IPFI Responds to Irish Divestment

On July 12 it was reported that the government of The Republic of Ireland would become the first country in the world to sell off its investments in fossil fuel companies. The divestment bill passed through the lower house of parliament with all-party support and will require the $9.3 billion National Investment Fund to sell its investments in coal, oil, gas and peat “as soon as is practicable.” This divestment action, one that will cost the government of Ireland millions in frictional costs and re-investment fees, came at the behest of an environmental movement aimed at decreasing the financial position of major fossil fuel companies. This type of action is unacceptable to IPFI and our President Christopher Burnham. Political decisions such as this one do not put the needs of the fund at the forefront of decision-making.

The Republic of Ireland ranked recently as the second worst European county for climate action. This ranking undoubtedly drove leadership to make this hasty and ill-informed decision. The divestment action is being heralded as a blow to fossil fuel corporations and their value- but this is not the case. When an entity chooses to divest holdings, the company divested from does not lose value, as shares are bought on a secondary market by investors not holding the same qualms as the original stockholders. By divesting, The Republic of Ireland has lost its ability to engage leaders at shareholder meetings, leaving the fund instead with fewer holdings (less diverse funds are less risk averse funds) and millions to reinvest in less-proven industries.

This political maneuver was ill-advised and as an organization that exists to keep politics out of the management of public funds, IPFI cannot condone this action.