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.”