Editor’s note: This commentary is by Maeve McBride, who is coordinator of 350Vermont.
[I]’m struck by the strange pace of life under the golden dome in Montpelier. On one hand, policy-making seems to progress at a glacial pace. On the other hand, the pace can be so fast, if you’re not watching carefully, you’ll miss the grand slam moment.
One of those long-awaited, tense moments happened recently in the Senate Government Operations Committee when the committee took up S.28, a bill to divest the state pension from the top 200 fossil fuel companies. Even if you knew nothing about political baseball, walking by the committee room, you might have a clue that something was about to happen. The room was packed like sardines, and people were being turned away from the door. Observers were on the edge of their seats, if you were lucky enough to have a seat. The audience included a lobbyist for the American Petroleum Institute, pensioners, Treasurer Beth Pearce and five of her staffers, 350Vermont, Sierra Club, VPIRG, VNRC, and many others.
First at bat was Eric Becker, chief investment officer of Clean Yield Asset Management. Hailing from Norwich, Clean Yield manages over $280 million in assets for individuals and families with large investment portfolios, including fossil-free portfolios. Mr. Becker found himself in a bases loaded situation. First, the pension has lost significant value because of fossil fuel investments. The best estimate using actual returns, and actual market fluctuations, is $77 million over the last three years. Second, the fossil fuel industry is tanking. Coal companies are going out of business; oil prices have plummeted; Exxon Mobil is under investigation for climate change lies by the New York attorney general. Third, Burlington has withdrawn $145 million out of the state-managed pension in hopes of significant savings on the management fees and for greater oversight of investment choices.
We are wrestling with the biggest threat to humanity that we have ever faced, and not in generations in the future, but now.
Mr. Becker acknowledged that the field had changed significantly since the committee took up a similar bill in 2013. In 2016, the case for divestment has “gained more weight and urgency.” Much like the housing bubble of 2008, we face a carbon risk bubble. In fact, Citigroup has identified $100 trillion worth of potential stranded assets in the fossil fuel industry. Stranded assets are the fossil fuel reserves that will be left stranded underground as we transition to renewable energy. Over 500 institutions, representing $3.4 trillion in assets, have recognized this carbon risk, and they have committed to divest from coal and other fossil fuels.
Following Mr. Becker, Treasurer Pearce argued against divestment as a strategy to protect pension holders from the inevitable carbon bubble burst; however, they fully “agree on the [reality of the] carbon bubble.”
The treasurer has repeatedly claimed that divesting from fossil fuels would cost the pension funds $9 million a year in foregone returns. Strike! Over the last three years, the pension could have gained more than $25 million annually, if it had been divested of fossil fuel stocks. Treasurer Pearce believes she can have more impact on Exxon Mobil through shareholder advocacy than via divestment. Strike! I listened to the Exxon Mobil shareholder meeting last May. The shareholder resolution that Treasurer Pearce presented garnered a measly 9 percent of the vote, and Rex Tillerson, CEO of Exxon Mobil, went on to ridicule the solar industry. Exxon Mobil will clearly not be moved from within. Finally, she describes legislating pension investments as a very “slippery slope,” regarding the Vermont Pension Investment Committee as the correct body to make investment decisions. Strike! In 1986, the Vermont State Legislature passed Act 246, divesting the pension from investments in South Africa. Between 1986 and 2016, I am not aware of any other legislative mandate on the pension funds. (Tobacco divestment in 1997 was executed by then-Treasurer Jim Douglas.)
But this isn’t a game with strike-outs and grand slams. This isn’t Treasurer Pearce vs. 350VT for the win. We are wrestling with the biggest threat to humanity that we have ever faced, and not in generations in the future, but now. Divestment will prevail, because our governments can no longer invest in planetary destruction, because we must transition away from a fossil fuel economy — faster than what seems humanly possible.
Climate change isn’t happening at a glacial pace, it’s outpacing scientists’ predictions. State policy and decision-makers are not keeping pace with the rapidly changing climatic predictions, the renewable technology boom, the collapse of fossil fuels, and a populace that is hungry for social and economic change to reverse our course. It’s beyond time to divest, to price carbon, to stop fracked gas pipelines, to fund weatherization, and to prioritize solutions for people and the planet.
