Divestment is a critical part of a multi-pronged approach to ending dependency on fossil fuels that exacerbate climate change. At the state level, the legislature has the authority to enact a law to require that the state pension fund withdraw its investments in fossil fuel companies.
- Sign the petition in support of Massachusetts state divestment Bill S. 1225!
- RSVP on Facebook to come to the rally on September 10th at the Massachusetts State House in support of divestment!
Bill S. 1225, “An Act Relative to Public Investment in Fossil Fuels”, sponsored by Senator Ben Downing, requires that the state pension plan be divested of direct holdings in fossil fuels within five years and that the Pension Reserves Investment Management Board stop making any new investments in fossil fuel companies. It makes no sense for Massachusetts to invest in companies that not only are destroying the climate, but are daily lobbying to undermine the Commonwealth’s attempts to develop a clean energy future.
By enacting S. 1225, Massachusetts would have the opportunity to be on the forefront of a massive and historic divestment movement that is spreading across the state and nation. Let’s stand up and claim it.
- Read the full text of Bill S. 1225
- Read an excerpt from President Obama’s speech on climate change that mentions divestment.
350MA is excited to team with many other organizations in its work. The following organizations have endorsed proposed legislation S.1225: 350MA, 350.org, Massachusetts Climate Action Network, Better Future Project, Students For a Just and Stable Future, Mothers Out Front, MoveOn.Org, SEIU Local 509, Conservation Law Foundation, Environmental League of MA, Environment MA, Clean Water Action, Toxics Action Center, Co-op Power, Divest Amherst College, Divest Boston College, Divest Boston University, Divest Brandeis University, Divest Emerson College, Divest Harvard University, Divest Lesley College, Divest MIT, Divest Mt. Holyoke College, Divest Northeastern University, Divest Smith College, Divest Stonehill College, Divest School of the Museum of Fine Arts, Divest Suffolk University, Divest Wheaton College, Divest Worcester Polytechnic Institute, Divest Williams College, Divest Worcester State University, First Parish Unitarian Universalist of Cambridge.
Frequently Asked Questions about the Massachusetts pension fund
1. What is the fund?
The Pension Reserves Investment Trust (“PRIT”) Fund was created through legislation, Chapter 661 of the Acts of 1983, to accumulate assets through investment earnings and other revenue sources in order to reduce the Commonwealth’s significant unfunded pension liability, and to assist local participating retirement systems in meeting their future pension obligations.
2. How much is invested in fossil fuel companies?
The PRIT currently has $1.3 billion invested in fossil fuels, including millions in Exxon and TransCanada (builder of the Keystone XL pipeline), out of a pension fund valued at approximately $54 billion in assets (as of May, 2013 – see http://www.mapension.com/publications). Even the Financial Times and the World Bank have reported fossil fuel stocks are most likely over-valued because most of those reserves need to stay in the ground in order to maintain a livable planet.
3. What is the responsibility of the Pension Reserves Investment Management (“PRIM”) Board?
The mission is to maximize the return on investment within acceptable levels of risk by broadly diversifying its investment portfolio, capitalizing on economies of scale to achieve cost-effective operations, and providing access to high quality, innovative investment management firms, all under the management of a professional staff and members of the Board.
Frequently Asked Questions about Bill S.1225
1. What does the bill do?
S. 1225 requires that the State Pension Reserves Investment Trust (PRIT) divest from alldirect holdings in fossil fuel companies within 5 years and prohibits any new investments in fossil fuel companies.
2. How much does the state pension plan have invested in fossil fuels?
$1.3 billion. “Today, fossil fuel companies represent two of the ten largest investments in the both the Public Retiree Investment Trust (PRIT) fund’s $9.4b domestic and $8.2b international equity portfolios. An additional $780 million invested across three other portfolios means the Commonwealth invests around $1.3 billion in state assets in fossil fuels.” –Quote from Sen. Ben Downing, “Fossil Fuel Free Massachusetts”, BlueMassGroup, 5/11/2012.1
3. What would the short term financial effect be on the pension fund?
A recent study done by the Aperio Group found that divestment from coal, oil and gas carries a “statistically irrelevant” amount of risk.2
4. What would be the longer term financial effect on the fund if the bill were enacted?
A report released by the Carbon Tracker Initiative and the London School of Economics shows that 60 to 80 percent of coal, oil and gas reserves held by the top 200 oil, gas and mining companies listed on the world’s stock exchanges could be considered unburnable to avoid a global temperature rise of less than 2 degrees C of preindustrial levels. Fossil fuel assets could be seen as far less
valuable than thought. The value of fossil fuel investments is predicted to implode, bursting the “carbon bubble.”3
5. Are there any safeguards in the bill to prevent harm to the fund?
Yes. Section 5 in the bill permits the public fund to reinvest or to remain invested in fossil fuel companies if the total value of public fund assets is reduced to 99.5% of the hypothetical value of the fund assuming there had been no divestment.
6. What about indirect holdings like mutual funds? How can the fund divest from the fossil fuels in those funds?
Section 3(c) in the bill states that indirect holdings such as mutual funds are not required to be divested of fossil fuels n the same way as direct holdings. However, the fund is required to contact the fund managers of the indirect holdings, e.g., mutual funds, to ask them to consider removing the fossil fuel companies or creating new fossil fuel free funds.
7. How long does the state have to fully divest if the bill is enacted?
PRIT would be required to divest 20% of the direct holdings per year for 5 years, with 100% divested by the end of the fifth year.
8. What pension funds would be affected by passage of S.1225?
The assets of the State Employees’ and Teachers’ Retirement Systems as well as the assets of local retirement systems under the control of the board. The majority of municipal government pension systems are under control of the board, with certain exceptions. Those boards not under the state pension system have the power to divest by their own actions and could be influenced by state pension fund divestment.