Michael McGrath (Cork South Central, Fianna Fail) | Oireachtas source

I will set out the approach to dealing with ESG in the context of the two funds.

In the investment strategy, the NTMA will be required to describe how it proposes to manage ESG risks - in effect, how it will identify and assess such risks as part of its investment process. In addition, the NTMA will be required to set out in the strategy the basis on which it identifies categories of investments in which the fund shall not be invested. It will also have to describe the categories of investments, which have been so identified at the time of publication of the investment strategy. It is possible that after the publication of the investment strategy, additional specific investment categories may be identified by the NTMA for exclusion from the fund's portfolio, in which case these additional exclusions may be described in the revised strategy following the NTMA's next review. The NTMA will have freedom to determine if there are specific categories of investment that should be excluded and in which the NTMA determines it will not invest. Such decisions will be made in line with the approach set out in the investment strategy.

In developing this legislation, we have sought to strike an appropriate balance between the NTMA's ability to practically operate the fund and implement its investment mandate and the need to recognise the wider societal aspects and the ESG risks, which may need to be considered as part of the investment process. To that end, the investment strategy will be subject to a consultation process with both the Minister for Finance and the Minister for public expenditure. The investment strategy will also be subject to consideration by any other Ministers across the Government as the Minister for Finance considers relevant, recognising the importance of the investment strategy and the value of wider consultation on the strategy. Outside of these legislative processes, the Government has decided that the strategy will be noted by the Government.

Finally, I have agreed that I will include a provision in the oversight agreement between the Minister for Finance and the NTMA providing for the issuance of a letter of expectations to the NTMA which would set out my expectations with respect to the operation of the funds. The latter two elements of the approach, that is, it being put before the Government and the letter of expectations, are not included in the Bill as they are actions that do not need a legislative basis and can be achieved administratively. It is normal to exclude from legislation such actions as engagement with the Government.