Proposals have been introduced in the New York State legislature to force New York’s public pension fund managers to divest all of New York’s fossil fuel assets by 2020 and all coal holdings within one year. Unfortunately for New York state retirees, these proposals ignore the financial reality of divesting.
As New York State Comptroller Thomas DiNapoli stated recently:
“My fiduciary duty requires me to focus on the long term value of the Fund. To achieve that objective the Fund works to maximize returns and minimize risks. Key to accomplishing this objective is diversifying the Fund’s investments across sectors and asset classes—including the energy sector, where fossil fuels continue to play an integral role in powering the world’s electricity generators, industry, transportation, and infrastructure.”
In fact, a report by Sonecon found that “over FYs 2005-2013, oil and natural gas investments, which represented 5.0 percent of the total assets of New York’s two largest public employee pension plans, contributed 9.8 percent of the plans’ total gains.”
DiNapoli has also correctly noted that divesting stands in contradiction to having a voice within companies:
“Active engagement with the companies and managers in whom we invest [is] an integral component of addressing climate change risk to the Fund… simply put, if we don’t own any energy sector stocks, we lose our vote and our voice when it comes to the future of these companies.”
This road of engagement over costly, symbolic divestment is a much safer option for the more than 1 million members, retirees and beneficiaries that depend on the New York Pension Fund to support their daily life. Hopefully other state leaders will listen.
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