ALBANY — More than 1,000 scientists and academic professionals, citing what they are calling a climate crisis, are urging state Comptroller Thomas D. DiNapoli and lawmakers to divest New York's pension fund from all fossil fuels.
As wildfires destroy thousands of acres of forests on the west coast and hurricanes pummel the Gulf and East coasts, advocates and experts are urging state lawmakers to support the Fossil Fuel Divestment Act - a proposal that has nearly 100 sponsors in the state Legislature - which would develop a timeline and plan for DiNapoli to divest pension funds from coal, oil and gas producers.
Research suggests the state pension would become richer by divesting from fossil fuels; the New York State Common Retirement Fund would be about $22.2 billion richer had it divested from fossil fuels 10 years ago, according to a 2018 analysis by Corporate Knights, a sustainable business magazine.
“In order to combat the (climate) crisis, we need to use all tools at our disposal, including divestment of fossil fuel stocks,” said Hridesh Singh, executive director of the New York Youth Climate Leaders. “This is an opportunity for our state to become the first state pension fund to fully divest from fossil fuels. Our future and the future of our climate is literally at stake here.”
DiNapoli said New York has been a leader on its approach to pension fund investments, and the Asset Owners Disclosure Project ranks the state number one nationally and number three globally among public pension funds that incorporate climate risk in investment decisions.
In a July op-ed published in the Times Union, the state comptroller said the state pension plan was the first in the United States to develop a Climate Action Plan to respond to the climate crisis.
“The reality is we have been recognized as a leader on the climate issue, and so we take a very thoughtful responsible approach that balances the need for return that we need to achieve in order to guarantee security, but also recognize the climate issue risk,” DiNapoli said during an interview with the Times Union on Thursday. “We want to be sure our portfolio will be sustainable for the long term.”
DiNapoli said he has doubled the commitment to sustainable investments to $20 billion, emphasizing climate solutions, and recently hired a director of Sustainable Investments and Climate Solutions who has already brought in more than $1 billion in sustainable investments in the first six months of employment.
Of the $194.3 billion value on the state pension, about $2.5 billion is invested in fossil fuels, according to the comptroller's office pension figures as of March 31, 2020. More recent total pension fund figures pin the value at over $210 billion based on first quarter estimates, according to an August comptroller news release on the fund, but that number has yet to be audited.
The comptroller’s office also has an “enhanced climate risk” assessment, which determines whether companies are at high-risk from climate change and whether they are prepared to transition to a low-carbon economy. This practice has led to divesting from 22 thermal coal companies, and attention has now been turned to oil sands companies, DiNapoli said.
Rebecca Bratspies, an environmental law professor at CUNY School of Law, said fossil fuel companies are becoming increasingly less relevant, putting the pension fund at risk and indicating that investments in other sectors may be more fruitful.
“Climate leaders don’t invest in fossil fuels,” Bratspies said. “New York cannot work toward net zero while simultaneously investing in the companies that are driving the climate crisis.”
DiNapoli said the state pension funds invested in fossil fuel companies are largely due to index funds in which the pension is invested. Index funds are a cost-effective way of passively investing in the market and allowing investors to access a wide variety of stocks and businesses. The energy sector remains an important part of index funds, the comptroller said.
“Our exposure, when you talk about fossil fuels, is going through these index funds,” DiNapoli said. “We’re not making a bet on fossil fuels, we are invested in index funds. Index funds aren’t static, they change based on capitalization in the market, so certain companies and sectors may fall out of an index.”
The comptroller’s office also focuses on working with companies and business sectors along with their respective shareholders to shift corporations to a low-carbon approach, which advocates say moves at a “glacial” pace.
Bill McKibben, a founder of 350.org, a grassroots group focused on ending fossil fuel consumption, said that might have been the best strategy 10 years ago, but a more rapid response is needed now.
“It’s now abundantly clear, a decade later, that this was not a good idea and it did not work, the companies did not bend,” he said. “It’s time for the comptroller to unlock himself from whatever point-of-view he used to have, and if he won’t do it, it’s time for the Legislature to do it for him.”
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Advocates call for complete fossil fuel divestment for state pension - Albany Times Union
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