For Refusing Fossil Fuel Divestment

The New York State Common Retirement Fund could have been $22 billion richer if the fund divested its fossil fuels stocks 10 years ago, according to a new analysis released by research and media firm Corporate Knights.

To determine the financial impact of fossil fuel divestment for the NYSCRF, Corporate Knights retrieved the fund’s stock holdings, weights and valuations for each of the past 10 years. It then used this publicly disclosed information to compare the actual investment returns of NYSCRF’s equity portfolio with those of a fossil-fuel-free version (no oil, gas or coal stocks), and accounted for net outflows arising from member contributions and pension retirement payments.

New Yorkers have been urging New York State Comptroller Thomas DiNapoli to drop fossil fuel investments more than over five years.

“Our analysis reflects that the energy transition is happening faster than investors expected,” said Toby Heaps, CEO of Corporate Knights, an investment and media research company. “Those responsible for safeguarding pension assets now need to ask themselves if they believe this transition is over or just beginning?”

To date, 988 institutional investors representing $7.17 trillion in assets have committed to some level of fossil fuel divestment, a more than 120-fold increase from years ago, according to the fourth Global Fossil Fuel Divestment and Clean Energy Investment Movement report by Arabella Advisors released during the California-based Global Climate Action Summit.

“By refusing to divest from fossil fuels, Comptroller DiNapoli is deciding to be on the wrong side of history, and it’s costing New Yorkers billions in foregone profits,” said Richard Brooks, with 350.org. “DiNapoli need look no further than New York City for real climate leadership: cut investments in dirty coal, oil and gas companies and invest in real climate solutions.”

The general outperformance of fossil fuel-free investment strategies over the past five- and 10-year periods is now well documented and proving resilient even as oil prices rise. For instance, the S&P 500 Fossil Fuel Free Index was ahead of the S&P 500 on a five-year basis as of market-close Sept. 26.

Historically, divesting from any sector has made almost no difference in long-term performance, as Jeremy Grantham has documented. However, the Corporate Knights findings and S&P outcomes indicate a quickening energy transition, which means that investors with substantial fossil fuel holdings may be taking on risks they do not fully appreciate.

This helps explain why 985 institutional investors with $6.24 trillion in assets under management have committed to divest from fossil fuels, up from $52 billion four years ago, according to the fourth Global Fossil Fuel Divestment and Clean Energy Investment Movement report by Arabella Advisors.

The report comes after a WNYC investigative report, which revealed a potential conflict of interest in the pension office of DiNapoli. The WNYC report showed former CIO Vicki Fuller left her position at DiNapoli’s office in July, and then immediately assumed a $300,000 director position with Williams Pipeline Company after increasing state investments in the company to $160 million.

Over 30 groups are demanding an investigation of the alleged conflict of interest, from the NYS Joint Commission on Public Ethics.