New York State and City plan to divest from fossil-fuel…
New York Governor Andrew Cuomo called on New York State Common Retirement Fund to stop all significant fossil-fuel investments and develop a plan to “de-carbonize” the portfolio (Reuters, 10 Jan) (The Guardian, 11 Jan) (Business Green, 21 Jan), (Bloomberg, P&I, 19 Dec): "This proposal lays out a roadmap for New York's Common Fund to take responsible steps to divest from its fossil fuel holdings, leading to a more secure retirement fund for countless New Yorkers while also helping to achieve the state's clean energy goals”, said Governor Cuomo. The state pension fund is the third largest in the nation, with a value of about $200 billion. Of that amount, the most recent estimate is that $3.68 billion is invested in the top 200 fossil-fuel companies in the world. The pension fund covers about 1 million current and retired public employees.
Governor Cuomo said he will work together with State Comptroller Mr. DiNapoli, the sole trustee of the pension fund, to create an advisory committee that would enable the Common Retirement Fund and "to develop a decarbonisation roadmap". In a statement on the Governor’s proposal, DiNapoli welcomed the opportunity to work with Mr. Cuomo on the issue, although clarifying that there were no immediate plans to divest the energy holdings. Recently, the fund has doubled its investment in a low carbon-emissions index. $4 billion will be invested in a so-called low-emissions index designed by Goldman Sachs Asset Management, with a heavier exposure to stocks such as Apple Inc. and Microsoft (WSJ, 30 Jan).
Meanwhile, New York City Comptroller Scott Stringer declared he would examine ways to decarbonise the city’s five pension funds (RI, P&I, 20 Dec). Stringer’s announcement was echoed by NYC Mayor Di Blasio, who said he and other stakeholders would begin examining how to divest the city’s five pension funds from fossil fuels (Politico, 11 Jan). In a joint declaration, the city’s mayor and comptroller announced they “will initiate a process for determining a prudent divestment and exclusion strategy for fossil fuel reserve owners that responsibly reduces our portfolio’s exposure to carbon risk and mitigates financial risks resulting from climate change, consistent with our fiduciary duty”. The goal is to divest the five City’s funds, with a combined value of $ 189 billion, from fossil fuel reserve owners within five years. In total, the City’s five pension funds hold roughly $5 billion in the securities of over 190 fossil fuel companies (Press release here).
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…and NYC sues five biggest oil majors
Mayor Bill de Blasio announced New York City is suing the country’s five biggest oil companies over climate change (Politico, 9 Jan) (RI, Washington Post, NYT, 10 Jan), (Fortune, 11 Jan): the lawsuit filed to the Southern District of New York claims that BP, Chevron, Conoco-Phillips, ExxonMobil, and Royal Dutch Shell together produced 11% of all of global-warming gases through the oil and gas products they have sold over the years. It also charges that the companies and the industry they are part of have known for some time about the consequences but sought to obscure them. “This is a tragedy that was brought by the fossil-fuel companies”, Mr. de Blasio said at a news conference (WSJ, 10 Jan).
Exxon responded that it welcomed “any well-meaning and good faith attempt to address the risks of climate change” but added: “lawsuits of this kind — filed by trial attorneys against an industry that provides products we all rely upon to power the economy and enable our domestic life — simply do not do that.” Shell added: “We believe climate change is a complex societal challenge that should be addressed through sound government policy and cultural change to drive low-carbon choices for businesses and consumers, not by the courts” (AP, FT, 10 Jan).
“This is a really big deal”, said Jeffrey Sachs, an economist at New York’s Columbia University and special adviser to the UN secretary general. “Pension funds of other major US cities will follow, I think. New York is the neighbourhood of the very big money managers. It’s a powerful, personal signal to them that they cannot keep funding the sorts of projects they have in the past” (The Guardian, 11 Jan).