New York State Comptroller Thomas DiNapoli, a leading figure in responsible investment in the US, is facing political pressure that would require the $176.8bn pension fund he oversees to divest all fossil fuels by 2020.
Democratic New York state senator Liz Krueger and New York State Assembly Assistant Speaker Felix Ortiz this week both tabled bills calling for fossil divestment at the New York State Common Retirement Fund.
The Fossil Fuel Divestment Act was announced with support from a host of influential figures, including climate change activist Bill McKibben, former SEC Commissioner Bevis Longstreth and Tom Sanzillo, the former New York State deputy comptroller.
Sanzillo said: “Right now the State Comptroller should divest from all stocks in the coal industry. The coal industry has already lost the State of New York millions, and is losing money every day.” DiNapoli’s office says it is examining the legislation.
The backers issued a statement noting DiNapoli’s efforts to use stockholder engagement to influence fossil fuel firms. But, it said: “These companies have largely ignored entreaties from the Office of the State Comptroller and other institutional investors.”
The Act would direct the Comptroller to divest New York Common – the third largest pension fund in the US – from holdings in the top 200 largest publicly traded fossil fuel companies, as defined by carbon content in the companies’ proven oil, gas and coal reserves.
The bill stipulates that divestment from coal companies must be completed within one year, with divestment from all other fossil fuel companies completed by January 1, 2020. Divestment from coal was “an urgent financial and environmental necessity” given a claimed $100m in losses on coal over the past three years.
To address potential concerns around fiduciary duty, the bill would permit the Comptroller to cease divestment if he can demonstrate that the fund has lost significant value as a direct result of fossil fuel divestment.The bill also includes a requirement that the Comptroller identify all companies subject to divestment in which the Fund has holdings, and report annually on the progress of divestment from those companies.
The bill is in both houses of the New York state legislature. Kreuger has sponsored the bill in the Republican-controlled state Senate and Ortiz has sponsored the bill in the Democratic-controlled state Assembly.
As the legislature is only in session from January to June, it is highly unlikely the bill will be taken up before next January, unless New York Governor Andrew Cuomo calls a special session.
In the meantime, it is expected that momentum will be built around the bill until it can be dealt with at the next session.
Kreuger said: “It’s critical that we send the message that we are no longer going to invest our public funds in activities that do enormous damage to our environment”.
Similar action is taking place across the US. In Massachusetts, there’s a bill to divest the state’s $62.3bn public pension fund of its 8% holdings in coal, oil and gas. And in California a bill requiring CalPERS and CalSTRS to divest from coal has passed in the state’s Assembly committee. The bill, sponsored by California Senate President Kevin de Leon, now moves to the floor for a vote.
A spokesman for DiNapoli said: “We’re examining the legislation. Comptroller DiNapoli’s fiduciary duty is to manage the pension fund’s investments to get the best possible return for its members. That’s why he continues to engage portfolio companies to address the risks that climate change poses to investments. Based on experience there may be more effective means than divestment to influence the behavior of portfolio companies and accomplish meaningful change.” Link