Legislators introduce bill to divest NY pension funds from fossil fuels

Pensioners advocate for divestment from fossil fuel industries. Gazette photo by Daniel Wells

Lawmakers and environmental advocates are hoping to pass a bill this session that would divest state pension funds from the top 200 fossil fuel companies over the next five years.

The bill (S.4596/A.3712), sponsored by Senator Liz Krueger, D-Manhattan, and Assemblyman Felix Ortiz, D-Brooklyn, would require the state comptroller to begin divesting pension funds away from fossil fuel companies; coal companies within one year, and gas and oil companies within five years.

New York’s state pension fund is the third largest in the nation, totaling $178.6 billion in assets, and affecting over 1 million people, including employees, retirees, and beneficiaries. New York’s Comptroller, Thomas DiNapoli, is the sole trustee of the funds.

According to Senator Krueger, continued investment from the funds leaves pensioners at risk of potential “stranded investments,” as renewable energy technologies continue to develop, and fossil fuels are slowly phased out.

“As it becomes clearer and clearer that fossil fuels are not a good investment for our future, if you’re an investor in them, you risk owning a product that you can’t sell,” Senator Krueger said. “Because, let’s face it, who would buy stock in coal at this point? No one. Not even the coal companies are investing in their own companies anymore. So why would we, the pensioners of New York state, want to be invested in it?”

The bill includes an escape clause, wherein the comptroller can cease divestment from the companies if the move causes the fund’s overall value to decrease by .05 percent.

Several cities across the state, including New York City, Ithaca, and Cooperstown have joined other organizations and universities in divesting their pension funds from the fossil fuel industry.

The bill has seen some opposition from DiNapoli, who, according to Krueger, “doesn’t want the Legislature to dictate a divestment policy for his office, because of a larger principle.”

Assemblyman Felix Ortiz, D-Brooklyn, and Seantor Liz Krueger, D-Manhattan, speak in support of their bill to divest NY pension funds from all fossil fuel companies. Gazette photo by Daniel Wells

According to a spokeswoman for DiNapoli, holding on to investments in fossil fuels will allow the fund manager to have some say as a shareholder in these companies.

“Rather than give up its seat at the table by divesting, the state pension fund leverages its role as a large institutional investor to engage with companies as a shareholder to address the goals of the Paris Agreement, to stand against deforestation and to commit to alternative energies,” said Jennifer Freeman, a spokeswoman for the Comptroller’s Office. “We believe that we can actively engage with companies in building a cleaner, sustainable global economy, while fulfilling our fiduciary duty to maximize the long-term value of the fund through profitable investments.”

The New York state pension fund is ranked number three in the world, according to the Asset Owners Disclosure Project, for its success at managing climate risk within its investment portfolio. In December 2015, DiNapoli announced a $2 billion investment into energy corporations that are “low carbon emitters,” according to a press release.

Despite this, Krueger says New York needs to do more to fight the global impacts of climate change caused by use of fossil fuels.

“Fossil fuel divestment sends a powerful message that it is unacceptable to invest in companies whose fundamental business model requires the destabilization of our climate and our society,” she said.