After an eight-year fight to get New York to divest its $226 billion pension fund from fossil fuels, activists have won a major victory. On Wednesday, New York Comptroller Tom DiNapoli announced the state will take a systematic approach to ensure the third-largest pension fund in the U.S. divests from fossil fuels by 2025.
But the state isn’t stopping there, with a promise to completely decarbonize the fund by 2040. That would put it 10 years ahead of the Paris Agreement timeframe of global decarbonization by 2050 and will turn up the pressure on other institutions to follow suit or be left holding worthless investments of a bygone fossil-fueled era.
The current movement, spearheaded by several climate-focused groups, is modeled after the successful campaign that gained strength in the 1980s to get institutions to divest pensions, endowments, and other large pots of money from South Africa in an effort to end apartheid. Now, though, the focus is on fossil fuels. So far, the movement has had a string of successes; more than 1,300 institutions representing nearly $14.5 trillion have agreed to full or partial divestment. That includes the entire country of Ireland as well as numerous colleges and financial institutions. New York state was on the partial list, having agreed to divest from coal. But Wednesday’s announcement is a lightning bolt that radically ups the ante.
“We’ll look back on this as a big moment in the story of the fossil fuel divestment movement,” said Richard Brooks, a campaign coordinator with 350, a climate organization that’s helped pioneer the divestment movement.
DiNapoli has said the state will systematically examine all its investment in oil and gas companies, service providers, and pipeline manufacturers and owners over the next four years. This is honestly good fiscal—as well as planetary—policy given the struggles of the oil industry that pre-dated the pandemic but have been pushed into overdrive over the past nine months. From there, it will move on to evaluate every company in its portfolio to see if they’re aligned with a habitable future. DiNapoli’s plan makes New York the first pension fund in the U.S. to set a 2040 carbon-free target for all parts of its portfolio.
“What he’s committed to here goes over and above the legislation that the DivestNY coalition, of which through 350 is part of, has been pushing for years,” Brooks said, referring to legislation introduced in the statehouse last year.
For any company that fails to meaningfully address climate change, the pension fund has a lot of leverage it can use, beyond pulling its money out, given the size of its investments. For example, it holds $300 million in Exxon stock, which is no small chunk of change, particularly given the company’s recent contraction. It could ask the oil giant to sit down for a meeting and talk about creating a real plan (or any plan, really) to draw down its emissions. Barring any meaningful action through that avenue, it could put forward or back shareholder resolutions to those ends. And if that fails, then it could just walk away and invest in a more profitable and civilization-friendly industry.
The DivestNY movement rose up in the wake of Hurricane Sandy, which decimated the New York metro area. But Brooks said the rise of the youth climate movement injected new urgency into the initiative, pairing teens who will have to live with the choices of investors today with retirees who want to leave a better world for them.
“We had these daylong Zoom lobby days where you had the pensioners and the teens sitting together lobbying their legislators, being super eloquent talking about their future, talking about their pensions,” Brooks said.
Those efforts paid off, gaining the divestment bill dozens of co-sponsors. With its like passage on the horizon, the comptroller simply put a plan forward.
“Today’s announcement from the Comptroller is an exciting, bold, and responsible leadership position, one that sets a high bar in a vital year for climate action,” New York Senator Liz Krueger, who introduced the legislation last year, said in a statement.
With the state of New York and New York City now ready to divest, it puts enormous pressure on polluting companies. As the beating heart of capital, the city and state’s pension funds—which together total around $500 billion—no longer going to fossil fuels sends a huge signal to Wall Street and the fossil fuel industry. But it also turns up the heat on other institutional investors, notably California’s pension funds, which are the largest in the nation, to catch up. This is, essentially, an East Coast vs. West Coast rap battle for pension funds and climate nerds, and frankly, I am here for it. While there’s a degree of competition, the more funds that get in the divestment game, the more financial power they can wield over polluting industries.
“We don’t need more hope. We need action,” Brooks said. “And I think what we’re seeing with the New York State Pension Fund is real action, which I’m really excited about.”