21 December 2017

New York Pension Fund to divest from fossil fuels

New York Governor Andrew Cuomo called the New York State Common Retirement Fund to halt investments in fossil fuels and set up a ‘decarbonisation’ strategy to secure future pensions from financial climate risks.

The state’s pension fund is the third largest in the United States, and currently has holdings in at least 50 oil and gas companies which have been identified as some of the most carbon-intensive companies in the world.

Governor Cuomo said: “Moving the Common Fund away from fossil-fuel investments will protect the retirement savings of New Yorkers”.

New York State Controller Thomas DiNapoli replied to this statement, by saying that although there are no immediate plans for the pension fund to break away from its energy holdings, it will start exploring a decarbonisation pathway, which would consider the halt of additional investment in fossil fuels, diversify current holdings from oil and gas companies and increase investment in renewable energy.

Mr. Cuomo used the example of Norway’s wealth fund, which after a recommendation from Norway’s national bank is considering divesting its $1 trillion funds away from oil and gas stocks to protect the country’s economy from oil price risks.

Egil Matsen, Norway’s Deputy Governor, said: “Our perspective here is to spread the risks for the state’s wealth.  We can do that better by not adding oil-price risk”.

Governor Cuomo also cited last week’s news, when World Bank announced it will halt financing of new oil and gas exploration projects in 2019- a move that sent a strong signal to financial markets and investors about the future of fossil fuels.

Environmental groups have long advocated the state’s pension fund should dissociate from fossil fuels investments, especially while policymakers in New York have embarked on strategies to promote a low-carbon economic model including the diffusion of electric vehicles, and renewable energy projects. 

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