News released dated April 20th, 2021
COLORADO — On April 19th Colorado’s House Finance Committee heard HB21-1246 PERA Public Employees’ Retirement Association Divestment From Fossil Fuel Companies, which would have required Colorado’s state pension fund (Public Employees Retirement Association) to divest from fossil fuel companies. Proponents of the bill argued that to not divest from fossil fuels not only fails to take bold action to address the climate crisis but also fails beneficiaries in choosing to ignore the mounting evidence that divested funds are outperforming those that have not. Despite strong arguments in favor and a hearing that lasted over three hours in duration, the bill did not move forward.
A 2021 report by BlackRock examined hundreds of divestment actions of funds worldwide and concluded that portfolios experienced no negative financial impacts as a result of divesting from fossil fuels. In fact, they found evidence of improvement in returns for those funds.
PERA maintained that decisions on investments are best decided by the PERA Board of Trustees and the PERA investment team, yet has released a Statement on Divestment citing that PERA will not make decisions on divestment unless told to do so by the Colorado General Assembly.
“Current market factors and recent support for divestment actions by the world’s largest and most prestigious investment advisor (BlackRock) have shed new light on these concerns,” said Tom Sanzillo, Director of Financial Analysis at the Institute for Energy Economics and Financial Analysis. “Taken together, the best analysis of current market forces suggests that the arguments for divestment from fossil fuels—and particularly the rationale and methods outlined in HB 1246—are powerful and compelling. They make a clear case that passage of HB 1246 is likely to improve performance, incur modest costs and offer a prudent approach to manage risks faced by the fund and its existing employees and retirees. The oil and gas sector, once the leader of the world economy, is now among the worst performers. This has been true for almost a decade, and its long-term outlook is negative.”
Colorado’s Fossil Free PERA has submitted formal appeals on the matter since at least 2019, outlining the fiduciary imperative to divest from fossil fuels and citing potential losses in returns, increased climate-related financial risk, and mounting concerns over the growing climate crisis and adverse impacts of fossil fuel investments on local communities.
“The fossil fuel industry is suffering a prolonged downward trend, facing increased climate-related financial risk, and mounting concerns over the growing climate crisis. The number of lawsuits seeking billions of dollars in damages from the biggest contributors to climate change is growing,” says Devon Reynolds, Colorado PERA member, University of Colorado Graduate Student Employee. “All of this significantly impacts the value of oil and gas companies and investment returns for PERA.”
Colorado’s PERA has come under scrutiny for its fossil fuel investments in Suncor and Extraction Oil and Gas, two fossil fuel companies that have a long history of dangerous pollution violations, particularly near lower-income communities and communities of color. Over 850 letters have been sent to PERA Board, Director, and staff highlighting concerns and calling for divestment.
“Maintaining the status quo of fossil fuel energy production will unquestionably lead to a self-created catastrophe,” says Deborah McNamara, Campaign Director at 350 Colorado, “Therefore the State of Colorado has an ethical responsibility to take steps to avert this disastrous result. Attempting to profit from investments in companies whose profits depend almost exclusively on the continuation of practices that cause climate breakdown (and adding insult to injury, losing money on those investments) is unacceptable and puts Colorado on the wrong side of history.”
In December, New York State became the largest pension fund in the world to take comprehensive climate action, including fossil fuel divestment. The $226 billion state pension fund is reviewing and divesting from the riskiest oil and gas companies within four years and decarbonizing the entire fund by 2040.
Over 1,110 institutions have now committed to policies black-listing some combination of coal, oil, and gas investments due to mounting concern over climate and litigation risk and adverse public health impacts associated with fossil fuel investments. These include sovereign wealth funds, banks, global asset managers and insurance companies, cities, pension funds, health care organizations, universities, faith groups, foundations, and the country of Ireland. Furthermore, the UN Secretary-General has advised pension funds to divest from fossil fuels. Over 145 pension funds have committed to divestment globally, and that number is growing each year.