A new report has claimed that some Irish registered funds are a significant channel for global institutional investment in fossil fuel and industrial agriculture businesses that are involved in harmful activities in developing parts of the world.
The study by ActionAid also claims that legislation put in place to prevent the State from investing public money in fossil fuels assets is not broad enough and needs to be revised.
The research is part of a wider analysis which claims that over the seven years since the Paris Agreement on climate action was adopted, banks globally have provided as much as €2.98 trillion to the fossil fuel sector in what is known as the Global South.
It also alleges that €320 billion has been supplied to the biggest industrial agriculture companies in the region during the same time period.
"At a time of unprecedented climate crisis, the world's banks and investments funds continue to invest staggering amounts into fossil fuels and environmentally harmful large-scale agribusiness in the Global South," said Karol Balfe, Chief Executive Officer of Action Aid Ireland.
"This is destructive practice and truly shocking."
An Ireland specific report, based on research completed in partnership with independent research organisation Profundo, claims international funds registered in Ireland hold €5.7 billion of bonds and shares in businesses that are involved in "climate harming activities."
Within these Irish based funds, the top six largest investments that could be considered damaging are all in oil and gas companies, the research claims.
Despite Ireland becoming the first nation in the world to pass legislation five years ago requiring the Ireland Strategic Investment Fund (ISIF) to stop investing public money in fossil fuel assets, the report states that the laws are now out of date.
"The Fossil Fuel Divestment Act 2018 drew important attention to the responsibility the Irish State has in ensuring investment of public monies does not exacerbate the climate crisis," said Ms Balfe.
"However, this only referred to one investment fund, and as we now understand the scale of harmful financial flows from Ireland, we must review and expand this Act."
The research also claims that the Act is principally focused on fossil fuel exploration, rather than its use and does not refer to agribusiness.
Investments in companies that depend on fossil fuels, such as agribusiness and agrichemical companies, are not prohibited by the Act, "thereby allowing for the continued financing of environmentally damaging activities," the report states.
It also claims that the Act does not cover indirect investments in such companies through financial derivatives, exchange traded funds and hedge funds.
"The fact is that Irish investment managers over the last five years held billions in bonds and shares attributable to fossil fuels and agribusiness in the Global South. This reveals huge flaws in regulation." said Ms Balfe.
However, in response a spokesperson for the Ireland Strategic Investment Fund said all ISIF investments are fully compliant with the Fossil Fuel Divestment Act 2018.
"Compliance with the Act is actively monitored and reviewed by ISIF," the ISIF spokesperson said.
"Any change to the legislation is a matter for the Oireachtas."
The research did not reveal any credit flows from banks in Ireland to fossil fuel firms in the Global South but claims Ireland is nonetheless still playing a role in the financing of these activities.
It also claims that Ireland's tax regime plays a role in allowing multinational companies to avoid tax in countries in the Global South, by funelling profits out of those countries and into Ireland.
