The ESG culture war notched up higher as Vermont stepped forward with legislation requiring the state's three largest pension funds to divest from the fossil fuel industry.
The legislation calls on the Vermont Pension Investment Commission to determine the extent to which the Vermont State Employees' Retirement System, the State Teachers' Retirement System and the Municipal Employees' Retirement System are invested in the fossil fuel industry and to come up with the plan to divest pension assets from fossil fuels by Dec. 31, 2030.
The bill also prohibits the commission from investing the assets of the three pensions funds in the fossil fuel industry beginning July 1, 2031.
The legislation was introduced in the Senate on Jan. 26 by Sen. Kesha Ram Hinsdale, D-Chittenden, and in the House on Feb. 8 by Rep. Gabrielle Stebbins, D-Burlington.
Eric Henry, chief investment officer of the $5.5 billion Vermont State Retirement Systems, which oversees the three pension funds, did not respond to a request for comment.
The legislation is a counterweight to anti-ESG laws in Republican states calling on public pension funds to refrain from doing business with — or requiring them to divest from — financial companies identified as boycotting traditional energy companies. Oklahoma, Kansas, Louisiana and Texas have either adopted or proposed such laws.
Oklahoma Treasurer Todd Russ, for example, in February made public a letter sent to 160 fund managers, banks and other financial institutions asking them to verify that they did not boycott Oklahoma's energy companies. Those that did not respond to the letter would be "presumed to be engaged in discriminating activities" and would be placed on a public list of financial companies with which Oklahoma's pension funds would be prohibited from doing business.
Vermont's proposed pro-ESG legislation follows a package of bills introduced in California in January, requiring the state's public pension funds to divest from fossil fuels and force large companies operating in California to disclose more climate-related information. The bill is also very similar to divestment legislation that Maine passed in 2021.