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IEEFA U.S.: Colorado legislature considers bill to divest state pension fund from fossil fuels

April 20, 2021

April 19, 2021 (IEEFA) ⎼ A Colorado bill that would require the state’s employee retirement fund to drop investments in fossil fuels within a year of passage is likely to safeguard  the fund’s performance, pensioners and taxpayers, IEEFA’s director of financial analysis told a legislative committee today.

The measure, HB21-1246, would require the Public Employees Retirement Association (PERA) to follow the lead of other major investors who have withdrawn money from fossil fuel-oriented companies. BlackRock, the world’s largest fund manager with roughly $9 trillion in assets, said in January that New York City’s pension funds would be better protected from climate risk and loss of value if the city divested from oil and gas stocks.

PERA has generally opposed divestment, arguing that dumping fossil fuel stocks would prevent it from obtaining the highest possible returns and breaching its obligation to protect employee benefits. But Tom Sanzillo, IEEFA’s director of financial analysis, said divestment arguments “are powerful and compelling.”

The oil and gas industry in particular has been on a long-term decline, Sanzillo said. Oil and gas stocks made up 28 percent of the Standard & Poor’s 500 index in 1980; today, they represent less than 3 percent. In 1980, seven of the top 10 S&P 500 stocks were oil and gas companies; today, there are none. Over the last 10 years, stock portfolios without oil and gas stocks did better than those with oil and gas stocks. There is a very poor outlook for oil and gas companies going forward.

“The smart money knows that the days of high profits from oil and gas stocks are over,” Sanzillo said, “Fiduciaries protect themselves, retirees and taxpayers by moving away from fossil fuels. Blackrock’s recent study for the City of New York is advice from one of the world’s leading investment houses.”

BlackRock’s study, which is based on a broad survey of major investment funds that have divested, found that dropping the stocks hadn’t led to losses for other funds.

“The market message is clear: The fossil fuel sector has historically contributed handsomely to pension funds across the world,” Sanzillo said. “It can no longer do so. It is a much smaller industry, with high risks, low profits and a troubling outlook.”


Full testimony: Testimony of Tom Sanzillo before the Colorado House Committee on Finance, HB 1246

Letter: To Rep. Shane Sandridge in response to questions raised during testimony, with supplemental documents (submitted April 20, 2021)

Author contact

Tom Sanzillo ([email protected]) is IEEFA’s director of financial analysis.

Media contact

Vivienne Heston ([email protected]) +1 (914) 439-8921.


The Institute for Energy Economics and Financial Analysis (IEEFA) examines issues related to energy markets, trends and policies. The Institute’s mission is to accelerate the transition to a diverse, sustainable and profitable energy economy.

Tom Sanzillo

Tom Sanzillo is Director of Financial Analysis for IEEFA. He has produced influential studies on the oil, gas, petrochemical and coal sectors in the U.S. and internationally, including company and credit analyses, facility development, oil and gas reserves, stock and commodity market analysis, and public and private financial structures.

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