The Colorado House Finance Committee missed an opportunity Monday to move state pension funds (Public Employees’ Retirement Association, or PERA) onto a more financially and environmentally sound footing. In an 8-2 vote against the proposed new law (PERA Divestment From Fossil Fuel Companies, HB21-1246), lawmakers held onto mistaken assumptions about the stability of fossil fuel investments. Those views are no longer accurate and do not reflect today’s reality.
Legislators shot down bill HB21-1246 that would have required the pension fund to drop fossil fuel investments within a year of passage. PERA has generally opposed divestment, claiming it would interfere with the fund’s ability to provide solid returns for its members.
That may have been true four decades ago, when oil and gas stocks made up 28 percent of the Standard & Poor’s 500-stock index, and seven of the top 10 S&P stocks were oil and gas companies. It’s no longer true today; those stocks now account for less than 3 percent of the S&P’s value, and none are now listed among the S&P’s top 10. Even petrostates like Norway, where oil and gas revenues have made up 25 percent of the annual budget, are acknowledging that the good times are over.
Divesting from fossil fuel stocks doesn’t necessarily mean that those funds must go into renewables, but evidence is growing that it’s not such a bad idea. Over the last decade, the Morgan Stanley Capital International fossil-free index of global equities has outperformed the MSCI that includes fossil fuels.