As of June 2024, Irish-based subsidiaries of investment companies held €31.76 billion ($34 billion) in fossil fuel investments. This puts Ireland 14th globally in terms of fossil fuel investment by manager location, alongside economies that have substantial fossil fuel industries. With Switzerland, Ireland is one of the only two jurisdictions with such significant fossil fuel investments without having a major fossil fuel industry of its own, putting Ireland ahead of fossil fuel producers like Brazil, Russia and Kuwait.
How did this come about, given the urgency and scale of the climate crisis? Fossil fuels—comprising coal, oil, and gas—are responsible for over 75% of global greenhouse gas emissions and almost 90% of total carbon dioxide emissions. They are by far the leading cause of climate change. But they remain incredibly profitable, as companies and investors seek to extract every last drop of value from an imploding system.
This outcome is facilitated by Ireland’s particular Foreign Direct Investment Model. But it is not inevitable; it is the result of specific policy choices. Given the urgency and scale of the climate crisis, Ireland needs as a matter of urgency to make different, better policy choices. As the Programme for Government for Ireland warns, ‘Time is of the essence as global warning continues’ and Ireland needs to take ‘decisive action to radically reduce our reliance on fossil fuels’.
Despite their overwhelming contribution to global emissions, fossil fuel companies continue to attract significant financial backing—driven by their enduring profitability. This is starkly illustrated by the case of ExxonMobil, the top fossil fuel investment held by asset managers based in Ireland. In 2023, ExxonMobil reported €33.63 billion ($36 billion) in profit. That is almost twice the GDP of Botswana (€18.1 billion) and nearly three times Namibia’s GDP (€11.5 billion).
Ireland plays a hugely disproportionate role in facilitating investments into fossil fuel companies like ExxonMobil. In 2023, the investments made into fossil fuel companies by investment managers based in Ireland generated an estimated 72.5 million tons of CO2e. This is more than the CO2e emissions for the entire country of Ireland—and more than ten times that generated by Sierra Leone.
Belfast Climate Change March, 2019. Photo: Trócaire.
The climate crisis is here, now, and it is causing disproportionate harm in the Global South. In Bangladesh, rising sea levels and increasingly severe cyclones are displacing coastal communities, with projections indicating that 17% of the entire country could be underwater by 2050. The legally binding Paris Agreement on climate change explicitly acknowledges the importance of tackling private finance. Its three overarching goals are: keeping below 1.5C of warming; increasing adaptation and making finance flows consistent with low emissions and resilience.
This gives a clear mandate for action: both tax reform and corporate regulation are needed to tackle financial flows, and both nationally in Ireland and at EU level, ‘polluter pays’ taxes are lacking and regulation of the financial sector remains weak and fragmented. While EU regulation exists, it is designed more to nudge investors toward more sustainable investment practices by increasing transparency and reporting levels than to enforce strict standards. And it is moving in the wrong direction: the recently passed EU Corporate Sustainability Due Diligence Directive excluded investments; and now the EU Commission’s Omnibus legislative proposal threatens to undo the limited gains made on climate plans, as well as blocking future attempts for stronger action at national level.
Protestors at COP 28 in Dubai. Photo: Konrad Skotnicki.
Fossil fuel investment is too profitable to remain weakly regulated. If Ireland continues with its current strategy of encouraging FDI at all costs, and relying on weak EU regulation, we are headed for catastrophe. The Inter-governmental Panel on Climate Change has repeatedly warned that every fraction of a degree beyond 1.5°C brings irreversible consequences: collapsed ice sheets, vanishing coral reefs, and extreme weather events that will make vast regions of the planet uninhabitable. And yet, companies are developing oil and gas fields that could push global warming beyond 2°C.
Our research found that 91% of the investments made into fossil fuel companies by investment managers based in Ireland were to companies that have plans for fossil fuel expansion like these. Ireland cannot afford inaction on this issue.
The figures in this report regarding investment from Ireland are based on new research commissioned by ActionAid Ireland and Trócaire. In the paper, we uncover the scale of fossil fuel investment through Ireland, who the investors are, and in which fossil fuel companies they are investing. We analyse the current regulatory framework and explain why it is inadequate—and moving in the wrong direction. And we make specific recommendations for change, which are summarised below.
Regulate the private financial sector: Ireland must end its outsized role as an enabler of destructive fossil fuel investment. Ireland should introduce a strong gender-responsive national human rights and environmental due diligence framework which includes the regulation of investors with respect to human rights and the environment and climate. The transposition of the EU Corporate Sustainability Due Diligence Directive could achieve this if downstream activities are included and the Omnibus proposal is rejected. Ireland should prohibit investments in fossil fuel expansion and require investors to implement climate transition plans consistent with a 1.5°C climate limit.
Endorse the Fossil Fuel Non-Proliferation Treaty: Ireland should endorse developing a Fossil Fuel Non-Proliferation Treaty to curb fossil fuel expansion and commit to a fair and funded phase out of fossil fuels.
Support tax justice: Ireland should support bold and fair new global tax rules through the UN Framework Convention on Tax, should adopt all OECD BEPS measures, and should conduct an updated and comprehensive spillover analysis of its tax policy. Ireland should take coordinated action globally, at the EU level and domestically to introduce a range of new taxes to mobilise finance needed for climate justice, based on ‘polluter pays’ and social equity principles such as wealth taxes for the highest earners, climate damages tax on investors, fossil fuel production taxes and levies on aviation and shipping.
Finance a just transition: Ireland must also meet its fair share climate finance obligations under Article 9.1 of the Paris Agreement, and pay our ecological debt to the Global South. Ireland should support conditionality-free debt cancellation for countries on the front lines of the climate crisis, commit to a new UN Framework Convention on Sovereign Debt, moving debt negotiations from the IMF to the UN, and to a debt workout mechanism that is fully representative and fair.
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