A bill to divest the state pension fund from stock in fossil fuel companies could lead to billions of dollars in pension shortfalls over three decades, Suffolk County’s largest employee union said.
The Suffolk County Association of Municipal Employees issued a report Monday that said fossil fuel divestment could lower state pension assets by between $11.6 billion and $28.6 billion over 30 years.
To make up for the shortfalls, workers and state and county governments could have to contribute up to $33.4 billion more to the fund, the report said. Shortfalls also could lead to tax hikes and cuts in benefits and public services, according to the report.
The report was released a day before a public hearing on a state bill that would require the state pension fund to divest from the 200 largest publicly-traded fossil fuel companies within five years.
The New York State Common Retirement Fund is the third-largest public pension fund in the nation, according to the state comptroller's office. It had an audited value of $207.4 billion in 2018 and over one million members.
The state bill was proposed to “protect workers and retirees from the rapid loss of valuation that fossil fuel companies will suffer in the coming energy transition,” said the bill’s sponsor, state Sen. Liz Krueger (D-Manhattan).
“It will also send a powerful message that it is no longer acceptable to invest in a business model that puts our entire planet at risk,” Krueger said in a statement Tuesday.
Krueger cited a 2018 report by Corporate Knights, a company that examines sustainability performance, that said the pension system would have been $22.2 billion richer if it had divested from fossil fuels in 2008.
The findings of AME’s report, prepared by Foster & Foster Actuaries and Consultants, includes projections based on New York City Mayor Bill de Blasio's proposal to divest city pension funds from fossil fuel.
In Suffolk, divestment could cost the county $2.51 billion in increased contributions over 30 years, the report said.
The report was based on 10 years of data showing green energy stocks typically underperformed fossil fuel stocks.
Suffolk AME president Daniel Levler said that while he understood the need to address climate change, fossil fuels still play too large a role in the market to move away from.
Adrienne Esposito, executive director of Citizens Campaign for the Environment, a nonprofit based in Farmingdale, said AME's projections base "future prosperity on old technology" by looking at previous green energy stock returns. The market is changing as solar and wind energy become "more promising."
"That means the future of investments and payoffs are also in renewables," Esposito said.