Vermont pension board will not divest from fossil fuels

Carl Martin, fossil fuel divestment

Carl Martin, right, of Montpelier attends a meeting on Tuesday of the Vermont Pension Investment Committee. Photo by Amy Ash Nixon/VTDigger

The Vermont Pension Investment Committee (VPIC) voted unanimously Tuesday not to consider divesting from fossil fuel companies in whole or in part.

The panel concluded divestment would not be in compliance with the committee’s Environmental, Social and Governance Initiatives policy.

The committee discussed and took testimony on divestment for three hours Tuesday in the auditorium at the Pavilion Building.

VPIC Chairman Stephen Rauh stressed the board’s fiduciary duty to beneficiaries of the retirement system.

“We were not created as an agent of social change,” Rauh said.

The amount of pension funds invested in fossil fuel companies is estimated to be $263.4 million, according to the state treasurer’s office. The funds total $4 billion.

Douglas Moseley of NEPC LLC, a fiduciary adviser for the state, recommended against divesting from fossil fuels. He said there would be transaction fees associated with moving pension fund investments, and eliminating fossil fuel companies from the portfolio “would change the overall risk balance” of the fund.

Matt Considine, director of investments for the State of Vermont, said divestment would be a $9 million hit annually to the pension fund.

And there is no discernable environmental benefit, Considine said. Divestment would be “a symbolic gesture,” in his view.

“The various proposals for divestment have failed to articulate any quantifiable or otherwise measurable benefits,” he said in a report to the committee.

“Instead, divestment is presented as a tactic to ‘politically bankrupt’ specific companies,” Considine wrote. “As such, Staff has been unable to determine any meaningful impact from the initiative, such as actual reductions in production or consumption of fossil fuels, or any change in behavior created from VPIC’s not owning a security.”

State Treasurer Beth Pearce spoke at length about the committee’s first duty: Vermont retirees.

“Our first and foremost responsibility [is] to the 48,000 active and retired members,” of the state’s retirement system, she said. “We are fiduciaries; our job is to get enough income in the fund to support the retirement security of those 48,000 people and I take that very seriously. At the same time I believe that climate risk is real.”

Pearce said the state is committed to helping with climate change and said she is personally compelled to “continue the fight on climate change.”

“I want to get that message across,” she said, “just as folks here want to get that message across.”

About 50 climate change activists, including students, retired and active state employees and legislators, turned out for the committee meeting, many wearing bright orange T-shirts with messages urging divestment printed on them.

After the vote, attendees affiliated with 350 Vermont and the Vermont Chapter of the Sierra Club chanted in unison as they exited the doors to the auditorium.

Ed Stanak, a retired state employee and past president of the Vermont State Employees Association, criticized the committee for refusing to re-evaluate an “outdated” policy.

Stanak suggested the vote was “politically driven.”

“Absent a thorough consideration of impacts on the retirement fund that will result by not divesting — in light of the growing body of data and analyses available on both the environmental and health impacts of climate change and the reasonably forseeable dire financial effects, VPIC would appear to be moving to a premature comprehensive decision on divestment without having taken appropriate steps for informed decision-making,” he said.

Catherine Lowther, a faculty member from Goddard College, and chair of Goddard’s sustainability committee, said Goddard divested from fossil fuels in January, and there have been no added fees or costs, and the portfolio is doing as well as it had earlier.

Pearce asked Lowther after the meeting to see the portfolio.

Lowther pointed to other colleges in the region that have divested, including Sterling College and Green Mountain College in Vermont, the University of Maine and Syracuse. Global institutions such as the government of Norway, the Church of England and the Rockefeller Foundation have also eliminated fossil fuel companies from their investment portfolios.

Joanie Maclay, a retired state employee, said while she was “deeply concerned for the environment, that is why I’m proud to be a Vermonter,” that she also is “equally concerned about the state of our retirement fund.”

Amy Ash Nixon

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36 Comments on "Vermont pension board will not divest from fossil fuels"

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1 year 2 months ago

This is a bad decision morally, environmentally AND financially. Divestment is a powerful tool with tangible environmental benefits because it stigmatizes fossil fuels (as we have stigmatized tobacco) and forces social change.

Given that VPIC won’t act, it’s now up to the Legislature to act on divestment, as it has in the past on South Africa under apartheid.

Thanks for this report, Digger. But a more balanced article would have quoted divestment supporters at the top, not just the bottom.

Renee Carpenter
1 year 2 months ago

Well Said!

David Ellenbogen
1 year 2 months ago

“We were not created as an agent of social change,” Rauh said.

