The New York State Common Retirement Fund, Albany, will modify and reduce its investments in energy companies, leading to a net zero carbon emissions target by 2040, said Thomas DiNapoli, the state comptroller and sole trustee of the $226.4 billion fund.
Divestment is a "last resort," but it will be used if companies don't follow the pension fund's carbon-emission guidelines, Mr. DiNapoli said in a news release Wednesday.
"We continue to assess energy sector companies in our portfolio for their future ability to provide investment returns in light of the global consensus on climate change," Mr. DiNapoli said.
"Those that fail to meet our minimum standards may be removed from our portfolio," he added. "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."
The pension fund announced a "climate-action" plan last year, setting a series of goals and standards for the pension fund's investments "for determining whether a company is well-prepared for the transition to a low-carbon global economy," the news release said.
During a telephone news conference Wednesday, Mr. DiNapoli said $2.6 billion in pension fund assets would be subject to review. “We expect the companies we invest in to be constructively engaged” in reducing carbon emissions, he said. “Do you understand the need to get to net zero?”
The pension fund’s standards for thermal coal companies led to the divesting of 22 companies with total assets of $40 million, he said. The divestitures took place over a six-month period earlier this year. A list provided by the comptroller’s office showed that the divestitures included some of the biggest U.S. coal companies, such as Arch Coal Inc., Consol Energy Inc. and Peabody Energy Corp. More than a third of these divestitures were Chinese companies.
The pension fund is completing its review of nine oil sands companies and will prepare minimum standards for shale oil and gas companies, the news release said.
“Those will be followed by integrated oil and gas; other oil and gas exploration and production; oil and gas equipment and services; and oil and gas storage and transportation,” the news release said. “Minimum standards for all of these sectors, and a determination of which companies are suitable to remain in the fund’s portfolio, will be completed by 2025.”
Utility companies are not subject to the policy announced Wednesday, Mr. DiNapoli said during the news conference.
Mr. DiNapoli’s plan won praise from state Sen. Liz Krueger, who, since 2015, has introduced legislation requiring the pension fund to divest fossil fuel companies. Speaking during the news conference, Ms. Krueger said there was no need to reintroduce the bill next year because Mr. DiNapoli’s plan is “the biggest step New York state could to protect the future.”
Ms. Krueger predicted that the New York pension fund’s effort “will trigger actions” by other U.S. pension funds and international pension funds. “You have truly put New York on the map,” she said to Mr. DiNapoli, praising the “enormous global significance” of his plan.
