Lawmakers ask state to divest from fossil fuel companies

Lawmakers ask state to divest from fossil fuel companies

Rep. Chris Pearson. VTD/Josh Larkin

Rep. Chris Pearson. VTD File Photo/Josh Larkin

Two House lawmakers from Burlington, Rep. Chris Pearson and Rep. Kesha Ram, will introduce legislation later this week that would require the state to stop investing in the fossil fuel industry over a number of years.

Pearson, a Progressive, told VTDigger that the bill instructs a board which handles the state’s retirement savings investments, to devise a plan to divest from fossil fuel companies over three years. The bill requires the board to draft the plan within a year.

“We spend a lot of money as a state combating the impacts of climate change,” said Pearson, who pointed to Tropical Storm Irene and record-high Lake Champlain levels in 2011 as examples of climate-related destruction.

“It doesn’t make a lot of sense to put a lot of pressure on our budget from climate change, at the same time as we’re investing in the businesses that are perpetuating climate change,” he said.

The bill, which has about a dozen co-sponsors, is likely to be introduced on Tuesday or Wednesday.

Ram, a Democrat, said the bill targets a broad swath of fossil fuel companies because sponsors haven’t agreed on whether to boycott companies who produce tar sands oil, coal, or whether to focus on another subset of fossil fuel-related businesses, like’s list of 200 public companies who hold the vast majority of fossil fuel reserves.

“The idea is being a little more aggressive and looking at our investments,” said Ram, who added that already existing policies of the key investment council haven’t necessarily made a big impact on the state’s investment portfolio. Those policies include following the Kyoto Protocol and pursuing environmentally friendly options where possible.

“A lot of our investments are buried in larger management funds, so I don’t think we’ve been able to have as much impact we could have,” Ram said. “In larger management funds, that we empower a manager to oversee, we mostly give them the bottom line on what kind of investment return we’d like to see. We don’t get much say in what we’d like them to invest in.”

The board that oversees investment decisions has representatives from the state Treasurer’s Office, as well as unions like the Vermont State Employees Association.

JP Isabelle, state Treasurer Beth Pearce’s spokesman, said Pearce would reserve comment until the bill is formally introduced.

Isabelle said the Treasurer’s Office, which is responsible for overseeing pensions for state workers, municipal employees and teachers, does not track the proportion of state investment tied up in fossil fuels. The state’s pensions are invested in so-called “co-mingled funds,” which mirror financial indices.

Doug Gibson, spokesman for the Vermont State Employees Association, said his union hasn’t taken a position on the bill yet.

Ram said that according to conversations with Deputy State Treasurer Steve Wisloski, fossil fuels make up a large portion of the state’s investment in commodities, but a small portion of the state’s overall investment.

One concern, Ram said, is ensuring that these external management funds, which are very stable and reliable funds, can be modified in way that doesn’t make the state’s overall portfolio more volatile.

“We don’t want to do anything that jeopardizes people’s hard-earned retirement,” Ram emphasized.

Shumlin’s office didn’t respond to a request for comment. Although Shumlin often speaks about the importance of fighting climate change, his personal investment portfolio, disclosed in 2010, contains oil company stocks. One of the companies has been repeatedly fined for environmental violations.

The proposal comes as climate change activists lead a nationwide campaign of fossil fuel divestment at colleges. Last week, Sterling College became the first Vermont college to distance itself from fossil fuel investments, and the third college in the nation to do so.

Pearson co-chairs the newly formed 22-member House Climate Caucus, along with Rep. Margaret Cheney, D-Norwich.

Nat Rudarakanchana

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14 Comments on "Lawmakers ask state to divest from fossil fuel companies"


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Julie Hansen
3 years 11 months ago

This kind of action helped end apartheid in South Africa; it could work on fossil fuels.

