New York state restricts investment in ExxonMobil, but does not lead to sale

New York state’s largest public pension fund is restricting its investment in ExxonMobil Oil Co., determining that the company is not preparing for a low-carbon world. But the announcement falls far short of committing to a complete divestment from Exxon, and the fund will continue to hold hundreds of millions of dollars worth of stakes in other major oil companies.

The decision could deal another blow to Exxon’s reputation, climate change advocates say, as the company tries to convince investors and the public that it is diversifying into low-carbon technologies. . But the news came as a disappointment to many activists who had hoped New York would make further progress.

“New Yorkers are demanding a complete divestment from Exxon and the other oil and gas majors,” Ruth Foster of the Divest New York Coalition said in a statement. “We cannot jeopardize the future of our climate and the hard-earned pensions of our Fund members by continuing to invest in fossil fuels.”

New York State Comptroller Thomas DiNapoli, who oversees the state’s common retirement fund, announced Thursday that his office will limit its investment in Exxon and sell about $25 million in securities. But the fund plans to keep about $500 million worth of Exxon stock managed “passively” through an index fund that invests in the entire market. DiNapoli announced that he would not place any restrictions on other large multinational oil companies.

Mark Johnson, a spokesman for DiNapoli, said that although the Exxon investments pose risks to the portfolio, “removing them completely is unrealistic for the foreseeable future and would be detrimental to the fund’s long-term performance.” We have determined that there is a possibility of granting

Johnson declined to say what standards his office has set for oil companies, but Exxon has set so-called “Scope 3″ emissions reduction targets, which measure the pollution emitted. “We are far behind other companies in the industry,” he said. Consumers of cars, trucks, and other products of our company.

Mr Johnson added that divestment is “part of our strategy, but only part of it”. We are doing more. ”

Exxon did not respond to a request for comment.

Many of those who urged countries to sell pointed to other funds, such as those in Europe, that have successfully sold off all their fossil fuel stocks. State Sen. Liz Krueger pointed out that asset management companies have creative passive indexes that exclude fossil fuel companies.

Mr. Krueger, a Democrat from Manhattan, withdrew a bill that would have forced Mr. DiNapoli’s office to fully divest from fossil fuels after the auditor general agreed to launch its own review in 2020.

As part of Thursday’s announcement, Mr. DiNapoli’s office also announced a goal to invest $20 billion in climate change initiatives such as renewable energy and green infrastructure, reaching $40 billion by 2035. He said he would aim to do so.

Krueger praised these investments and said the most important question is whether the world can raise enough money for clean energy. “If we do that and accelerate the transition from an oil and gas economy to a green economy, this issue of divestment becomes moot,” Kruger added. “No one wants to invest in oil and gas.”

The state comptroller’s review of major oil and gas companies was the latest in a sectoral analysis of fossil fuel companies that began in December 2020. Previous rounds led to investment restrictions in 50 companies that mine coal, oil sands and shale oil. And gas. Advocates have praised DiNapoli’s leadership in starting the review, but some agencies are going further. New York City announced in 2021 that it had divested approximately $3 billion worth of fossil fuel holdings. A major Dutch pension fund announced last week that it had ended investments in all major oil and gas companies.

A complete divestment by these pension funds would undermine the Comptroller’s argument that fiduciary duties limit the ability to withdraw from passively managed funds, said advocacy group Stand Earth, which has been pushing for the divestitures. said Richard Brooks, director of climate finance.

DiNapoli announced Thursday that his office would move more money into climate index funds and no longer invest in private equity funds “focused on oil, gas and coal extraction and production.” Brooks praised the measure.

The pension fund has approximately $260 billion in assets, making it one of the largest state pension funds in the country. Johnson, the Comptroller’s Office spokesman, said the fund’s fossil fuel exposure has fallen to $3.5 billion from $4.69 billion in December 2022. In addition to its holdings in Exxon, the fund owns about $388 million worth of Chevron stock and $50 million worth of stock, according to recent filings. Invest in BP.

Brooks said that despite the relatively small amount of shares sold, the announcement could make it easier for other pension funds to take similar steps, including California, Maine and Oregon. , noted efforts underway in Vermont.

More than 1,600 faith-based organizations, universities, philanthropies and other institutions around the world have announced at least a partial divestment from fossil fuels, according to Stand.earth. Brooks argued that these decisions are already having an impact by shrinking the pool of potential investors for fossil fuel companies. He said New York’s decision will add to the pressure.

“It should influence the choices people make when deciding who to invest or not invest in,” Brooks said, adding that DiNapoli’s firm is well-respected. “I think he realized that Exxon posed a risk to the fund and that financial risk was sending a message and a signal to the market.”