Well if this were 100% true, why did Treasurer Pearce waste taxpayer money traveling to the Exxon shareholders meeting in an unsuccessful attempt to get them to change their policy?

Overlooked entirely by the VPIC is the fact that their fiduciary interest should extend not just to retirees, but to their descendants who will inherit a changed planet thanks to companies like Exxon.

One thing the Exxon board and the VPIC have in common: their minds were made up before they heard what the public had to say.

Tom Sullivan
1 year 2 months ago

Hey Gregory,

My question is, If there was a divestment in fossil fuel, and the pension fund got hit with the projected $9 million loss annually which hurt Vermont families, what would your response be to them?

John Greenberg
1 year 2 months ago

Tom Sullivan:

”If there was a divestment in fossil fuel, and the pension fund got hit with the projected $9 million loss annually which hurt Vermont families, what would your response be to them?”

That’s a fair question, but it explicitly depends on a hypothetical proposition which is in doubt here. So …

If there were a divestment and the pension fund did just as well or better, what would YOUR response be?

Glenn Thompson
1 year 2 months ago
From my own experience as an investor, I’ve made a heck of a lot more money investing in Fossil Fuel companies compared to investments in green energy companies…knowing all to well, investing in stocks is like a ‘crap shoot’! That is why a smart investor seeks advise from financial experts and not listen to ignorant people who base opinions on emotions and hysteria! PS. about 10 years ago, I followed a group of about 20 Green Energy stocks which today, most have either gone out of business or penny stocks! Most of my current Fossil Fuel stocks pay out a… Read more »
John Greenberg
1 year 2 months ago
Glenn Thompson: Divesting from large fossil fuel companies is not the same as investing in green energy companies. That’s certainly one option, but it is far from the only one, and as far as I’ve heard, it is not among those being discussed here. The financial question you SHOULD be asking is whether the fossil fuel companies which have, in the past, provided good investment returns are likely to continue to do so in a world increasingly committed to moving away from burning those fuels. Right now, the political movements in this country and elsewhere to leave fossil fuels in… Read more »
Glenn Thompson
1 year 2 months ago
John Greenberg, “Divesting from large fossil fuel companies is not the same as investing in green energy companies. That’s certainly one option, but it is far from the only one, and as far as I’ve heard, it is not among those being discussed here.” Who said it was? I only used it as an example! “The financial question you SHOULD be asking is whether the fossil fuel companies which have, in the past, provided good investment returns are likely to continue to do so in a world increasingly committed to moving away from burning those fuels.” Fossil fuel stocks will… Read more »
Tom Sullivan
1 year 2 months ago

Hey John, thanks for your response.

“If there were a divestment and the pension fund did just as well or better, what would YOUR response be”

I would say that’s wonderful. You made a choice that moves us away from fossil fuels while your pension performed well.

But that hypothetical comes from the pension fund manager, and his goal is to have the pension fund perform as well as it possibly can. And if divestment hurt the pension fund, wouldn’t he be doing a disservice to present and future retirees?

John Greenberg
1 year 2 months ago
Tom Sullivan: My point above was merely to underscore that the hypothetical about underperformance is just that: a hypothetical. “But that hypothetical comes from the pension fund manager, and his goal is to have the pension fund perform as well as it possibly can.” That may be the manager’s goal, but I am not ready to assume either a) that he or she is achieving it to the maximum degree or b) that his or her strategy is the only one which would bring similar results. Accordingly, I think it is at least reasonable to ask what the basis is… Read more »
Chris Kayes
1 year 2 months ago

This was a great decision morally, environmentally AND financially. Lack of diversity can be fatal for long term investments.

As many have pointed out, there is no moral, environmental or financial need to divest from fossil fuels.

As indicated by some of the comments on this article, there is a severe lack of understanding regarding the use of alternative energy sources.

To form an educated opinion on this topic, please take the time to read http://fusion4freedom.us/review-of-forbes-on-line-magazine-article-solar-energy-revolution-a-massive-opportunity/

Kathy Nelson
1 year 2 months ago
Chris, a quote from your link: “1. The appropriateness of solar to replace grid level baseload power generation. Solar in general, regardless of the collection system: – photovoltaics or PV, concentrated PV, concentrated solar driving conventional steam turbine generators and thermal — are extremely inefficient in comparison to their enormous size and cost.” Your link is more about production of solar panels with little concern about the environmental damages associated with that manufacture, transportation and poor siting of large solar arrays.. Use of small scale solar for residential use is the best way to use solar. Industrial scale solar arrays… Read more »
Linda Baird-White
1 year 2 months ago

The current administration has a long track record (3 terms) that includes multiple failures where thorough research is concerned. Best to leave things as they stand for now until we see what the next election brings. We’ve seen too many epic failures and VT is not in a position to withstand any more of the same.

