The legislation stated that the purpose of the ICNF “shall be to support State expenditure:
(a) in 2026 or any year thereafter, where there has been, or is likely to be in the
subsequent year, a significant deterioration in the economic or fiscal position of
the State, and
(b) in each of the years 2026 to 2030, on designated environmental projects.”
What this means in practice is that the NTMA will invest the Fund in assets such that the capital of the Fund, and any investment return earned, is available to be withdrawn by the State to fund expenditure including on climate and nature projects. The Fund itself will not invest directly in infrastructure or climate and nature projects.
Each year from 2024 until 2030, the Government will contribute €2 billion to the ICNF.
In the event of significant deterioration in the public finances, the Minister may seek to reduce the amount payable to the ICNF in any given year. The Minister may also opt to increase the payment in a given year.
The long-term investment strategy for the ICNF has yet to be finalised, and remains subject to NTMA approval and Ministerial consultation. However it is expected that the ICNF will initially be invested in liquid public bond markets.
Given the purpose of the ICNF is to ensure funds are available to be withdrawn in the event of a downturn, and to fund designated environmental projects, it is appropriate that the ICNF will invest in relatively low-risk liquid assets. Therefore the ICNF is not expected to invest directly in infrastructure and environmental projects – the fund is intended to be available to be withdrawn by the Government to fund relevant expenditure, including on relevant environmental projects.
Up to €3.15 billion will be specifically available to support designated environmental projects from 2026 to 2030.
Pending approval and implementation of the long-term investment strategy, the ICNF is being managed by the NTMA under an interim investment strategy which reflects a low risk appetite, permitting only highly-rated liquid sovereign and quasi-sovereign bonds.
The ICNF Investment Strategy is published on the NTMA website here.
Where there is significant deterioration in the public finances, the Government may withdraw up to 25% of the fund in a given year.
For designated environmental projects, the Government may withdraw up to 22.5% of the fund (subject to an overall cap of €3.15 billion) each year from 2026 to 2030.
Once money is withdrawn from the fund, it will be a matter for the Government to decide how that money is spent by the Exchequer.
ISIF has its own unique mandate to invest on a commercial basis to support economic activity and employment in Ireland. ISIF focusses its efforts on making transformational investments across its impact themes of Climate, Housing and Enabling Investments, Scaling Indigenous Businesses, and Food and Agriculture.
The FIF and ICNF each have their own mandates to invest on a commercial basis to secure the optimal total financial return. They do not share ISIF’s “double bottom line” mandate to support economic activity and employment in Ireland. Therefore the FIF and ICNF are expected to retain more of a global focus than ISIF, and while there is potential for some limited overlap in certain asset classes, they are expected to pursue different investment strategies.
A new dedicated business unit for the Future Ireland Funds is being established within the NTMA, to be led by its own Director and resourced by its own team. The process is ongoing to recruit the Director and the initial team members, and it is expected that the team will continue to grow over the coming years.
There are expected to be certain synergies between the Future Ireland Funds and ISIF in terms of expertise and operational capability which will be leveraged by the NTMA to ensure efficient operation and close collaboration between both business units.
The Future Ireland Funds will also benefit from the shared services provided by the NTMA including Finance, Legal, Compliance, Risk, ICT, Communications, People, Internal Audit, Procurement and other functions.
The NTMA engages third party investment managers to facilitate access to global diversification and the widest possible range of asset classes and investment opportunities. This approach allows the assets of each fund to be invested globally across a number of asset classes/strategies and regions to enhance the diversification and liquidity of the portfolio, so that there is no excessive concentration in one company, sector or country driving the risk and returns of the portfolio.
It is expected that the FIF and ICNF will rely primarily on external investment managers, however the model remains subject to review and there may be scope for certain investment activities to be undertaken in-house as capabilities and capacity allow.
The Interim Investment Strategies for both funds are being managed by the NTMA internally.
The NTMA is the manager and controller of the FIF and ICNF, and the Agency (i.e. Board) is responsible for all aspects of the management of the funds, including the determination of the relevant investment strategies. The Agency expects to appoint a new Investment Committee, comprising Agency members and external experts, to assist in the oversight of both the FIF and the ICNF.
In addition, investment strategies for both the FIF and the ICNF are subject to consultation with the Minister for Finance and the Minister for Public Expenditure, National Development Plan Delivery and Reform, and the Minister for Finance shall consult with such other Ministers as he/she considers appropriate.
The NTMA endeavours to be a responsible investor, actively integrating ESG matters into its decision-making processes with a view to enhancing the overall outcomes for the Fund and ultimately for the State.
The NTMA is acutely conscious of the importance of investing public money in a responsible and sustainable manner – and of the importance of demonstrating this to the public and its other stakeholders.
The NTMA envisages that ESG risks, including individual investment decisions, will be considered through a comprehensive Sustainability and Responsible Investment Framework (SRIF) that will be designed to take account of the specific circumstances and objectives of each fund.
In developing the SRIF, it will be a requirement for the NTMA to consult with the Minister for Finance and the Minister for Public Expenditure, National Development Plan Delivery and Reform, and the Minister for Finance shall consult with such other Ministers as he/she considers appropriate.
There are a number of industries in which the FIF, ICNF and ISIF do not invest. The NTMA aims for exclusions to be limited in number and are in effect a “last resort” approach to responsible investment when other avenues are inappropriate or are deemed to be ineffective.
The exclusion of certain categories of investment is mandated by legislation, including investment in fossil fuel undertakings, cluster munitions and anti-personnel mines, coal production and processing, and tobacco manufacturing. Other non-statutory exclusions that also apply include the manufacture and testing of nuclear weapons.