An Ethical Council for Irelands Pension Fund?


Dáil reviews the case for an Ethical Council similar to the Norwegian model

On June 24th, the Dáil sub-committee on Human Rights invited Ms. Eli Lund from the Norwegian Ethical Council to discuss possible ethical standards for the Irish Pension Fund. The Norwegian Ethical Council was the government body responsible for the divestment from Elbit Sytems.

This meeting was significant as it discussed efforts to put in place an Ethical Council in Ireland for the Irish Pension Fund, similar to the Norwegian Ethical Council  which recommends where the Norwegian Pension Fund invests. Ms. Lund, a current member of the Norwegian Ethical Council, addressed the committee alongside members of Trócaire, one of the largest NGOs in Ireland, that has been instrumental in this campaign. The committee ended by requesting the publication of the report on the issue in order for the matter to proceed.

The Irish System

The Irish Pension Reserve Fund -IPRF- has no duty or legal requirement to consider ethical obligations when picking their investments. It has signed onto the UN Principals for Responsible Investment. However at this point, legally, the IPRF cannot divest for ethical reasons. If it places ethical considerations before financial ones, or excludes any company for ethical reasons, it is in breach of Irish law. To change this requires a change in legislation. To achieve a change in legislation requires a report. A report has been compiled by Trócaire and other NGOs to try to rectify this situation. This report has been presented to the Irish Government but not yet published. While it is legally impossible for the IPRF to currently exclude any company, it is allowed to exclude all companies involved in the direct production of landmines, due to legislation passed on this subject. The IPRF operates its active ownership through a consultancy group called Hermes. It is also involved in several CSR initiatives, such as one in Sudan.

The Norwegian example

Ms. Lund outlined the Norwegian system and its challenges. At one point stating that Ethical Councils ‘aim is to have clean hands’. She believed change was better than exclusion. She emphasised that power of the Norwegian public’s demands for an Ethical Council and the effect of the Councils reports. While these reports are not binding, they are, in her opinion, one of the most effective parts of the Councils work. They allow an informed and well researched view to be given to activists and investors in all forms. She also spoke of the need to focus, be realistic and precise. There was no point in aiming to change everything, or demanding a tobacco company cease tobacco production. Equally there can be hypocrisy, such as  excluding arms dealers when your own government buys arms. By recognising the limits of the Councils resources and possibilities they were able to maximise what they could achieve. She also emphasised the economic benefits and loss associated with ethical investment. The investment will not lose over the long term but it does have a narrower field, therefore a very clear decision needs to be made to place ethical considerations before economical ones. The engagement with companies needs to be clear and transparent to all. Companies need to be aware at all times of the funds expectations. The Ethical Council strives to be forward looking. While not ignoring past behaviour, their main concern is the future behaviour of a company. Above all she emphasised the need to do what little can be done instead of doing nothing.

Irish NGOs requests

Trócaire recommended that 3 principles be employed.

  • Active ownership
    • constant and systematic interaction with companies to encourage and monitor.
  • Negative screening
    • cutting out types of industry, and enforcing exclusion when appropriate
  • Positive selection
    • choosing companies that are ethical

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