June 21, 2019

New York Sidesteps Divestment Again

This week, New York passed a new climate bill, setting aggressive targets for emission reductions and other environmental goals. The plan received cheers and jeers from commentators within and outside the state, but one notable item was left out entirely: divestment.

Putting aside some general opinions about the feasibility and approach of the bill, it’s noteworthy that the Cuomo administration and state legislature left divestment out of this ambitious plan.  For years, a proposal to mandate the New York State Common Retirement Fund to divest from fossil fuels has been considered in both the State Senate and General Assembly, but hasn’t seen much success.

However, this year there was a concerted effort to move the bill through the legislature and Gov. Cuomo had mentioned his support of fossil fuel divestment during last year’s State of the State address.  Despite the vocalized support by several political leaders, New York still hasn’t adopted divestment–and didn’t include it in this sweeping climate bill when it had the chance.

Perhaps it’s because divestment has no impact on the environment:

“We understand that climate change is real but what is lost in this debate is that there have been no studies proving that fossil fuel divestment would make any significant progress toward addressing climate change… The bottom line is that the retirement accounts of working families should not be used as political bargaining chips in the debate over climate change.” – Peter Meringolo, Chairman of the New York State Public Employee Conference

 

“We have expressed our criticism for the strategy of divestment many times in the past. Though the specific demands of Divest Harvard have changed, their underlying philosophy toward combating climate change has not. Simply put, it is the supply of and demand for fossil fuels that creates the market valuations of energy companies, not the reverse. Divestment has no ability to alter these basic economic realities.” – The Crimson Editorial Board

 Or that pursuing such an empty gesture would only create more costs for New Yorkers, costs that add up to over $1.1 trillion over 50 years:

“The Fund is one of the best funded and best managed pension funds in the country. Opening the Fund’s investment decisions to the political trade winds will jeopardize the financial security of over one million current and future retirees.” — Civil Service Employees Association

Or maybe divestment was left out merely because the responsibility of such decisions lies only in the hands of the State Comptroller:

“All attempts by the legislature to mandate specific investment decisions have been struck down for violating the Comptroller’s independent discretion. Because this legislation, in requiring divestment from 200 specific companies, mandates very specific investment decisions, it would be vulnerable to legal challenges and likely found unconstitutional.” – Interim Chief Investment Officer (CIO) of the New York State Common Retirement Fund Anastasia Titarchuk

All of these reasons were on display at hearing in New York on divestment this spring, where leaders from the Comptroller’s office and various organizations reiterated the costly, ineffective nature of fossil fuel divestment.

But whatever the rationale, it is clear divestment has been kicked down the road once more in New York, and should be everywhere else.