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New York City Mayor Bill de Blasio and Comptroller Scott Stringer announced on Monday that two of the cities pension funds will divest completely from any securities “related to fossil fuel companies”.
The city expects its total divestment to be around $4 billion—likely one of the largest divestments in the world.
The purpose of the divestment is to “address the significant financial and environmental risks that these fossil fuel holdings post to the funds and to our planet.”
Investing in fossil fuels isn’t just bad for the planet, it’s a bad investment, de Blasio shared in a press release. ““Our first-in-the-nation divestment is literally putting money where our mouth is when it comes to climate change. Divestment is a bold investment in our children and grandchildren, and our planet. I applaud the trustees, advocates and experts for their hard work, and I look forward to seeing more cities around the world join this call for change,” de Blasio said.
Oil company stocks had a tough year in 2020, as the sector largely gave way to tech stocks, which fared better throughout much of the pandemic months.
The two funds divesting from fossil fuels include the New York City Employees’ Retirement System (NYCERS) and New York City Teachers’ Retirement System (TRS), which voted today to approve the divestments. New York City Board of Education Retirement System (BERS) is planning to vote “imminently,” according to the press release.
The divestment is expected to be complete within five years, and the names of the company will be released after the sale of the targeted securities.
The city committed back in 2018 to completely divesting its major public pension funds from fossil fuel reserve companies.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.
The first reality is that there will neither be a post-oil era nor a peak oil demand either throughout the 21st century and probably far beyond.
The second reality is that the notions of imminent global energy transition from hydrocarbons to renewables and zero emissions by 2050 or even by 2100 are illusions. There can never be any meaning energy transition without considerable contributions from natural gas and nuclear energy.
The third reality is that oil and gas will continue to be the core business of the global oil industry well into the future because there will always be strong demand for them as long as the global economy continues to run on oil and gas.
The fourth reality is that the global oil industry is already contributing efficiently and handsomely to global decarbonisation by reducing sensibly the emission footprint in its production of oil and gas and refining.
The fifth reality is that in the global oil and gas business risk and high return on capital go hand in hand. Renewables aren’t in the same category of oil as investing in them doesn’t carry the same risk as exploring for oil and gas and therefore they generate far less return on capital. Therefore, the NYC divestment plans could deprive members of the two unions of extra retirement funds with hardly any perceptible environmental benefits.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London