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New York State Pension CIO Opposes Fossil Fuels Divestment Bill
The interim CIO for the New York State Common Retirement Fund said a proposed bill would infringe on the fund’s fiduciary duty.
New York State Common Retirement Fund’s interim chief investment officer is against the state’s proposed bill that would require it to divest from fossil fuels.
At a hearing Tuesday in Albany, New York, interim CIO Anastasia Titarchuk said the bill poses “serious” constitutional questions on whether the state’s legislation can determine how the pension fund invests without infringing on its fiduciary duty. These questions will make the fund and the state vulnerable to legal challenges, she said.
The Fossil Fuel Divestment Act, introduced by New York State Senator Liz Krueger in January, would prevent the pension fund from holding a list of 200 fossil fuels companies. The pension would be forced to divest from coal in one year, and from all other fossil fuels in five years.
“The fund is not a policy tool in terms of making a divestment decision,” Titarchuk said at the hearing. “Our primary concern and our only concern is ensuring the benefit payments for citizens.”
Krueger, a Democrat who represents the east side of Manhattan, led the hearing on the bill. Titarchuk told her and a panel of state senators that the divestment would cost the fund a lot of money because it would have to move the capital from passive index strategies into customized index funds that exclude fossil fuels.
The interim CIO said that representatives for the pension believe that energy companies and utility providers could adopt sustainable practices, making them potentially attractive investments for the fund. Titarchuk also noted that Comptroller Thomas DiNapoli is in the final stages of creating a plan to address climate change through the state’s pension funds.
New York State Senator John Liu, a Democrat who represents northeast Queens, asked why the pension didn't resist the state's decision to eliminate firearms and private prisons from its portfolio in 2018.
“Guns and prisons were a minute portion of the fund that did not affect the fund,” Titarchuk said in response. “The investment case and the double bottom line, the moral case, warranted our divestment.”
[II Deep Dive: Can NYC Dump Fossil Fuels?]
New York State Senator James Sanders Jr., a Democrat who represents Jamaica, Queens and parts of Rockaway, vigorously opposed Titarchuk’s testimony on how the pension should handle climate change.
“This is a threat to human existence," Sanders said. “If the only thought is making money, we could legalize every drug there is.”
His statement was met with applause from protestors who attended the hearing.
“What good is all of this wealth if it ends with all of us dying?” he added. “We should not let the dollar bill drive us to madness.”
But Titarchuk had a response.
“It’s better to be at the table and heard than to not be there,” Titarchuk said. “By divesting, you might make a statement, but it does not affect the true climate risk present in the portfolio.”