A Forum on Divesting From Fossil Fuels

On August 11th I attended a forum on pension funds and foundations divesting from fossil fuel companies. The event was organized by 350NYC and a host of other organizations including the Sierra Club and The New York Society for Ethical Culture. The seven member panel consisted of representatives from foundations, city and state government, and organizations that track and assess carbon risk in investing. It was stated that the performance and risk over the past ten years of fossil fuel companies in the S&P 500 was no better or worse than the remainder of the S&P 500. Therefore divesting would not be a negative drag on the performance of pension funds and foundations. NY State Senator Kreuger argued that divesting large pension funds from fossil fuel companies would send an important
message. For foundations who focus on climate changes such as the Rockefeller Brothers Fund having assets in fossil fuel companies is counter-productive to their cause. It seemed that most of the crowd supported divesting but arguments were made that divesting may not be the best approach to the goal of reducing climate change. It was argued that stocks divested from these funds would be bought up by another party and the effect to company would be minimal. One approach to affect change was to become more engaged investors. The New York City Comptroller’s Office is petitioning companies to allow stockholders to nominate board members with the goal of placing more climate aware members on the boards of these companies. Another approach was for investors to raise the issue of executive pay currently based on resource extraction and shift that pay calculation to company performance. Several speakers argued that affecting change from the inside may be the best approach.
Pension funds and foundations are long term investors and several speakers spoke about the risk and viability of fossil fuels companies as long term investments. The factors discussed about viability were the capital expenditures vs the performance of these companies, the declining costs of solar, batteries, and wind, the potential for stranded underground assets, and the volatility in the price of oil. Several major coal companies filed for bankruptcy this year.

Gary Keir