Fossil Fuel Divestment Bill Before State House
By Tim Cronin, Policy Associate
Massachusetts lawmakers have a long history of displaying leadership on policies of high moral and social significance. Massachusetts was the first to establish universal public education, an anti-slavery bastion decades prior to the civil war, and a leader in the progressive reforms of the early 20th century. In recent decades Massachusetts has continued this tradition of leadership by using its state pension as a tool for wider social change. Examples include divestment of pension monies from South Africa (1982), and the tobacco industry (1997).
Today Massachusetts has a chance to use its pension fund, and the $62 billion it invests, to take action on climate change by divesting from fossil fuels.
Divesting from fossil fuels sends a strong signal to the market, politicians, and society that we cannot continue “business as usual” energy production and must instead transition to a clean energy economy.
In addition to spurring this transition, divesting from fossil fuels makes prudent fiscal sense for the state’s pension system. Trillium Asset Management highlighted in their 2015 analysis that the Massachusetts Pension Reserves Investment Trust lost $521 million, or nearly $10 million a week, in fossil fuel related assets in 2014.
Current Divestment Bill
This past Tuesday lawmakers, business leaders, and other supporters testified at the State House in favor of House Bill 3281. The bill, sponsored by Representative Marjorie Decker, seeks to divest the state pension system’s extensive holdings in fossil fuels.
Specifically the bill would do two things:
- First, it would immediately divest all pension monies from coal. Of all fossil fuels, coal is the most damaging to the environment and the least economically viable in the long term.
- Second, it would create a commission that would carefully analyze all financial investments in oil and gas, studying the feasibility of divesting from them. The commission could then recommend ceasing new investment in and divesting from gas and oil holdings over the course of three years. The bill directs this divestment to continue as long as the value of the fund doesn’t drop by more than 0.5% as a direct result of gas and oil divestment.
Compared to past pension divestment legislation, H.3281 can be characterized as a compromise bill. Similar bills filed in previous sessions took a harder stance against emissions related to oil and gas. H.3281 gives a little more leeway for these industries. According to Matthew Patsky, CEO of Trillium Asset Management, “[H.3281] is weak, but a start in the right direction.” The bill does allow for the newly created commission to revisit oil and gas divestment, even if it had previously found it to be financially damaging to the state’s pension fund.
Support for the Bill
Supporters of the bill include a number of prominent public sector unions, lawmakers, activist organizations, and communities. Union supporters include SEIU Local 509 and Local 888, the Massachusetts Nurses Association, and the Boston Teachers Union. In addition, the bill has over 50 co-sponsors, equalling about 25% of state lawmakers. The bill also has the support of 41 environmental organizations, and over a dozen communities across Massachusetts.
The next steps for the bill is for it to be reported favorably out of the Joint Committee on Public Service. If you want to support the bill, contact your legislators – find out who your legislators are here.
Are you a business leader? Interested in other ways to reduce carbon emissions? Sign our letter to Governor Baker asking him to support putting a price on carbon.
About the author: Tim is an economics and politics student at Stonehill College. This past year he had the opportunity to study at Oxford University, exploring global governance, human rights law, and int’l economics. As a senior, Tim will serve as student-body president and continue to fight for sustainable initiatives such as fossil fuel divestment and expanding the college’s solar farm. He has interned at the State House and serves on the board of his local civic association. Tim enjoys reading The Economist, listening to podcasts, and exploring state parks in his free time.