen fertilisers (‘fossil
fertilisers’) and agrochemicals; livestock emissions from enteric
fermentation and manure; and methane emissions from rice paddies;
— industrialised agriculture globally is typified by large-scale plantations;
widespread application of agrochemical fertilisers, pesticides and
herbicides; hybrid or genetically modified seeds sold by corporations
which need to be purchased anew each year; mechanised farming;
monocultures of single crop varieties covering hundreds of hectares;
and commodity crops destined for export, with corporations known as
‘agribusinesses’ controlling and profiting from almost every step of the
process;
— Ireland is ideally placed to start the process of getting the proposed
Fossil Fuel Non-Proliferation Treaty initiative on the diplomatic and UN
agenda given its commitment to climate action, rejection of further
offshore exploration licences and its membership of the Beyond Oil and
Gas Alliance diplomatic initiative;

calls on the government to:

— signal its commitment to a sustainable, resilient, and zero-carbon future
by endorsing the development of a Fossil Fuel Non-Proliferation Treaty
and joining the bloc of states seeking a negotiating mandate;
— amend the Fossil Fuel amendment Act 2018 in a manner that will widen
its reach so that it is applicable to all funds within the ISIF by removing
the exclusionary clause within Section 49.1 regarding financial
derivative instruments, exchange traded funds or hedge funds;
— ensure meaningful steps are taken to protect the climate and our
children’s future, while acknowledging the significant role of SMEs and
Ireland’s agri-economy;

— to ensure that the investments made by the ISIF are not being made in
a way that is contributing to the alarming damage that fossil fuels and
agribusiness are proven to cause;

also calls on the government to:
— incorporate a provision to allow for a review of the Act every 3-4 years to
ensure that the purpose and impact of this legislation is being carried
through;
— ensure that it reviews and analyses relevant structures and processes to
ensure that investment made through Foreign Direct Investment and
international subsidiaries based in Ireland don’t undermine our climate
and development objectives;
— consider new regulations and policies to phase-out financing to fossil
fuels and steer away from harmful industrial agriculture and other high-
emitting activities, which should include a requirement that banks and
other financial institutions operating in Ireland develop climate
transition plans consistent with a 1.5°C climate goal and which should
cover all financed emissions with no offsets, and be subject to sanctions
for non-compliance;
— ensure a coherent and equitable approach to preventing emissions at
source and a coordinated just transition globally.