Updated with correction
New York State legislators who have introduced bills requiring the $148.1 billion New York State Teachers' Retirement System, Albany, to divest fossil fuel holdings said they were disappointed by the pension system's Dec. 28 announcement of climate-change investment management plans, lamenting what they say is a lack of timetables to act on polluters.
"It's a far cry from what is being proposed," said Assemblywoman Anna Kelles (D-Ithaca), lead sponsor of a fossil fuel divestment bill. "We know it's possible. It's a question of political will."
Ms. Kelles introduced her bill in February 2021. "There is enough evidence that they can be true to their fiduciary responsibilities while divesting," she said.
Her bill is identical to one by State Sen. Jabari Brisport (D-Brooklyn), also introduced in February 2021. Both bills were re-introduced this month; they remain in respective Assembly and Senate committees.
"It's a bit of a disappointment," James Ostaszewski, counsel and legislative director for Mr. Brisport, said about the pension system's plan. "It doesn't go far enough."
Still, Ms. Kelles and Mr. Ostaszewski complimented pension system officials' discussions with them while the system prepared its strategy and for giving them a heads-up on the Dec. 28 announcement. "Even though it's true that some divestment is better than no divestment, we can and should do a lot better than this" Mr. Ostaszewski said.
The New York State Teachers' Retirement System governing board's ESG plan includes:
- Divesting about $66.3 million in thermal coal holdings "in a timely and prudent manner."
- Freezing investments totaling $1.04 billion in certain investments covering thermal coal, oil, gas and oil sands, which are placed in a restricted list.
- Conducting engagement with companies in the restricted list to assess their "climate transition plans."
- Revising the system's stock proxy-voting policy "to more clearly articulate" efforts to "affect climate-friendly change" among the system's holdings.
The announcement didn't set timetables for divesting assets or offer details on engagment with companies on the restricted list.
"There's no solid time frame," Mr. Ostaszewski said. "Actions speak louder than words."
Ironically, climate change criteria in both bills is almost identical to criteria used by the pension system, such as the revenue percentage derived from thermal coal, the amount of potential carbon dioxide emissions from reported coal reserves, the percentage of annual revenue from oil or gas production and the amount of potential carbon dioxide emissions from reported oil and gas reserves. The pension system's environmental criteria cover certain investments in oil sands companies. The Assembly and Senate bills don't cite oil sands.
However, the legislators complain that the pension system is only placing its 20 largest coal, oil and gas holdings in its restricted list. The legislators want every investment exceeding the fossil fuel revenue and carbon dioxide criteria to be identified.
Their bills would require the pension system's governing board to create an exclusion list — within six months of becoming law — for these holdings of oil, gas, and coal.
If the investments in this exclusion list don't meet specific compliance guidelines for improvement, the pension system should divest coal holdings within one year of the list's creation and divest oil and gas holdings within two years, the bills said. Companies on the list could ask the board to remove them "on the basis of clear and convincing evidence" that they meet the compliance guidelines.
The bills also point out that any action required of the governing board must be "consistent with the fiduciary responsibilities of the board under the New York state constitution."