1 year 2 months ago

VPIC Chairman Stephen Rauh stressed the board’s fiduciary duty to beneficiaries of the retirement system.

“We were not created as an agent of social change,” Rauh said.

This wasn’t always the case…i.e. the MacBride Amendment in 1989-90 divestment of industries in Norther Ireland.
Also what about fiduciary responsibility to those taxpayers who supply the funds for the pensions? Shouldn’t they have a say?

Mary Reed
1 year 2 months ago
In addition to the known disastrous ecological effects of fossil fuel extraction and use, at the rate we humans are doing that, fossil fuels will eventually be gone from the earth. We are developing alternatives such as solar and wind, boosting hydro-power, and we are using ‘stepping stones’ away from oil and coal, mainly natural gas. Perhaps, eventually, we will have the technology to harness and use hydrogen gas, one of the most widely available elements in the universe, for most of our power needs, and it could be truly ‘clean’. Moving away from fossil fuels is a long process,… Read more »
fred moss
1 year 2 months ago

Do people even understand how fossil fuels are used in every day life?? I highly doubt it. The media and liberals has manipulated this conversation so much it is almost impossible to talk about. Human life is so further along because of fossil fuels.

You think the average 20 something even knows where plastic comes from?

Wayne Andrews
1 year 2 months ago

Very good point Fred! Ziplock sandwich bags, plastic wrap, tupperware, garden hose, mud flaps, keyboards, telephones, jugs, caps, extension cords, insulators, household wire, siding, floor tile and on and on.
I work a ton of hours every week and I find it very strange the time periods people comment on these threads.
My question for the elite are:
Are you on the payroll?
Do you hold a job?
Do you fully pay for your retirement?
Does your employer purchase any petroleum products?
BTW, I am on lunch hour now.

Kathy Nelson
1 year 2 months ago

Fred, here is a link to a 12 page (partial) list of everyday items that are made from oil:

http://www-tc.pbs.org/independentlens/classroom/wwo/petroleum.pdf

Kathy Nelson
1 year 2 months ago

Fred, here is a link to a 12 page (partial) list of everyday items that are made from oil:

http://www-tc.pbs.org/independentlens/classroom/wwo/petroleum.pdf

There must be a more complete list out there.

Oscar Lafrenniere
1 year 2 months ago

Would someone please think of the children!

What good is money when the earth is dying?

Divest NOW!

BERNIE 2016

1 year 2 months ago

Instead of attempting to take Vermont retirees’ pension plan political hostage for a very uncertain outcome, maybe Hillary Clinton’s ride this week from Iowa to New Hampshire on a private jet that burns about 350 gallons of fossil fuel per hour should be the concern.

This is the very same Hillary Clinton who refuses to state her position on the Keystone Pipeline.

Seems like the fossil fuel divestors would do better focusing on getting Hillary to ride around in a Chevy Volt and leveling with the people on the Keystone Pipeline issue.

Glenn Thompson
1 year 2 months ago

I watched the news clip when Hillary was asked her position on the Keystone Pipeline? Either we have to read her mind, or wait until she is elected president for that answer? I’m no Bernie fan for sure….but at least he won’t give a response as pathetic as that!

Glenn Thompson
1 year 2 months ago

How did the 50 Climate Change Activists make it to Monpelier????

Bikes?
Walkng?
Horse and Buggy?

If they used fossil fuels…then they are wasting energy and come across looking like Hypocrites!

Dave Dempsey
1 year 2 months ago

Glenn,
Great point. If all the advocates for divestment of fossil fuel investments in the country who can afford to buy electric vehicles, only use power generated by carbon free renewable energy sources and stop traveling by air and limit all other uses of fossil fuels, divestment would be unnecessary. Fossil fuel companies would not be as profitable and return on investment wouldn’t be as attractive. The problem is that most people can’t afford to do these things and rely on fossil fuels to get to work and heat their houses, trailers and apartments.