3 years 11 months ago
This is a really interesting subject because it is rare to see enviro-rhetoric get a chance to learn from real world consequences. Despite the current Ben Bernanke Magic Show underwriting the entire US stock and bond market, the 2010-2020 investment climate offers no alternatives for institutional funds to match the kind of yield and security of fossil fuel equity. Anyone who has been holding stock in ExxonMobil and divests for reasons of principle is taking an unambiguous loss in real terms. This is what I mean by “interesting” because those same funds are expected to provide a first world quality… Read more »
John Greenberg
3 years 11 months ago
“the 2010-2020 investment climate offers no alternatives for institutional funds to match the kind of yield and security of fossil fuel equity. Anyone who has been holding stock in ExxonMobil and divests for reasons of principle is taking an unambiguous loss in real terms.” Not so fast. There are actually plenty of companies offering higher yields in today’s market than ExxonMobil. Indeed, since Exxon’s dividend yield is quite close to the market’s average, almost half of dividend yielding stocks pay more than Exxon. In a world beset by environmental concerns, many centered around fossil fuel production, Exxon’s financial “security” may… Read more »
3 years 11 months ago
Sure: note that most infrastructure and industry stock is “fossil fuel equity” because petroleum remains the core input. Multinationals with a controlling stake in that core input are a better long-term bet than the multinationals who rely on this increasingly expensive, price point volatile and strictly finite commodity. Your price about P/E is completely true, and in the current climate of QE Infinity, Vermont institutional funds could just as easily dump all their incoming captial into SPY and go on vacation for the remainder of the year. However, divestment has costs: And more to the point, once the Federal… Read more »
John Greenberg
3 years 11 months ago
Once again, Justin, not so fast. You write: “most infrastructure and industry stock is “fossil fuel equity” because petroleum remains the core input.” It’s true that fossil fuels are at the base of just about everything in our current economy. But the bill we’re discussing asks for divestment from “fossil fuel companies,” which I take to mean companies which produce and market fuels from fossil deposits: i.e, coal, oil and gas companies, not other companies however dependent on fossil fuel inputs. As to whether controlling these fossil fuel resources is “a better long-term bet” than investing in “multinationals who rely… Read more »
3 years 11 months ago
John, thank you so much for a thoughtful reply. I will focus on two core issues: the economic evidence for divestment costs and the logic of long-term bets on evil, stupid things like fossil fuel equity. (Upfront, for anyone keeping score, I’m going to start by admitting my core point might be wrong, beside the point, or both.) First, you’re quite right that the wiki link was only tangentially related – I thought I was pasting a different URL, this one:;jsessionid=D7DCE9E047E0820F1CF5251373B03530.d01t03 It’s a paper that I was passed in an earlier conversation about divestment (in a college endowment context)… Read more »
John Greenberg
3 years 11 months ago
Justin: Thanks for the interesting reply. You’ve conceded all that I was really trying to show by admitting that “I cannot conclusively prove, or even support, my contention that divestment has inherent costs that would be high enough to actually jeopardize Vermont’s institutional funds.” That said, just to be perfectly clear, neither of us is asserting that the opposite is true either: there MAY be some costs associated with divestment. We both suspect that there is at least some truth in that statement. Before leaving this part of the issue entirely, here’s a parting thought. We know that the environmental… Read more »
3 years 11 months ago
The people of Vermont want clean air and support realistic actions that will produce tangible results in improving air quality. On the other hand, the people of Vermont do not like stunts that take the Legislature’s and State Treasurer’s time, jeopardize state employee retirement funds, waste tax payers’ money and produce no tangible results in improving air quality. The Pearson/Ram considered legislation to require the State to stop investing in the fossil fuel industry, unfortunately falls in to the latter category. What ever the specific legislation ultimately requires, you can be assured it will not result in one cup less… Read more »
Brent Kay
3 years 11 months ago
I would hope our elected officials would focus their time on real issues facing Vermonters. This amounts to nothing more than a political stunt that will serve to further jeopardize the fiscal stability of Vermont pension funds. The cost impact of legislation like this would be millions of dollars. Where would the money come from, especially at a time where Vermont is running tens of millions of dollars in the red each year? Moreover, it is essential we do not tie our Treasurer’s Office hands when it comes to managing our pension funds – too many Vermont’s lives depend on… Read more »
Brian Buckley
3 years 11 months ago

1. Vermont once again leading by example. Congrats.

2. Our House Rep. Peter Welch (who is in the House Energy Efficiency caucus) needs to introduce legislation opening the “master limited partnership” loophole to energy service/renewable generation companies. Fossil fuel stocks are so attractive because that loophole, which exempts publicly traded fossil fuel companies from the double taxation that all other types of publicly traded companies face (roughly 15% more).

3. Vermont should divest the state pension funds from fossil fuel companies and instead invest in energy services companies (ConEd Solutions, Siemens, Johnson Controls, Ameresco, Honeywell, etc.)

3 years 11 months ago

Point 2 is a very, very awesome idea — surprised it hasn’t been implemented already.

Jim Barrett
3 years 11 months ago

The effort to reduce Vermont investments in private companies that have helped us to live in a comfortable fashion for decades is not unexpected in this hostile government. A government run by people who hate private enterprise except when it fits the liberal mold…..example: Ben and Jerry’s. We now have people directly blaming certain storms as being caused by global warming when that has never been determined…… other words a lot of hot air. Not one person can point to anything we have done after spending billions on controlling the climate where we have benefitted……….all BS!

Justin Boland
3 years 11 months ago
John, good reading, thank you. I doubt you’ll be surprised to learn I don’t agree with you on most of that. I am a little confused as to where you got the impression I said that anything “will be the basis of global trade forever,” which is downright Friedmanesque. My point is simply that massive change involves long timetables, and scarce commodities involve increasing profits for those who control them. Still, let me wrap up on where I agree: I don’t dispute the “ephemeralization” of technology, as Bucky coined it, I just think it’s important to recognize that this innovation… Read more »
John Greenberg
3 years 11 months ago
Justin: A few quick replies and we can leave it where it is: 1) “I am a little confused as to where you got the impression I said that anything “will be the basis of global trade forever,”” You didn’t say it; I inferred it from what you wrote, obviously incorrectly. My apologies. 2) “… where you see manufacturing coming back to America, I see factories full of robots being managed by first-generation immigrants from nations with stronger STEM education.” These two notions do not conflict as far as our energy discussion is concerned. I simply said that manufacturing is… Read more »
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