DiNapoli to redirect pension fund to combat global warming

ALBANY — State Comptroller Thomas DiNapoli on Wednesday announced he will direct the massive state pension fund to end investments in all fossil fuel companies by 2040 to combat global warming.

The change could reinvest $2.6 billion in the pension fund's current fossil fuel holdings, DiNapoli said.

DiNapoli, the sole trustee of the $226 billion fund, said he will also take interim steps to reduce support for current investments that contribute to global warming and to protect the fund’s investments as the global economy becomes greener and jobs and opportunities continue to develop.

"New York state’s pension fund is at the leading edge of investors addressing climate risk, because investing for the low-carbon future is essential to protect the fund’s long-term value," DiNapoli said. "Achieving net-zero carbon emissions by 2040 will put the Fund in a strong position for the future."

Companies that fail to meet DiNapoli’s minimum standards to address climate change will lose or not receive investment from the fund, he said. DiNapoli said a review is underway of current fund investments in the energy sector using those standards. He said the review of nine oil companies is wrapping up soon and standards will next be developed for investments in oil extracted from shale and natural gas. That will be followed by a review of investments in oil and gas exploration and production.

"Those that fail to meet our minimum standards may be removed from our portfolio," DiNapoli said. "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."

DiNapoli is legally obligated to protect the investment of the fund, which serves more than 1 million state and local government workers, pensioners and beneficiaries.

The announcement was met with support from the Democratic-led Assembly and environmental groups.

Senate Finance Committee Chairwoman Liz Krueger (D-Manhattan) called DiNapoli’s plan "bold and responsible leadership."

She said the plan won’t just consider divesting from energy producers, but will also evaluate utilities, transportation and construction companies to make sure their emissions meet the new standards. She also said DiNapoli’s action will allow supporters to hold future comptrollers to adhere to the plan.

"I think this is a movement that will sweep through the whole country," Krueger said in a remote news conference of environmentalists who pushed for divestment.

Krueger and DiNapoli said it will be "almost impossible … for another state comptroller to decide to reverse course" because social, government and business trends are all moving in the same direction.

"I think once you start down this road you don’t undo it," DiNapoli said.

Energy companies that produce fossil fuels have long been a major investment and top performer for pension funds, but DiNapoli has said the future for strong, reliable investments is transitioning to more environmentally safe companies as the economy changes and governments require more strict caps on emissions.

"This is the biggest pension fund to divest yet," said Bill McKibben, a nationally known environmental researcher who teaches at Middlebury College in Vermont. He noted Ireland and New York City have already divested from fossil fuel investments.

"Now in the next four year we hope and we will see how we phase out of fossil fuels," said Assistant Assembly Speaker Felix Ortiz (D-Brooklyn).

No analysis of the plan is possible until DiNapoli and his staff make decisions on investments beginning in late spring with oil and gas investments.

"Unfortunately, this is another instance in which the comptroller is using his oversight of the pension fund to engage in political virtue-signaling," said E.J. McMahon of the fiscally conservative Empire Center think tank.

DiNapoli noted he and previous comptrollers have divested from investments before over the regimes running Iran and Sudan as well as divestment from gun manufacturers, tobacco companies, operators of private prisons, and coal producers. In each case, DiNapoli argued investment in those areas wasn’t fiscally sound, and not just political positions.

By Michael Gormley

michael.gormley@newsday.com@GormleyAlbany

Michael Gormley has worked for Newsday since 2013, covering state government, politics and issues. He has covered Albany since 2001.