[T]he chair of the committee that oversees state pension funds sounded skeptical Friday about calls to divest from some fossil fuel assets.
Tom Golanka said a subcommittee charged with reviewing investments would have to convince the full board it made a mistake when it rejected divestment in the past.
The meeting was held after calls by Gov. Peter Shumlin and lawmakers to dump coal-related and Exxon Mobil investments. It was attended by dozens of industry lobbyists, union representatives and environmental advocates.
Golonka said an examination last summer into divestment by the Vermont Pension Investment Committee found that divestment would cost the fund $10 million to $14 million per year.
“I’m more than willing to bring in outside experts to review the data we were given last summer — I think that’s prudent,” Golonka said after the meeting.
The previous recommendation against divestment represents an appropriate starting point, he said.
“I think you have to start there, and say, ‘What caused us not to agree to do it last year? Did we miss something? The board’s weighed in on this; you can’t just throw everything out,” Golonka said.
“I don’t want to prejudge it until we get to look at the data,” Golonka said, but when the board considered the issue last summer, “we saw it at that point as an expensive way to approach something that would have minimal impact.”
Shumlin and others argue coal and Exxon stocks should be dumped not only for environmental reasons, but also because coal is a bad investment.
The divestment issue has resulted in a tug of words between the governor and the treasurer, who has admonished the governor for trying to change investment policy through “sound bites.”
The Shumlin admnistration expressed disappointment with Golanka’s comments and said it indicated the board had prejudged the process, exactly what State Treasurer Beth Pearce had warned the governor and supporters of divestment against doing.
Sen. Anthony Pollina, D/P-Washington, a proponent of divestment said VPIC was apparently relying on “a flawed study.”
That study, Pollina said, assumed that Vermont would divest of all its fossil-fuel assets at once, and would reinvest that money into green energy assets.
No one is proposing that approach, Pollina said. Senators in their letter to VPIC suggested a five-year timetable for divestment, he said. Moreover, VPIC would be expected not to invest the money from sold fossil-fuel investments into green energy investments instead, he said — instead, the board would be expected to reinvest in whatever makes the most money for the fund over the long term.
If the board were to take another look, they’d probably find that fossil fuel stocks don’t make sense over the long term, Pollina said. In either event, Pollina said, he suggested to Pearce that VPIC track the performance of fossil-fuel-free funds and compare them against those containing fossil fuel assets. Pollina said VPIC should reach out to other entities such as municipalities and institutions that have already divested from fossil fuels, and should ask how they’ve made out as a result.
Representatives from the governor’s office questioned Golonka’s objectivity in the matter.
“In my mind, [Golonka’s position] would be a surprise to the Senators who signed that letter, as well as the members of the House who clearly directed VPIC to divest,” said Shumlin spokesman Scott Coriell. “It’s certainly a surprise to me, and it doesn’t sound like a very open and objective process without a predetermined conclusion.”
The governor called for divestment of coal-related and Exxon stock in his State of the State address. Depending on how it is calculated, the state has from $700 to $1.1 million in coal assets and approximately $200,000 in Exxon Mobil.
The House passed a resolution urging divestment of those assets, and 16 senators signed a letter that originated in the Senate Government Operations Committee and that called on Pearce and VPIC board members to pursue the same.
The senators’ letter also called for inclusion of two legislators on the subcommittee VPIC is expected to form at their next regularly-scheduled meeting Tuesday. That subcommittee is being formed to re-examine the possibility of divesting the pension fund of certain fossil-fuel assets. Senators called for the board to pursue divestment first of coal and Exxon Mobil assets, and then those of the top 200 fossil-fuel companies.
Golanka said he didn’t plan to include legislators as members of the committee, except perhaps in an advisory role. He invited members of the public to participate as well, in the sense of contributing their thoughts through the public comment process.
At the meeting, Pearce warned that investments were structured in such a way that heavy fees could be charged for divesting those assets.
The governor has said in the past that, if VPIC’s current investment managers refuse to customize the $4 billion fund’s portfolio, the board can surely find someone who would.
The VPIC members are expected Tuesday to begin the process of composing a subcommittee to examine the issue, and to direct that body on how to proceed.
