Urging pension funds to divest from fossil fuel holdings

Credit: Lowlova under CC BY-SA 4.0 via Openverse

With the new Legislature in session in Trenton, climate change activists are renewing their push to bar New Jersey’s public employee pension funds from being used to support investments in the fossil fuel industry.

A bill that would force the managers of New Jersey’s public employee pension funds to divest their stakes in 200 of the largest publicly traded fossil fuel companies was discussed Monday in a Senate Environment and Energy Committee hearing by climate change activists and others. received strong support from environmental protection activists.

There was no formal vote on the bill during the hearing, but divestment advocates called for increased urgency and raised the issue at a recent meeting of the New Jersey Investment Council, which sets policy for the more than $90 billion pension fund. I reiterated the concerns expressed. .

feel the effects of climate change

As evidence, advocates point to the way climate change is beginning to affect life in New Jersey on a daily basis, from dangerous flooding from severe storms to alarming air quality warnings from wildfires.

“This is a feedback loop, and we’re in it, and there’s real urgency right now,” said Tina Weishaus, co-chair of the DivestNJ Coalition.

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They also reminded lawmakers that New Jersey has filed lawsuits against the fossil fuel industry in recent years seeking compensation for damages caused by climate change.

“What kind of retirement benefits can public servants expect when they are investing in the very companies that are destroying people’s health, communities, economies, natural resources, and futures?” Wysius said during the hearing. asked:

But the issue may be more complicated than it seems, several other witnesses argued at the new Congressional committee’s first hearings that began last month.

Several versions of fossil fuel divestment bills have been introduced in the Legislature in recent years, but none have made it to the governor’s desk for final consideration.

They cited jobs at New Jersey refineries and other locations tied to the fossil fuel industry, as well as general concerns about the health of the pension fund, despite recent stabilization efforts. , said it remains one of the most underfunded state retirement systems in the nation. National contributions.

“The cost of living for retired pensioners in this state has not increased…and now we are considering removing investment income from pension funds,” said Dennis Hart, executive director of the New Jersey Chemistry Council. “There is,” he said.

“I think this law is misguided,” Hart said.

Funding pension funds

New Jersey’s pension fund covers the retirement benefits of an estimated 815,000 current and retired public employees. The pension system is supported by regular contributions from workers, dedicated funds from the state lottery, and regular payments funded by taxpayers through the state’s annual budget.

The Pension Fund is professionally managed by the Treasury Department’s Office of Investments and these investments are assumed to return to the Fund an annual rate of return of 7%.

They called on the state Legislature to pass legislation to move New Jersey to a cleaner future.

But state pension fund administrators also have a fiduciary responsibility to act in the best interest of government retirees, who often rely on pension benefits as their primary source of income.

The bill, which is scheduled for review Monday, would generally require state pension fund administrators to sell their shares in coal companies within two years and all other fossil fuel companies within one year. is required.

A periodic report on “all investments sold, redeemed, sold, or withdrawn” would also be required to be prepared by the state pension authority and distributed annually to the governor and legislators, according to the bill.

This is just the latest attempt to pass such an investment ban in New Jersey. Several versions of fossil fuel divestment bills have been introduced in the Legislature in recent years, but none have made it to the governor’s desk for final consideration.

In contrast, lawmakers acted swiftly in 2022 to enact a law banning the investment of pension fund assets in companies with close ties to Russia and the government of Belarus, Russia’s military ally. All this is a response to Russia’s continued military aggression. Ukraine.

Trustees and fuel divestment

Fiduciary duties to maximize returns to retirees were among the concerns raised by opponents during Monday’s committee hearing on the latest fossil fuel divestment bill.

“We shouldn’t try to use pension funds as leverage to enact public policy,” said Ray Canter, vice president of the New Jersey Chamber of Commerce.

Beyond the fiscal impact, Cantor said fossil fuel companies are also investing in new energy technologies, citing scientists ExxonMobil employs in New Jersey as an example.

“Fossil fuel companies are now investing in renewable resources and are at the forefront of the transformation effort,” Kanter said.

But Weishaus downplayed such efforts in his testimony, saying that fossil fuel companies as a whole spend very little on climate action.

She also emphasized the need to protect residents of New Jersey’s “environmental justice” communities. That includes Black and brown communities, which often bear the greatest burden from flooding, increased air pollution, increased rates of heart attacks and asthma, and other health problems.

“Fossil fuels are killing us, and some of us are dying faster than others,” Weishaus said.

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