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August 9, 2016

Will Divestment Lose Again In Vermont?

Earlier this year, Vermont became a battleground state for the divestment movement when Governor Peter Shumlin (D) called for Vermont State Retirement Systems to mirror the actions of California and divest from fossil fuel energy companies in his annual state-of-the-state address.  He also went on to note that 350.org leader Bill McKibben, a Vermont native and longtime proponent of divestment, had instigated the call for divestment in Vermont and nationally.

One of the key opponents of state pension divestment emerged from an unlikely place, fellow Democrat, Treasurer Beth Pearce.  After Shumlin’s announcement, she made her views on divestment clear.

“From our end, legislating investments is bad practice…My first priority is to protect the 49,000 active, vested and retired members of the system, the beneficiaries, and the taxpayers who put dollars into that system. For me, I don’t think [divestment] is the best approach.” (January 17, 2016)

Though she was not alone in her stance, Pearce spearheaded the resistance to divestment, relying on economic analysis and input from relevant stakeholders to educate her decision.  Her team found that divesting would cost pensioners $10 million per year in lost returns and $8.5 million in implementation fees.

After much deliberation and debate, the Vermont Senate Government Operations Committee decided to not hold a vote to force the state retirement funds to divest from fossil energy holdings, and the House decided not to enforce state mandated divestment.  As Divestment Facts has previously noted, this was not the first time that Bill McKibben’s home state has resisted divestment, but the latest in a string of rejections.

While her efforts ultimately benefited state retirees who depend on their pensions as well as the taxpayers who support the $4 billion fund, Pearce’s action on the issue attracted a challenger in her Democratic primary election, which is being held today.

Richard Dunne, Pearce’s opponent, went so far as to cite divestment as a key factor in his entering the race.  No Republicans have filed, so the winner of the primary will become state Treasurer.

Pearce is considered a safe bet to serve another term, but it will be interesting to see the voting breakdown, given that divestment has been such a hot-button issue in the state and in this race in particular.  Results can be expected either tonight or tomorrow morning.



As expected, Beth Pearce cruised through her primary, winning the Democratic nomination for Vermont State Treasurer.  Despite the fact that her opponent made divestment a central issue in the campaign, Pearce won handily by a 2:1 margin.

In a recent Op-Ed, Ethan Allen Institute President Rob Roper commended Pearce for her pragmatic approach to the issue:

“Where other government officials have flip-flopped on their stance on divestment over the years following activist pressure, Pearce has repeatedly called the divestment a ‘bad practice’ and explained to legislators that selling off stocks achieves nothing more than putting assets back into the market where they will be absorbed almost immediately. The pure economic and environmental rational of divestment led her to note: ‘I’m a person, as a fiduciary guided by the facts of the situation and frankly not the politics of it.’”

The fact that Democratic voters turned down divestment in the polls speaks to the issue at hand—that divestment is a costly move that will only negatively impact pensions and taxpayers, while having no impact on climate change.  Beth Pearce acknowledges that, and Vermont voters have as well.