As if public pension managers around the country weren't having enough difficulty digging themselves out of their massive $3-$5 trillion funding gap, the chorus of liberal governors suggesting they should recklessly abandon their fiduciary obligations to future retirees and choose investments not on their financial merits but rather based on the political preferences of clueless politicians is growing stronger by the day. As Pensions & Investments points out today, New York Governor Andrew Cuomo is the latest such politician to jump on the bandwagon after suggesting that the New York State Common Retirement Fund should "divest from all fossil-fuel holdings."
New York Gov. Andrew Cuomo on Tuesday proposed that the New York State Common Retirement Fund halt all new investments "with significant fossil-fuel-related activities" and prepare a plan to divest existing fossil-fuel investments.
"New York has made incredible strides in securing a clean energy future for this state … yet the Common Fund remains heavily invested in the energy economy of the past," Mr. Cuomo said in a news release.
"Moving the Common Fund away from fossil-fuel investments will protect the retirement savings of New Yorkers," he said. "This proposal lays out a roadmap for the Common Fund to take responsible steps to divest from its fossil-fuel holdings."
Perhaps, Mr. Cuomo, with his infinite valuation and investing expertise, could explain precisely how the act of randomly dumping investments that happen to conflict with his personal political beliefs will truly "protect the retirement savings of New Yorkers."
Meanwhile, even though State Comptroller Thomas DiNapoli, the sole trustee of the $201.3 billion pension fund, said in a prepared statement that "there are no immediate plans to divest our energy holdings" (which we suspect has something to do with the fact that he would be immediately sued for abandoning his fiduciary duties), he simultaneously welcomed Cuomo's suggestions and vowed to work with the governor to create an advisory council to emphasize clean energy investing for the pension fund.
Mr. DiNapoli is an independently elected public official. Mr. DiNapoli didn't quantify the size of the pension fund's fossil-fuel holdings, but he did note that the pension fund has a $2 billion low-carbon index that "shifts investments from the worst emitters to those companies that reduce their greenhouse gas emissions."Mr. DiNapoli said the pension fund will expand this index next year. "The fund's commitment to sustainable investments is $5 billion and growing," he said.According to the governor's proposal, he and Mr. DiNapoli "will work together" to create an advisory committee that would enable the Common Retirement Fund "to develop a decarbonization roadmap."
This effort would enable the pension fund "to invest in opportunities to combat climate change and support the clean tech economy while assessing financial risks and protecting the (pension) fund," the news release said.
So, which stocks could take a hit if Cuomo gets his way? Here is a list of energy stocks in which the State of New York has a greater than $50 million stake:
Of course, while we applaud Cuomo's desire to "protect the retirement savings of New Yorkers," we would suggest a slightly different approach: pursue the best investment strategy possible to maximize returns so that taxpayers don't get shafted (again) by the reckless pursuit of your political witch hunts...it just might be crazy enough to work...