The latest move by the New York State Common Retirement Fund to restrict its investments in eight integrated oil and gas companies, prominently Exxon Mobil Corp, underscores the growing influence of climate risk on investment strategies.
The decision comes after New York Comptroller Thomas DiNapoli’s careful review of the transition readiness of companies exposed to significant climate risk.
In a statement, DiNapoli emphasized the urgency of climate change as a risk facing all investors and his commitment to safeguard the state’s pension fund by prioritizing efforts to mitigate these risks and reducing the fund’s exposure to fossil fuels.
DiNapoli acknowledged the fiduciary duty to maximize investment returns for members and retirees, highlighting that these actions align with the goals of the fund’s Climate Action Plan.
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The fund’s plan involves divesting corporate bonds and actively managing public equity holdings in eight integrated oil and gas companies, deeming them not transition-ready.
In addition to Exxon, the upcoming months will see divestment and restrictions on companies such as Delek Group, Guanghui Energy Company Ltd., Echo Energy PLC, IOG PLC, Oil and Natural Gas Corporation Ltd, and Dana Gas Co and Unit Corp. As of Dec. 31, 2023, the total value of these holdings is around $26.8 million.
While the fund plans to continue holding Exxon and other restricted companies in its passive index holdings, a spokesman reiterated the fund’s commitment to divest about $25 million worth of Exxon shares, even though other Exxon holdings total about $500 million.
The spokesman, Matthew Sweeney, explained, “The passive strategy is fundamental to the Fund and has been successful. The review determined that removing it from the passive index would go against fiduciary duty at this time.”
Earlier in 2023, the Fund updated its assessments of shale oil and gas, oil sands, and coal companies, resulting in restrictions on investment in around 50 firms that were deemed not transition-ready, including six new coal companies and four new shale oil and gas companies.
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