April 29, 2016

Divestment Debate Confuses Facts

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Montpelier, February 19—Tensions over fossil fuel divestment ran high at the joint Government Operations committee meeting at the State House this afternoon, and speakers found little middle ground. The committee met today to hear testimony on their proposal to divest the state retirement funds from ExxonMobil and coal extraction companies.

One point of agreement was that “no one wants the pension fund to lose money,” in the words of Senator Anthony Pollina. Beyond that, however, the debate was highly polarized.

Bill McKibben, long-time environmental activist and founder of 350.org, said that the intensity and urgency of climate change merit action beyond traditional government processes. “It’s time for our political leaders to do the job of leading,” he said.

Shareholder engagement and traditional advocacy will not work with fossil fuel companies because the problem is “not a flaw in the business model, but the business model itself,” McKibben said.

McKibben cited underperformance of fossil fuel stocks, particularly coal, over the past 3-5 years as proof that the state can “satisfy the moral instincts of Vermonters without sacrificing finance”, an argument that was echoed by other proponents at the meeting.

State Treasurer Beth Pearce, a member of the Vermont Pension Investment Committee (VPIC), took an opposing stance. She spoke in favor of shareholder engagement, citing past examples of success with BP. She called divestment a “meaningless gesture,” since someone else would buy the stock that VPIC sold off, and probably not advocate for the environment with that shareholder power.

Pierce refuted many of McKibben’s statistics, particularly around financing. Divestment still represents a risk, she said, and VPIC’s economists found that the fund could lose $9 million annually by divesting from all fossil fuels.

Pierce urged committee members to let VPIC govern its own funds, and mentioned that numerous towns and labor unions have requested that lawmakers stay out of this process.

Committee members asked critical questions of all speakers, but came to no conclusions at the meeting.

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