New York state will transition its retirement fund for public employees — the third largest pension fund in the country — to an investment portfolio with net zero greenhouse gas emissions over the next two decades, State Comptroller Tom DiNapoli said Wednesday.
The announcement is a victory for environmental advocates in New York, who have called on the state to divest from fossil fuel companies for years.
“This is an important step in the worldwide campaign to stop investments in fossil fuels in order to prevent the worst of global warming,” said Mark Dunlea, chair of the Green Education and Legal Fund.
The announcement accelerates a plan that’s been underway for several years. The pension fund has already divested about $40 million dollars worth of coal companies and only holds about $2.5 billion in fossil fuel stock, roughly a fifth of its ownership in what it calls “climate solution” companies.
DiNapoli said the net zero plan will eventually extend into other industries, not just fossil fuel. “If we’re going to get to the point of where we have companies that don’t meet our minimum standards we will make the decision to take action, up to and including divestment,” DiNapoli said.
DiNapoli said his office will work toward that goal by evaluating companies the state invests in based on how well they’re prepared for a future that doesn’t rely on carbon-based fuels. That review will be made across the state’s entire portfolio — not just fossil fuel companies.
“As I hope we would all agree, climate change is one fo the greatest risks facing investments of all asset classes,” DiNapoli said. “The steps I’ve announced today will help protect the fund in the long-term.”
The announcement doesn’t mean New York will completely divest from companies with a focus on fossil fuels, but will evaluate investments individually based on specific standards to determine its carbon strategy and impact.
DiNapoli’s office has already started to distance the state’s retirement fund from companies that don’t meet minimum climate impact standards. The fund divested from 22 coal companies that didn’t meet the state’s standards, for example.
At the same time, DiNapoli’s office has ramped up the state’s investments in renewable energy, like wind and solar.
“We’re really contemplating doing much more in terms of clean energy, solar, and so on,” DiNapoli said.
State Sen. Liz Krueger, D-Manhattan, had sponsored legislation geared toward divesting the state retirement fund from fossil fuels. She said Wednesday that DiNapoli’s announcement was significant because it allows the state to evaluate businesses from all industries.
“It’s a warning announcement to everyone who is damaging our environment — from ExxonMobil, to utilities, to transportation, to construction — that everyone needs to heed the challenge of cleaning up their act, so to speak,” Krueger said.
DiNapoli’s office will now spend the next four years reviewing the state’s investment in energy sector companies, according to the plan. That will be followed by annual progress reports on the new goal of the pension fund, and regular assessment of the state’s investments.
