New York Pension Fund Cuts Fossil Fuel Stocks in the Next 5 Years

The New York State’s pension fund, one of the world’s largest and most influential investors, said it would sell in the next five years its shares in fossil fuel companies, and in others who contribute to global warming.

By doing so, the New York State's pension fund could accelerate the shift away from oil and gas companies, energy experts and climate activists say, according to the New York Times. New York State's commitment to such a radical step is more significant than others, especially given the state's central role in the global financial markets.

The state comptroller, Thomas P. DiNapoli, said the main goal is to create a foundation for long-term economic success in a fossil-fuel-free world. “New York State’s pension fund is at the leading edge of investors addressing climate risk, because investing for the low-carbon future is essential to protect the fund’s long-term value,” he said in a statement.

DiNapoli said the fund could opt out of stocks that do not meet its new standards, requiring them to demonstrate “future ability to provide investment returns in light of the global consensus on climate change.” In his opinion, energy companies that do not readjust themselves to part with oil and gas are bad long-term bets.

“Clearly this will put pressure on companies to be much more transparent about how they’ll transition away from fossil fuels and reduce emissions,” said Alice C. Hill, a senior fellow at the Council on Foreign Relations who studies climate risks. She stressed that the announcement by a large investor that it is going out of this business is a very strong market signal that climate change is a financial risk.

New York's fund, the New York State Common Retirement Fund, has historically invested about $12 billion in fossil fuels, and now pledges to sell its investments of any oil and gas, oilfield services, and pipeline companies that do not have clear plans to phase out fossil fuels.

In addition, the fund has promised to push other companies to reduce their emission of greenhouse gases. According to the report, the fund will sell its stakes in companies if they do not eliminate such emissions by 2040. The plan could free up billions of dollars for potential investments in renewable energy and zero-carbon industries, analysts said.

The movement is growing worldwide, with pension funds in the UK, Ireland, and Sweden adopting plans to sell assets. According to DivestInvest, 1,246 organizations and nearly 60,000 individuals are committed to scrapping their fossil fuel investments.

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