New York State and City Pension Funds Will Divest from Fossil Fuel Companies
New York Governor Andrew Cuomo and New York Mayor Bill de Blasio have both recently made significant climate change-related announcements: the State’s and City’s pension funds will divest billions of dollars from fossil fuel companies. These actions support state and local goals of reducing statewide greenhouse gas emissions 40% by 2030 and meeting the Paris Agreement target of reducing emissions 80% by 2050.
New York State will divest all investments in entities with significant fossil fuel-related activities (estimated at about $3.68 billion) and dedicate a meaningful portion of its $200 billion Common Retirement Fund portfolio to investments that directly promote clean energy. The divestment will affect the Common Fund’s holdings in more than 50 oil and gas companies, including nearly $1 billion invested in ExxonMobil alone. Governor Cuomo sees divestment as a way to reduce risky financial investments for New Yorkers, based on the view that New York State and the world are backing away from fossil fuel use. The Governor will work with New York State Comptroller Tom DiNapoli to create an advisory committee of financial, economic, scientific, business, and workforce representatives that will serve as a resource for the Common Fund and will develop a de-carbonization roadmap to invest in opportunities to combat climate change and support the clean tech economy while assessing financial risks and protecting the Fund.
New York City will divest approximately $5 billion from the City’s five pension funds (together worth $189 billion) currently invested in over 190 fossil fuel companies within a period of five years. The City Comptroller’s Bureau of Asset Management will commission an analysis of the proposed divestment and will ultimately carry out the divestment according to specified steps and timelines to be determined at a later date. New York City’s Comptroller Scott Stringer justified the City’s divestment on similar grounds of reducing financial risk as did Governor Cuomo. New York City joins Washington, D.C., which began divesting its public pension fund from fossil fuel companies (equaling about $6.5 million) in 2016, and many other cities that have taken steps to divest directly controlled and/or pension funds from fossil fuels.
In addition to divestment, the City has announced that is has sued the five investor-owned fossil fuel companies with the largest contributions to global warming: BP, Chevron, ConocoPhillips, Exxon Mobil, and Royal Dutch Shell. The City aims to recover the billions of dollars needed to pay for past and future climate change-related damage and resiliency measures.
The State’s and City’s decisions to divest their pension funds from fossil fuel companies will send a strong message to other US states and municipalities that divestment is feasible—and will demonstrate to the global community that there is a strong commitment to combatting climate change in some parts of the United States.