Investing in the planet: DiNapoli has worked to influence energy firms for the better
Jun 17, 2017
State Comptroller Thomas P. DiNapoli believes his office can exert more influence over energy companies by continuing to invest in them than by dropping these firms from New York’s Common Retirement Fund.
Community leaders gathered June 5 in Albany to demand that Mr. DiNapoli divest state funds from fossil fuel companies. This was part of a movement designed to pressure corporations like ExxonMobil to become more environmentally friendly.
The strategy is simple: By pushing more investors to withdraw their money, these companies may eventually be forced to alter their practices. They will then move away from fossil fuels and focus more on renewable sources of energy.
And the motive of this movement is admirable. We as a society must do much more to reduce our carbon footprint and reverse the effects of global warming.
But when asked about this campaign during a June 7 meeting with the Watertown Daily Times editorial board, Mr. DiNapoli had an excellent response. First of all, these investments remain valuable parts of the retirement portfolio. Secondly, replacing the state comptroller’s office as an investor would be rather easy for energy firms.
But most importantly, divesting state funds from these companies would have a serious consequence. Mr. DiNapoli’s office would lose any bargaining leverage it now has over them.
The comptroller’s office has been a leader among investment groups in pushing companies to progress on the issue of climate change. It has, in fact, persuasively made the point that it’s in these firms’ long-term financial interests to adhere to practices that complement efforts to reduce our reliance on fossil fuels.
“As trustee of the Common Retirement Fund, Comptroller DiNapoli has the responsibility to protect the interests of the fund and voice concerns and propose changes that are in the best interest of the companies in which the fund invests,” according to information from the comptroller’s office regarding its Corporate Governance program. “The fund reviews corporate governance practices including how a company is directed, administered and operated, recognizing that firms that adopt good governance practices have greater potential for corporate success and sustainable economic growth. With an emphasis on environmental, social and governance issues, DiNapoli and the fund help shape corporate policies and practices in ways that safeguard the fund’s investments and promote corporate responsibility.” On the issue of climate change, the comptroller’s office provides the following information about its strategies:
■ Long-term business models: Mr. DiNapoli has asked companies like ExxonMobil to explain how the global effort to confront climate change will affect their businesses and what steps they can take to adapt to a future with lower-carbon emissions and potentially less demand for their fossil fuel products. ■ Low-carbon index fund: In January 2016, the comptroller’s office created a $2 billion index fund that weighs investments in domestic equities based on their carbon emissions while closely tracking the performance of its benchmark, the Russell 1000. The index reduces investments in the worst carbon-emitting corporations and shifts them to lower emitters. The index was designed to be easily expanded as performance dictates. ■ Renewable energy sources: Mr. DiNapoli has reached agreements with major corporations to increase their use of renewable energies. Businesses that commit to diverse renewable energy sources are protecting long-term value by giving themselves energy options in times of volatile fossil fuel. ■ Reduction of greenhouse gas emissions: The comptroller’s office reached agreements with companies to set measurable goals for lowering their greenhouse gas emissions in accordance with the United Nations findings that stabilizing global temperatures will require a 55 percent reduction in GHG emissions by 2050. ■ Sustainable soy and palm oil: Mr. DiNapoli persuaded companies such as Dunkin’ Donuts, ConAgra and Archer Daniels Midland to use only palm oil that is certified to have been sustainably harvested. Palm oil is found in numerous food products — but its production is one of the leading causes of deforestation, a major factor in climate change. These efforts by the comptroller’s office are already having a positive effect.
“The Securities and Exchange Commission has told ExxonMobil it must include a resolution on its annual shareholder proxy that, if approved, would force the company to outline for investors how its profitability may be affected by climate change and the legislation that aims to combat it,” according to a story published March 23, 2016, by the New York Times. “The decision was a defeat for the energy giant, which had fought against it. The proposal was introduced in December, after the Paris accord on climate change, by a coalition of investors led by New York State’s comptroller, Thomas P. DiNapoli, who is the trustee of New York State Common Retirement Fund, and the Church of England.”
According to information from Mr. DiNapoli’s office, this proposal garnered only 38 percent support from ExxonMobil’s shareholders in 2016. But this year, it was supported by 62 percent of the shareholders.
Such results have captured people’s attention. The Asset Owners Disclosure Project is a nonprofit organization that strives to “protect asset owners from the risks posed by climate change.”
Part of its work involves surveying the world’s 500 largest asset owners and ranking how well they manage climate change risk and opportunities. This year, the state comptroller’s office is ranked first in the nation and third in the world.
The comptroller’s office is taking responsible and effective measures to help advance the interests of those working toward environmental sustainability. Mr. DiNapoli has served as a good steward of public funds invested to benefit state pensions, and firms that make up the retirement portfolio have responded favorably to his leadership on worthwhile goals.