New York’s public pension fund to divest from energy transition risk

The New York state public pension fund announced it would divest nearly two dozen stocks involved in shale oil and gas production.

The New York State Common Retirement Fund, which manages about $280 billion on behalf of more than a million people, says the 21 companies “have not demonstrated that they are prepared for the transition to a low-income economy. low carbon”.

Thomas DiNapoli

“As market forces and new policies drive the energy transition, we must align our investments with a profitable and dynamic future,” says New York State Comptroller Thomas DiNapoli, who serves as the fund’s trustee. .

“The shale oil and gas industry faces many hurdles that pose risks to its financial performance. To protect the state pension fund, we are restricting investments in companies that we believe are unprepared to adapt to a low-carbon future.

Investors are increasingly focusing on transition risk – the danger companies face from changing regulations and investments as companies try to reduce their carbon dependence and switch to carbon sources. greener energy.

NET-ZERO COMMITMENTS

Many companies have responded by releasing plans on how to achieve net zero greenhouse gas emissions over the next few decades. For example, 217 companies and organizations have signed The Climate Pledge, an agreement to achieve net zero emissions by 2040.

A recent study, however, claims that some large companies are exaggerating their carbon reduction plans. Of 25 large companies with net zero goals, only three “clearly commit to deep decarbonization of more than 90% of their full value chain emissions” by their target date, according to research from the NewClimate Institute.

The divestment by the New York public pension fund is part of a larger climate strategy. In 2019, the fund released an action plan that includes committing $20 billion to sustainable investments and establishing metrics to monitor companies’ readiness for the transition. A year later, he launched the goal of having a net-zero investment portfolio by 2040.

The action against shale oil and gas companies will see $238 million in debt and equity sold “cautiously and on schedule”, according to DiNapoli’s office. A previous review of oil sands and coal companies saw 34 companies removed from the portfolio. Integrated oil and gas companies will be the next to come under scrutiny.

Dolores W. Simon