A COMMITTEE OF TDs and senators has advised the government that a new automatic-enrolment pension system should not allow funds to invest in fossil fuels.
The Oireachtas Committee on Social Protection has published a report scrutinising Government plans to develop an auto-enrolment scheme for pensions that would apply to around 750,000 workers between the ages of 23 and 60 who are employed but not signed up to an occupational pension scheme.
The current plan for the scheme is that employees’ contributions to their pension would be matched by their employer as a percentage of the employee’s gross income, which would then be topped up again by the State. Workers would have the choice to opt out of the scheme.
Among the committee’s 21 recommendations for the government are that investment funds in the scheme should not be allowed to invest in fossil fuels and that a minimum percentage of the funds should be invested in renewable energy development.
“The committee recommends that the investment funds be prohibited from investing in fossil fuels or the arms industry,” the report states.
“The committee recommends that a minimum percentage of the funds should be invested in Irish renewable energy developments in order to ensure our Climate Action obligations. As with without achieving these, the future of all pension funds will be at risk from climate change.”
The committee also advised “that investment ‘good practice’ should include consideration of sustainability and environmental, social and governance factors and this should be explicitly stated in the Bill”.
Back in 2019, one goal in the Climate Action Plan at the time was to consider how a new requirement could be placed on pension providers to give savers more information on whether their money was invested in fossil fuels and options for alternatives.
However, a working group tasked with examining the action concluded it should be considered in “broader terms” than a “strict requirement” on pension providers, and the proposal was not progressed further in subsequent climate action plans, a Noteworthy investigation found.
Humans’ use of fossil fuels is a primary driver of greenhouse gas emissions, which are trapping heat in the atmosphere and causing average global temperatures to rise.
With that comes disruptions to climate systems that are already impacting humans and nature and which are expected to grow significantly worse unless the world substantially reduces its greenhouse gas emissions.
Diverting finance away from fossil fuel companies – a strategy known as divesting – is seen as one way of dis-empowering those companies and encouraging the industry to turn instead to renewable energy development.
Speaking to The Journal, Green Party TD Marc Ó Cathasaigh, a member of the committee behind the report, said it is important that where money is allocated has “values” behind it.
“When you set up auto-enrolment, you’re going to be putting a lot of Irish taxpayers’ money to one side. There’s values that should be attached to that, that how you invest your money isn’t valueless,” Ó Cathasaigh said.
“If we’re doing that, we should make sure that the values that are expressed through how that money is invested match the Irish state.”
On whether the recommendations are likely to be adopted in the final legislation, the TD said it is “difficult to say”.
“We had two engagements with officials in the Department of Social Protection in the course of the pre-legislative scrutiny and I thought they were really constructive,” he said.
“From here, the report goes to the minister [for social protection]. We have to see how many recommendations included in the report the minister is prepared to incorporate in the second stage. Then beyond that, if we feel they fall short in any of the recommendations, it will be open to us to put down committee stage amendments.
“I hope the minister will engage constructively with it.”
Dr Jane O’Hara of Divest Ireland, which is campaigning for fossil fuel divestment, told The Journal: “We’re very happy to see that those particular recommendations were included in the report.
“It was really good to see that not only do they want them not to invest in fossil fuels but they want some of that money, some of which will be public funds, to be invested in renewable energy. We think that that will help us get closer to our climate targets, so we really support that,” O’Hara said.
“They still need to go further to actually be legislated for. We would want to focus our campaign now on making sure that the Department of Social Protection implements those recommendations and that they understand how important people really think that they are.”
She said that a fossil-fuel free pension as a default option under the scheme would allow people to invest ethically without needing to spend a significant amount of time on researching a multitude of choices.
“Most people probably would go for the default option and probably wouldn’t have the time or perhaps the financial literacy to get into all the different options, so we would support the idea that at least the default fund, but if possible all the funds, would not be allowed invest in fossil fuels,” she said.
“If you look at it from the point of view of where your money is invested, if it’s invested in fossil fuels, then not only are the fossil fuel companies profiting from your money, but it also means you’re profiting from the destruction of the planet.
“It’s very important to know where your money is going.
“We would like people to be able to have these conversations with their pension providers but we know sometimes those are difficult and the information that is provided isn’t very transparent or it isn’t accessible, so we think if people are going to be automatically enrolled in a pension fund, it should be made possible to have the option to not invest in fossil fuels, or for that to be the default option.”
Later today, Cabinet ministers will hear a progress report for the first quarter of the Climate Action Plan 2023. The Department of Taoiseach report will say that 27 of the 36 actions scheduled for delivery were completed on time. The remaining nine actions will be added to the quarter two action list as Ireland continues to play catch-up on climate action.
Ministers will be told that the Department of the Environment, Climate and Communications, which had the greatest number of actions, had a delivery rate of 71%. The Department of Agriculture, which the second highest number of actions, had a delivery rate of 91%.
Cabinet will hear that one of the largest actions was the launch of the €1.5 billion Agri-Climate Rural Environment Scheme (ACRES) which aims to improve biodiversity, climate, air and water quality and that in the first quarter, there were over 46,000 applications to the scheme which accounts for a third of the 135,000 farms in the country.
The first Electric Vehicles (EVs) charging infrastructure strategy will also be mentioned, with a 31% increase in sustainable travel rates observed in the first three months of the year, while electric vehicles accounted for 24% of all new cars sold – surpassing diesel sales for the first time – and bringing the total number of EVs on Irish roads to just under 85,000.
In electricity, just under 35% was produced from renewable sources in 2022 and Ireland met half of its 2030 onshore wind target.
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