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WSJ: New York Governor Seeks Fossil-Fuel Divestment, But Comptroller Has Other Plans

Tuesday, January 2, 2018

Gov. Andrew Cuomo said he will push for the state pension fund to divest from fossil-fuel companies, but the official who controls the fund says the best way to address climate change is by leveraging shareholder power.

The governor is creating a plan for divesting the New York State Common Retirement Fund from fossil-fuel investments as part of his 2018 agenda, he said. Mr. Cuomo said he plans to detail this and other initiatives in his Jan. 3 State of the State speech.

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.

The fossil-fuel divestment movement has been gaining steam as a way to address climate change by withdrawing support from the oil, gas and coal industries that are seen as driving global warming.

In November, Norway’s $1 trillion sovereign-wealth fund, the world’s biggest, said it would consider exiting its fossil-fuel investments. And this month, the World Bank, the international bank ING and the insurance company AXA all announced plans to divest.

Mr. Cuomo’s proposal calls for an end to all new investment in companies with significant fossil fuel-related activities and, guided by an advisory committee, greater investment in “the clean tech economy” and efforts to fight climate change.

New York City Comptroller Scott Stringer also said he would seek fossil-fuel divestment for the city’s $191 billion pension fund.

State Comptroller Thomas DiNapoli, who is responsible for pension-fund investment decisions, said in a statement that while he has no immediate plans to divest, he welcomes the chance to work with the governor on the issue. Mr. DiNapoli said he has committed $5 billion of the fund’s money to green investing, including the creation of a $2 billion low-carbon index, all of which he announced two years ago at a United Nations climate change conference in Paris.

Mr. DiNapoli previously has said the pension fund can wield greater power over big oil-and-gas companies by staying invested. “We’ve shown that shareholders have the power to compel major corporations, like Exxon Mobil, to address climate change,” he said in his response to the governor’s announcement.

Earlier this month, Mr. DiNapoli claimed victory when Exxon Mobil Corp. agreed to assess how the company might be affected by efforts to adopt the Paris agreement to reduce global warming. That move was the result of 62% of the company’s shareholders approving a request filed by the New York state retirement fund and the Church of England in 2015.

The 10,000-member Suffolk County Association of Municipal Employees, which is covered by the state pension fund, also pointed to the news as reason to stay invested.

“It’s not an argument on our part that there isn’t a need to address fossil fuels,” said union President  Daniel Levler. “We’re wondering if it isn’t more sound to have a seat at the table to prevent the worst of what this industry might do.”

Mr. Levler said fossil-fuel companies would have no trouble finding other investors, who might not be committed to holding them accountable for their impact on the environment. “If we pull out, someone else is going to jump in,” he said. “Will that person be guided solely by profits?”

Click here to read more in the Wall St. Journal.