Maine Gov. Janet Mills signed into law a bill that would require the $17.6 billion Maine Public Employees Retirement System, Augusta, and the state treasurer to divest holdings in fossil-fuel companies by Jan. 1, 2026.
The signing, late Wednesday, followed approval by the state House of Representatives on June 9 and the state Senate on June 10.
The legislation also requires the pension fund and the state to halt investing in multiple fossil-fuel companies. The state treasurer cannot invest in prime commercial paper or corporate bonds issued by fossil-fuel companies.
Fossil-fuel investments represent $1.34 billion, or 7.6%, of pension fund assets, said Sandy Matheson, MainePERS executive director, in an email Friday.
“One of the key provisions of the bill is that any actions must be in accordance with sound investment criteria and consistent with fiduciary obligations,” Ms. Matheson wrote. “We haven’t developed a plan at this point, but any plan we develop has to put the financial interests of our members first. We will not be taking any actions that create a loss for the plan.”
The law says pension fund’s board of trustees “shall review the extent to which the assets of any state pension or annuity fund are invested in the stocks, securities or other obligations of any fossil fuel company.” In addition, such a review will include "any subsidiary, affiliate or parent of any fossil fuel company." Using "sound investment criteria and consistent with fiduciary obligations," the board must divest these holdings by Jan. 1, 2026, the law says.
Also, the board, "in accordance with sound investment criteria and consistent with fiduciary obligations, may not invest the assets of any state pension or annuity fund in the stocks, securities or other obligations of any fossil fuel company," the law says. The prohibition extends to "any subsidiary, affiliate or parent of any fossil fuel company."
For both divesting and halting purchases, the law doesn't preclude "de minimis exposure" of fossil-fuel investments by the pension fund or by the state, the law says.
The law defines fossil fuels as coal, petroleum, natural gas or any derivative of coal, petroleum or "natural gas that is used for fuel."
The law focuses on the 200 publicly traded companies "with the largest fossil fuel reserves in the world" as well as "the 30 largest public company owners in the world of coal-fired power plants."
In addition, the law identifies companies that have as their "core business the construction or operation of fossil fuel infrastructure" or have as a core business "the exploration, extraction, refining, processing or distribution of fossil fuels."
The law also covers "fossil fuel infrastructure," which means, among other businesses, oil or gas wells; oil or gas pipelines and refineries; oil, coal or gas-fired power plants; oil and gas storage tanks; fossil-fuel export terminals; "and any other infrastructure used exclusively for fossil fuels," the law says.