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New York Pension Fund To Dump Half U.S. Shale Firms From Its Portfolio

The third-largest pension fund in the United States, the New York State Common Retirement Fund, will sell stakes and bonds in half the shale companies it is invested in, as it considers them unprepared for a low-carbon future, Reuters reported on Wednesday, quoting documents from New York State Comptroller Thomas DiNapoli.

The fund, whose estimated value was $258.1 billion as of fiscal year ending March 31, 2021, will be selling stock and bonds in 21 U.S. shale firms, while it will keep its investment in another 21 companies in the sector. The divestment, valued at a total of $238 million worth of stock and debt, will include companies such as Pioneer Natural Resources, Hess Corp, and Chesapeake Energy, according to the material Reuters has reviewed.

Among the firms which the New York fund will keep are CNX Resources Corp and EQT Corp.

“To protect the state pension fund, we are restricting investments in companies that we believe are unprepared to adapt to a low-carbon future,” DiNapoli said in a statement sent to Reuters.

This could be good timing for the New York pension fund’s sale, considering that WTI crude oil was the second-best performing asset class in 2021 after Bitcoin, per Visual Capitalist data.

The New York fund said more than a year ago that it was undertaking a review of all energy companies that it was invested in, to assess their readiness for the energy transition and could dump those considered riskiest in climate-related investment.

“Those that fail to meet our minimum standards may be removed from our portfolio. Divestment is a last resort, but it is an investment tool we can apply to companies that consistently put our investment’s long-term value at risk,” DiNapoli said at the end of 2020.

In April 2021, the fund said it would “restrict investments in oil sands companies that have not demonstrated that they are prepared for the transition to a low-carbon economy.” The fund planned to sell all $7 million worth of equity and bonds in Imperial Oil, Canadian Natural Resources, Husky Energy, MEG Energy, Athabasca Oil, Cenovus Energy, and Japan Petroleum Exploration.

The fund’s exposure to oil firms is not large, but it could set a trend in divesting from oil sands and shale firms among other institutional investors, considering that it is the third-biggest pension fund in the U.S. after CalPERS and CalSTRS of California.  

By Tsvetana Paraskova for Oilprice.com

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