In a historic move, New York State announced it will divest its $225 billion Common Retirement Fund from fossil fuels—among the largest pension fund divestments ever undertaken in the nation.
NYS Comptroller Thomas DiNapoli, who manages the massive retirement fund, known as the “Common Fund,” outlined a comprehensive divestment plan today that includes three big pieces:
- Full review of every fossil fuel investment throughout the sector
- Commitment to decarbonize the pension fund portfolio by 2040 with phased target dates
- Rigorous reporting schedule that includes annual reports on each divestment action—placing the Common Fund more than a decade ahead of any other pension fund in the country
The Timeline to Divest
As part of the plan, the Comptroller announced an aggressive schedule of divestment activity over the next four years. This year already, the Common Fund has divested from 22 coal companies. In the next few months, it will divest from companies with tar sands investments. After that, over the next several years, it will divest from these subsectors of the fossil fuel industry:
- Shale oil and gas firms;
- Integrated oil/gas majors like Exxon and Chevron as well as smaller integrated companies;
- All oil/gas exploration and production firms;
- Fossil fuel service firms, like Schlumberger;
- And finally, fossil fuel transportation and pipeline companies like Kinder Morgan and Williams.
In addition, the Common Fund is moving forward with two key steps, both supported by the 2018 Decarbonization Panel that was jointly appointed by Governor Cuomo and Comptroller DiNapoli. First, the Fund will hire new staff trained in financial analysis of climate impacts and dangers. And second, the Common Fund will actively vote against board directors of non-fossil fuel companies that do not prioritize climate concerns in alignment with the Fund’s decarbonization goals.
A conversation about divestment that seemed muted a half-decade ago—thanks to staunch opposition from the oil and gas industry—has become a central part of New York’s policy priorities, affecting everything from land use, to emergency crisis management, to economic development, to public health and clean air and water initiatives. Indeed, the divestment movement, which rests upon both financial and moral objectives, has become one of the top global responses to the climate crisis.
Today’s landmark announcement is due in no small part to the advocacy led by the Divest NY coalition, which has helped keep the issue alive in Albany and around the state.
And enormous credit also is owed to New York State Senator Liz Krueger and Assemblymember Felix Ortiz, who have championed over the last several years push-the-envelope legislation to further build a broad divestment movement in New York.
This past year, the enormity of the climate crisis has been on full display—from wildfires that turned the West Coast into a fiery hellscape, to back-to-back tropical storms and hurricanes that pummeled the Gulf and East Coast, to storms in the Midwest that left thousands reeling.
And it has never been clearer that the extraction and burning of fossil fuels are the central cause of climate change and have already driven global temperatures up by 1°C beyond pre-industrial levels. Current global fossil fuel reserves, if extracted and burned, would exceed—many times over—the international carbon budget for an average increase in temperatures of 1.5-2°C (2.7-3.6°F).
New York’s unprecedented divestment action today builds on a successful international movement. And these historic shifts in the Common Fund’s response to climate change show enormous creative leadership and evolving sensibility by the Comptroller and his team.
This divestment action will no doubt have national and even global resonance—and hopefully will further open the door for responsible pension fund managers everywhere to pursue a thoughtful but aggressive risk-based decision-making process to end fossil fuel investment for good.