New York State’s pension has announced plans to drop the “riskiest” oil and gas stocks from its massive investment portfolio by 2025 and fully divest by 2040, making it the first U.S. state and the biggest pension fund in the world to make such a commitment.
“We continue to assess energy sector companies in our portfolio for their future ability to provide investment returns in light of the global consensus on climate change,” state Comptroller Thomas DiNapoli said Wednesday. “Those that fail to meet our minimum standards may be removed from our portfolio. Divestment is a last resort, but it is an investment tool we can apply to companies that consistently put our investment’s long-term value at risk.”
The Huffington Post says tar sands/oil sands and fracking operations will be among the first to feel the bite of a divestment that focuses on the biggest carbon polluters first. “By early 2021, the state comptroller’s office will complete a review of companies that produce tar sands oil, a particularly dirty source coming mainly from Canada,” including ExxonMobil subsidiary Imperial Oil, the online news outlet states.
Tom Sanzillo, director of financial analysis at the Institute for Energy Economics and Financial Analysis (IEEFA), agrees that other institutional funds will likely follow New York’s “bold and smart” example, noting that fossils have fallen from a one-time high of 28% of the Standard & Poors 500 index to just 2.3% today.
“Why is DiNapoli taking this step?” Sanzillo writes, in a post for the New York Daily News. “For most of the last decade, the oil and gas sector has been at the bottom of the stock market. They have been firmly in last place for the last four years. The price of oil is down and any increases are likely to be meager. The buying and selling of assets to consolidate the industry is producing anemic prices, and the outlook is negative.”