Divestment from Fossil Fuels Act

Summary: The Divestment from Fossil Fuels Act requires the state/city/county’s retirement fund to divest from companies that mine, drill and produce fossil fuels.

Based upon New York SB 4596 (2018)

SECTION 1. SHORT TITLE

This Act shall be called the “Divestment from Fossil Fuels Act.”

SECTION 2. FINDINGS AND PURPOSE

(A) FINDINGS—The legislature finds that:

  1. Climate change is a serious looming threat to the health, welfare and prosperity of all residents of [STATE/CITY/COUNTY]. Maintaining the status quo of fossil fuel energy production will lead to a self-created catastrophe, including rising temperatures, droughts, wildfires, more violent storms, and rising sea levels. It will threaten lives, livelihoods, and the very fabric of society. This jurisdiction has the responsibility to do everything it can to avert these disastrous results.
  2. One step is to divest the [STATE/CITY/COUNTY] Retirement Fund from all investments in fossil fuels. Ireland became the first country to fully divest from fossil fuels, New York became the first American state to enact a law to divest its retirement fund from fossil fuels, and globally, over 1,500 institutions with assets totaling more than $40 trillion have also divested from fossil fuels.
  3. The Retirement Fund, with an estimated value of more than [AMOUNT], invests at least [AMOUNT] in public pension money in companies that mine, drill and produce fossil fuels. By divesting from fossil fuels, this jurisdiction will send a message that it is unacceptable for any institution to profit from activities that threaten our future, and the lives of our children and grandchildren. Divestment is financially prudent and morally imperative—the time for action is now.

(B) PURPOSE—This law is enacted to protect the health and welfare of the residents and future residents of [STATE/CITY/COUNTY].

SECTION 3. PROHIBITION

After section XXX [which is in the section on administration of public pension funds], the following new section XXX shall be inserted:

(X) DIVESTMENT FROM FOSSIL FUELS

(A) Notwithstanding any provision of law to the contrary, the [Comptroller] shall not have the power to invest the available monies of the common retirement fund in any stocks, debt or other securities of any corporation or company, or any subsidiary, affiliate or parent of any corporation or company, among the two hundred largest publicly traded fossil fuel companies, as established by carbon content in the companies’ proven oil, gas and coal reserves. The [Comptroller] shall, in accordance with sound investment criteria and consistent with his or her fiduciary obligations, divest any such stocks or other securities whether they are owned directly or held through separate accounts or any commingled funds. Divestment pursuant to this subsection must be completed by [January 1, 2026], with the exception of companies engaged in the mining, extraction or production of coal, divestment from which must be completed no later than one year after the effective date of this subsection.

(B) The [Comptroller] shall be permitted to cease divesting from companies under paragraph (A) of this subsection, reinvest in companies from which it divested under paragraph (A) of this subsection, or continue to invest in companies from which it has not yet divested upon clear and convincing evidence showing that as a direct result of such divestment, the total and aggregate value of all assets under management by, or on behalf of, the common retirement fund becomes or shall become:

  1. Equal to or less than ninety-nine and one-half percent; or
  2. One hundred percent less fifty basis points of the hypothetical value of all assets under management by, or on behalf of, the common retirement fund assuming no divestment from any company had occurred under said paragraph (A).

Cessation of divestment, reinvestment or any subsequent ongoing investment authorized by this subsection shall be strictly limited to the minimum steps necessary to avoid the contingency set forth in the preceding sentence. For any cessation of divestment, and in advance of such cessation, authorized by this subsection, the [Comptroller] shall provide a written report to the [Attorney General], the [Senate standing committee on pensions], and the [Assembly standing committee on government employees], updated semi-annually thereafter as applicable, setting forth the reasons and justification, supported by clear and convincing evidence, for its decisions to cease divestment, to reinvest or to remain invested in fossil fuel companies.

(C) Within sixty days of the effective date of this subsection, the [Comptroller] shall facilitate the identification of fossil fuel companies from which the common retirement fund is required to divest under paragraph (A) of this subsection, and file a copy of this list with the [Attorney General], the [Senate standing committee on pensions], and the [Assembly standing committee on government employees]. Annually thereafter, the public fund shall file a report with the [Attorney General], the [Senate standing committee on pensions], and the [Assembly standing committee on government employees] that includes:

  1. All investments sold, redeemed, divested or withdrawn in compliance with paragraph (A) of this subdivision; and
  2. All prohibited investments from which the common retirement fund has not yet divested under paragraph (A) of this subdivision.

SECTION 4. EFFECTIVE DATE

This law shall become effective on July 1, 20XX.

 

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