New York joins tar sands investor exodus with divestment of its state pension fund.
April 20, 2021
Last week, the New York State Comptroller Tom DiNapoli made a big move, turning words into action. Comptroller DiNapoli, who manages the massive $246 billion New York State Common Retirement Fund, announced the Fund has completed a review of its pure play tar sands holdings and was divesting from seven companies.
This got a lot of media attention:
National Observer: New York State pension fund pulls out of oilsands
Spectrum News: Comptroller to bar pension investments in oil sands firms
Pensions and Investments: New York state pension fund limits oil sands investments
The companies were found to present too great a financial risk to the fund due to the lack of transition plans and alignment with the Paris Climate Agreement goals. This follows the groundbreaking announcement in December 2020, when Comptroller DiNapoli detailed a plan to review the fund’s portfolio of fossil fuel companies and divest from the riskiest companies by 2025 as well as achieve net-zero emissions by invested companies by 2040.
This is a pretty big deal in many ways. This is the first state pension fund in North America to divest from tar sands. Only one other group of pension funds in North America – three of New York City’s funds – have moved to divest from tar sands companies.
We believe this is only the beginning as other North American pension funds are increasingly recognizing that the tar sands is a risky investment both for pensioners and our planet. It’s time to pivot to clean, safe renewable energy. That’s where the smart money, led by New York, is headed.
Part of our work at Stand is to support and engage in pension divestment campaigns across the USA and Canada. There are many active ones in states such as California, Colorado, New Jersey, and Minnesota and across Canada to name a few. We are organizing the Climate Safe Pensions Network to advance coordination amongst these campaigns. More to come on that soon!
Bill McKibben congratulated DiNapoli, saying:
“Alberta’s oilpatch is the dirtiest of the dirtiest–there’s no need for this crude, and no place for it on a planet serious about the climate crisis. Kudos to New York’s Comptroller Tom DiNapoli for making it clear that you can’t build your retirement on tar sands.”
Many high profile investors, outside of pension funds, are exiting the tar sands. Last year, Sweden’s central bank and Norway’s sovereign-wealth fund dropped tar sands investments, BlackRock announced tar sands companies would be excluded from one of its major funds, and insurance giant The Hartford announced it would no longer invest or insure Alberta oil.
Capital expenditures in the tar sands have dropped by more than 64.6% from 2014 through 2019. In recent years, oil majors like Shell, Statoil, ConocoPhillips, and even Koch Industries have left the tar sands altogether and in February of this year ExxonMobil cut its tar sands reserves by 98%. Last year alone saw over C$14 billion stranded assets in the oil sands. Write downs included C$2.8 billion by Suncor, CA$1.13 billion by Teck, CA$9.3 billion by Total, and CA$1.2 billion by Imperial Oil. The US-based Global Energy Monitor recently reported an additional US$32 billion in oil and gas pipelines are at risk of becoming stranded assets in Canada.
Tar sands fuel is among the most carbon-intensive fuels in the world. Industry likes to point out that the amount of greenhouse gas emissions (GHG) per barrel of oil produced has declined, but the sector’s absolute emissions have climbed each year. Tar sands fuel remains more carbon-intensive than the average barrel worldwide and is the fastest-growing source of emissions in Canada.
As investors flee the tar sands, renewables are seeing an uptick in growth.
Beginning with the prior collapse of oil prices in 2015 and 2016, Canada’s oil sector shed jobs, while the clean energy sector grew jobs. By 2017, Canada’s clean energy sector grew faster than the rest of the country’s economy, creating 298,000 jobs – nearly 100,000 more jobs than the total in mining, quarrying, and oil and gas extraction combined.
The growth in renewables is drawing investors – including the New York State fund, which previously announced a commitment to invest $20 billion in climate solutions, including renewables. Last month, New York City announced a tripling of investments in climate solutions, ahead of schedule, reaching $6 billion.
Over 1,300 institutions with more than $14 trillion in assets have committed to some form of fossil fuel divestment. These include pension funds, universities and colleges, faith and philanthropic organizations, and cities and countries.
Next, New York State will review their investments in the fracking sector – looking at shale oil and gas companies to see if they have real plans to phase out of oil and gas production (they don’t) and if they present too great a financial risk to stay invested (they do). Any companies that don’t pass the test will be divested. This review is expected to wrap up by the end of the year.