Last week’s Financial Times editorial pulled no punches when describing the inherent hypocrisy of New York City’s fossil fuel divestment announcement. Noting that the decision was more about political grandstanding than taking any real action to support the environment, the FT highlighted some tangible actions the Big Apple could take in lieu of empty gestures that will only hurt pensioners and city taxpayers.
As the FT puts it, “The worst aspect of these initiatives, though, is that they deflect attention away from the politicians’ own contribution to the problem.” Some of the editorial board’s most salient points of issues New York should try to focus on instead of divestment:
“Transport is the largest source of greenhouse gas emissions in New York State, and its impact is exacerbated by traffic congestion, dirty vehicles and crumbling infrastructure. Fixing those problems would do more to address the threat the city faces, and to improve the lives of New Yorkers, than attention-seeking stunts.”
What’s more, the cost of fossil fuel divestment is enormous. A study we commissioned found that NYC’s five pensions could lose $98 to $120 million annually if the city divests from fossil fuels. On the state level, a similar study commissioned by the Suffolk County Association of Municipal Employees found that the New York State Common Retirement Fund could lose as much as $2.8 billion over 20 years if it were to divest.
This means that Mayor de Blasio’s divestment announcement isn’t just an “attention-seeking” stunt or a “disingenuous oversimplification” that doesn’t support the environment, but also a decision that stands to breach the city’s fiduciary responsibilities. As the New York Post editorial board noted, “it’s going to be hard to divest while still meeting the plans’ fiduciary obligations — which de Blasio and Stringer say they’ll respect.”
This same point was not been missed in a recent IPAA letter to the editor published in the Albany Times-Union, which noted why New York State’s Comptroller Tom DiNapoli has long rejected divestment on this premise:
“My fiduciary duty requires me to focus on the long-term value of the Fund. … 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.”
Let’s hope that New Yorkers are wise enough to see Mayor de Blasio’s announcement for what it is: political positioning, not a real solution for the environment. At the very least, it seems the country’s editorial boards are paying attention and not afraid to call out harmful political grandstanding.