Edward Stanak
1 year 2 months ago
Below is my full written statement on divestment that was prefiled with VPIC . July 27, 2015 Stephen Rauh, Chair Vermont Pension Investment Committee (VPIC) 109 State Street Montpelier Vermont 05609-6200 RE: Pension Funds , Divestment and Environmental, Social and Governance Initiatives Policy ( ESG ) Dear Chair Rauh and Members of the Vermont Pension Investment Committee : I am a member and beneficiary of VSERS. I write with respect to the VPIC decision making process concerning divestment from fossil fuel industries . My specific concern is the clear likelihood of substantial undue adverse effects on the retirement fund if… Read more »
Ed Letourneau
1 year 2 months ago

All the people who want divestment for the state pension funds — should be required to sign up for the extra taxes that will be needed if money is lost!

Peter Everett
1 year 2 months ago
I am concerned about climate change as much as the politicians are about the $18 TRILLION (and growing) debt that they are leaving future generations…none. Both they and I will be long gone before payment comes due. They created the financial damage, and they don’t give a damn because they will be work food in the next decade or two. They know they created it, yet, they want to do nothing but increase this debt. Why should they care, they won’t have to repay it…our kids and grandkids are going to be stuck footing the bill. By the way, it… Read more »
John Baker
1 year 2 months ago

Peter may be employing sarcasm when he posted:

“I say overpopulation may have just as much of an effect, because we all expelling CO2 at roughly the same rate. ”

But since he has made this similar point in a number of posts, I assume his is serious.

Breathing is part of the carbon cycle and doesn’t contribute to climate change.

http://climatechange.supportportal.com/link/portal/23002/23006/Article/33640/When-people-breathe-they-exhale-carbon-dioxide-Does-this-contribute-to-climate-change

Dan Carver
1 year 2 months ago

The best approach is for the Divestment Supporters to petition current and future State’s employees and teachers to accept a significantly lower pension value, and if they agree, then pensioners could demand the VPIC to divest.

Good luck with that!

sandra bettis
1 year 2 months ago

Whose pocket is this board in?

Steve McKenzie
1 year 2 months ago
Why are the divestment proponents limiting their demands to only targeting fossil fuel companies? If their objective is to drive change via investment choices, why are they not also demanding divestment from companies whose products and/or services actually generate the stated harmful product (CO2)? Per EPA.gov, in 2013 “transportation” and “industry” (manufacturing) accounted for a combined 48% of CO2 emissions. Why is there no demand to divest from companies such as GM, Ford, Delta, United Airlines, Boeing, United Technologies, GE, IBM, Dow Chemical, UPS, FedEx, Caterpillar, Deere, etc? If the divestment proponents position is that divestment ultimately drives corporate behavior,… Read more »
Dave Bellini
1 year 2 months ago

A logical decision. Many of the politically correct folks are not vested in the pension system. If it loses money….THEIR…future is not impacted. THEY HAVE “NO SKIN IN THE GAME.” It’s not their risk. They have no standing. If 350,org wants to make up any funds lost by divestment let them put THEIR money where their mouth is. Not likely. They are the vocal minority that seem to have loads of free time during the week.

ed stanak
1 year 2 months ago
Dave- Read my prefiled comments above to VPIC. The issue for the beneficiaries of these retirement funds ( To conservative commentators worried about effects of divestment on tax payers: rest easy, in the current and foreseeable political climate the VT legislature will NEVER increase the employer’s obligated contribution to the fund) is whether there has been any analysis of the potential undue adverse effect on the retirement fund from NOT divesting. That’s when we will get hosed by Wall Street. We are the ones with “standing ” on this issue and we had better become educated on the complex issues… Read more »
1 year 2 months ago
Divestment,cute and cozy. The war machine roars ahead and people are distracted by Rockefeller`s/Wall Street`s Mckibben`s dog and pony show. Anybody else find it ironic Mckibben says nary a word(if at all) about perpetual wars for oil/profit and US/corporate world hegemony? There is no irony, in context,because he is wall street`s co opted boy. Anybody else connect the dots? Divestment lowers oil stock prices making it easier to reclaim them. S African divestment was a vastly dissimilar dynamic. And(because) divestment will not touch at least 75% of the planet`s oil reserves. Unless one is capable of shaming the owners into… Read more »
ray giroux
1 year 2 months ago

The “petro dollar” –

Has anyone been paying attention? Our fiat currency is no longer backed by gold or silver – it is backed by oil.

Paul Richards
1 year 1 month ago

The much larger question is why are we funding these lavish pension plans for public sector unions while the rest of us are stuck with government mandated Social Security???????! We are forced to pay for these 2 plans which we have no choice in. This is tyranny.
We can solve the whole problem very easily by ending these golden, exclusive giveaways set aside for public sector unions and by letting them buy their own plans if they want them. Then they can decide where they want to invest. Until that happens they should have no say in the matter.

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