A recent Boston Globe headline read: “Maine Legislature votes to divest public funds invested in fossil fuels, sparking hope in Mass. for similar action.The news was most welcome, and it buoyed the spirits of a small band of climate warriors set to testify on divestment legislation the next day as the Stop the Money Pipeline MA panel. 

Representing 350 Mass, I joined the panel to explain why divestment is not just symbolic, and why H.2640 is an important, if modest first step in divesting public pension funds in MA. This bill would simply give permission to municipalities to divest their holdings in fossil fuels from their retirement fund investments administered by PERAC (Public Employee Retirement Administration Commission) should they choose to do so. PERAC’s stated mission is to “provide regulatory oversight and guidance for the effective, equitable, and ethical operation of the Commonwealth of Massachusetts’ public pension systems.” 

H.2640 is identical to H.4440, which last session passed out of committees, but despite  strong co-sponsorship and municipal leader support, languished without a vote. We had  hoped that it would pass and even lead to passage of a divestment bill regarding PRIM’s (Pension Reserves Investment Management) larger public fund, but to date we are still waiting.

Over the last eight years, divestment bills for PRIM championed by 350 Mass and the MassDivest coalition, have been dead in the water. The moral argument for divestment - we should not have our public money contributing to climate destruction - didn’t move MA House leadership. Taking their lead from their fund managers, the message has been: responsible financial decision-making is the primary concern of managers of public funds. On that supposed basis, MA pension funds increased fossil fuel holdings during this same time, as many in the public have watched in frustration and dismay.

But times have changed. It is now apparent that fossil fuels are a money loser as well, (except for broker fees), and states around the country are beginning to divest not only because of climate destruction but because soon-to-be stranded fossil fuel assets are causing financial losses. In addition to Maine, Massachusetts can look to other neighbors for guidance. NY State will divest over 4 billion in the next four years, and while it is a very mixed story regarding the banking and insurance industry, boards and asset managers are feeling the pressure and establishing climate risk and carbon reductions criteria. 

The MA Legislature needs to pay attention. Unfortunately MA pension funds continue to use Vanguard for instance, to manage investments, despite the fact that Vanguard is way behind even BlackRock and State Street on climate risk and divestment. In fact, a new report by the Institute for Energy Economics and Financial Analysis (IEEFA) finds that Vanguard Group, the world’s second largest asset manager, is leaving its investors to face profound wealth destruction risks as the world’s largest investor in fossil fuels, all while insisting climate change is a priority for the company.

In the end it is the taxpayers that are on the hook to ensure enough money is available to cover pension commitments, and that alone should raise concerns. As the state shifts its priorities to implementation of our climate legislation in order to meet the new goal of 50% reduction in carbon emissions by 2030, we will need to meet both legal and financial requirements, aligning our publicly funded pensions to ensure we are no longer invested in climate destruction. 

H.2640 should be an easy lift. Please contact your legislators and ask them to co-sponsor this legislation and forthcoming legislation for PRIM divestment as well. Let them know you are concerned that taxpayer dollars invested by PERAC and PRIM should meet strict criteria for fossil-free investments.