Divesting from fossil fuels is difficult, but necessary
The Jan. 30 Another Voice by Daniel Levler is correct: Climate change must be addressed. His opposition to divestment of fossil fuels by the state pension fund is not.
In my 16 years at the highest levels of administration of the pension funds for New York City and New York State, I have had an opportunity to understand what divestment means. I support divestment.
The investment index the state uses to choose stocks for the pension fund is the MSCI ACWI. Over the last five years, when fossil fuels were excluded the index did better. Last year, fossil fuels were one of the worst performers on Wall Street. The industry was the leading sector in the world for decades. It is now a laggard.
Recently, Norway, a country that gets most of its income from owning, drilling, buying, selling and investing in oil has started a process to replace fossil fuels. Its fund is $1 trillion, five times the size of New York State’s. No country in the world knows more about oil and gas investing than Norway. For it to lose oil investments is like New York State losing banking, real estate and manufacturing, combined.
Divesting from fossil fuels is difficult, but it is necessary. The fossil fuel industry is hellbent on ignoring climate change and the risks it poses to its bottom line and ours. After years of financial losses on its drilling operations, ExxonMobil has announced it will do more, throwing good money after bad.
Director of Finance, Institute for Energy
Economics and Financial Analysis