Dive Brief:
- The New York State Common Retirement Fund said last week it would divest holdings worth approximately $26.8 million from eight oil and gas companies, including ExxonMobil, after reviewing their strategies to shift to a low-carbon economy.
- The fund, which is the third largest public pension fund in the country and manages almost $260 billion in assets, will restrict investments in Guanghui Energy Company, Echo Energy, IOG, Oil and Natural Gas Corp., Delek Group, Dana Gas and Unit Corp. — in addition to Exxon, which leads the bulk of the divestment.
- State Comptroller Thomas DiNapoli, who oversees the fund, said the pension plan has also set a new goal to commit $40 billion to sustainable investments and climate solutions by 2035, after meeting its initial target of $20 billion.
Dive Insight:
The fund’s divestment strategy includes dropping corporate bonds and actively managed public equity holdings in the eight oil and gas companies.
With the updated sustainable investments goal, the fund aims to back projects in clean energy generation, energy storage, resource efficiency and green infrastructure. The fund will also focus on utility companies, which have some of the highest carbon emission, but can also help cultivate a path to shift away from fossil fuels, according to a statement from the comptroller’s office.
DiNapoli also said the fund will increase its climate index investments by 50% to more than $10 billion during the next two years, with a goal to double that figure by 2035.
“Climate change is an increasingly urgent risk facing all investors, and I am determined to protect the state’s pension fund by keeping it at the forefront of efforts to mitigate risks to our investments,” DiNapoli said in the release.
The comptroller said the partial divestment strategy “reduces [the] fund’s exposure to fossil fuels” and helps accomplish the goals of the Climate Action Plan he launched in 2019, which aims to mitigate climate risk in the fund’s investment portfolio and eventually transition it to net-zero emissions status by 2040. Last year, the fund restricted its holdings in 50 companies focused on coal, oil sands and shale oil and gas companies — including Pioneer Natural Resources and Hess Corp. — for failing to demonstrate effective climate transition plans.
Despite the fund’s partial divestment from fossil fuel-heavy companies, several environmental groups and climate coalitions, such as DivestNY and the Climate Safe Pensions Network, criticized DiNapoli and said his divestment strategy “misses the mark,” as the fund only pulled out about 5% of its investment in Exxon.
A spokesman from the state comptroller’s office told Reuters that while the pension fund was divesting about $25 million worth of Exxon shares, the fund's other Exxon holdings total about $500 million.
“New Yorkers demand full divestment from Exxon and the other oil and gas majors,” DivestNY’s Ruth Foster said in a press release. “The future of our climate and the hard earned pension dollars of the fund members can’t be risked with continued investments in fossil fuels.”
