Press Release: House Finance Committee Rejects PERA's Divestment from Fossil Fuels
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.
###
Quote Deck:
“PERA owes the same fiduciary duty to members retired today and members retiring 30 years from now. What this new information makes clear is that everyone's interests are aligned when it comes to fossil fuel investments. It's time to move our money to safer investments, both for better returns today and a viable future for PERA members of my generation and beyond.” - Bobbie Mooney, Fossil Free PERA Spokesperson & Colorado PERA member
“The economic risk of climate change is real and unlimited. A foundation of any investment is do not take on more risk than you are able to handle, and the State of Colorado is not able to handle unlimited risk. The main reason fossil fuels are even so profitable today is reliant on $5+ Trillion in government subsidies. This movement is greater than just divesting from fossil fuels. Do not the Black Lives Matter movement and beyond show that people are becoming discontent with many current government practices. Aren’t some previously accepted systems already changing? PERA needs to be on the forefront of this and get with its people, not the lobbyist. If the goal of the board of PERA is to keep PERA alive for future generations, every effort should be made to have a future. This is a clear action that helps the future generations.” - Laura Isanuk, Financial Advisor, AIF & CFS, First Affirmative Financial Network
“PERA should follow the lead of the New York State Comptroller, who has announced that his office will decarbonize the pension fund’s full portfolio by 2040 with interim targets, completing a systematic review of all fossil fuel investments within four years, including divesting from any companies which don't have a plan to leave fossil fuels behind,” says Devon Reynolds, Colorado PERA member, University of Colorado Graduate Student Employee. “This includes transitioning their business away from oil and gas production, servicing or transportation, and alignment with the Paris Climate Agreement. As long as PERA's money remains invested in the fossil fuel industry, that investment supports an industry that has willfully denied its role in climate change, accelerating today's climate crisis in favor of profits. PERA must divest from fossil fuels."
“We as educators need to remember we have the moral responsibility to steward future generations to walk in beauty in all they do, by standing as a barrier to extractive industries like Suncor, and divesting from their insidious practices of poisonous plumes. We need to ensure we can live as transformative educators and good ancestors now for all future generations social and climate justice.” - Renee Millard-Chacon, Colorado PERA member, Educator - Adams D27-J Charter School, Youth Program Coordinator VISTA, Spirit of the Sun, Inc.
“The economic outlook for fossil fuels has been weak for years now. As a fellow Coloradan, I hope PERA pays better attention moving forward, and invests with these risks in mind. People’s retirements are on the line.” - Andrew Rodriguez, CEO + CIO, Change Finance, PBC
"We have known for many years that holdings of fossil fuel companies are morally and ethically unsuitable for most investors. We now see that those investments are also detrimental to the risk-adjusted returns of a diversified portfolio like PERA. Combine these factors, and the investment case for fossil fuels collapses. The only question is who will be the last one to come to this realization and what price they will pay for it." - Daniel Carreno, Change Finance, PBC
“Colorado’s PERA is investing public funds in ways that threaten the health and safety of our state,” says Giselle Herzfeld of 350 Colorado. “Fossil fuel investments are directly threatening the health, safety, and wellbeing of Colorado residents and families. Across our state, communities are experiencing dangerous consequences from this expansion of oil and gas drilling, and the question should be, do we want our public money and pension funds supporting this?”