During this year’s New York State Employee Conference one message came through loud and clear: New York State public employees do not want their pension fund to bear the cost of a misguided fossil fuel divestment scheme. Lucky for them, their pensions are under the watchful eye of State Comptroller, Tom DiNapoli, who – in stark contrast to his NYC counterparts — prioritizes his fiduciary responsibility toward pensioners over winning political points with environmental activists.
But with a politically ambitious Governor and a bill pending in the New York State legislature that would direct the State Comptroller to divest New Yorkers’ retirement funds from oil, natural gas, and coal companies, DiNapoli’s hand could be forced despite the fact that divesting could cost pension fund trillions of dollars.
While City Comptroller Scott Stringer wants to paint all those who oppose fossil fuel divestment as “irresponsible,” the reality is that DiNapoli has a very realistic and thoughtful view on divestment strategies. In his own words:
“I feel a lot of sympathy with [the activist’s] position but using the pension funds as the volleyball in this debate is not the way to go… and I always ask when I am in a meeting on this, how many of you drove a car here that used gasoline to get here? So, don’t use my pension fund to solve this problem when we as a society are still going through a transition…”
Similarly, Peter Meringolo the Chairman of the New York State Public Employee Conference, noted at the conference today:
“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.”
Concerns over the cost, hypocrisy, and ineffectiveness of fossil fuel divestment were only part of the argument made against it by experts at the conference. Another very real problem is that by directing DiNapoli to divest the pension fund from fossil fuels, the State Legislature may be asking him to do something illegal. As explained by the General Counsel to the New York State Troopers and NYSPEC, Richard Mulvaney:
“I want to talk about the fiduciary responsibility that Tom DiNapoli has been mandated to undertake. You understand that this is the highest legal duty that is imposed on an individual to… take actions [on the behalf of] people who depend on him the most, the pensioners of the State of New York. That is a legal mandate and any time a legislature wants to legislate or order him to do something that is against his fiduciary responsibility—he places himself and our pension in great legal peril.”
This point cannot be overstated: the comptroller’s job is to maximize funds for the benefit and security of its pensioners, not to use the pension as a political tool. According to a new study just released by the Suffolk County Association of Municipal Employees (AME), fellow panelists at the conference, divestment of the state pension would lead to a $2.8 billion loss over 20 years. From the report:
“Given the unique role of the energy sector in the economy, investors that chose to remove traditional energy from their investments reduce the diversification of their portfolios and thereby suffer reduced returns and greater risk. Investor costs are further compounded when considering the additional costs of transactional fees, commissions, and compliance costs that are unavoidable when divesting. During a period when many pension funds are underfunded.”
With the retirement money of New York’s working families on the line, let’s hope that the State Legislature supports Comptroller DiNapoli and pushes back against fossil fuel divestment.