Dinapoli won’t meaningfully divest from fossil fuels. Why?
On Feb 14, state Comptroller Tom Dinapoli gave valentines to the fossil fuel industry when he announced that he was going to keep nearly $5 billion of the state pension fund invested in Exxon and other major gas and oil companies like Chevron, Shell, Occidental, Saudi Aramco and BP.
After 18 months of review, Dinapoli decided that almost all of the big gas and oil companies — companies that for decades knowingly lied to the public and government about how the burning of fossil fuels was driving destructive global warming — were committed to positively dealing with climate change and transitioning to a clean-energy future.
Most climate experts have reached the opposite conclusion. Also in February, the Dutch pension fund, comparable in size to the $240 billion New York state fund, announced that it was divesting from oil and gas companies due to their continued destructive behavior.
Christina Figueres, the lead UN negotiator of the Paris Climate Accords, recently announced she had concluded that such companies will never play a positive role in transitioning to a clean energy future. Her statement came after she reviewed how fossil fuel companies spent their record profits from exploiting the
U.s.-led boycott of Russian gas after its invasion of Ukraine.
Much of these profits have been spent on greenwashing media campaigns, arguing that the fossil fuel industry’s heavy promotion of massive tax subsidies for carbon capture shows their commitment to a cleanenergy future. Such schemes have been heavily supported by Democrats, from the White House to the state Capitol. Just before the recent international climate Conference of the Parties,
the International Energy Agency released a report saying that carbon capture is an illusion and that companies and governments need to stop promoting it. The Biden administration still lobbied hard for it at COP.
Dinapoli did say that Exxon had failed his climate evaluation. However, he plans to divest only about $25 million of its stock, holding on to more than half a billion dollars.
Most large pension managers don’t actually make decisions about individual stocks, deciding instead to invest “passively” in index funds that track the overall market. Dinapoli contends that removing Exxon from his “passive” investments would put him too far out of sync with his index funds, in violation of his fiduciary duty to responsibly manage the funds. After a decade of working on divestment, I can say this “passive vs. active” argument still makes no sense to me or to many other financial observers.
Nor did Dinapoli make this distinction when he publicly agreed in 2020 to a divestment process in exchange for the withdrawal of legislation sponsored by a nearmajority of state legislators in both houses.
If it was a real concern, the obvious solution would be to invest in fossil-free indexes. Financial firms would fight over the opportunity to collect the fees from creating whatever index fund the comptroller wanted.
For the past decade, fossil fuel companies have been the worstperforming stocks. Prior reports found that the failure to divest cost the state pension fund over $20 billion. While the recent record profits did help fossil fuel companies’ stock prices rebound, by the end of 2023 they had once again fallen to the bottom of the market.
Dinapoli seeks to excuse his unwillingness to say no to fossil fuels by increasing his investments in renewable energy. While that is a positive step, the most important step is to cut emissions from fossil fuels, which have continued to increase since the Kyoto protocols 30 years ago and the Paris accords a decade ago.
Dinapoli and others have argued that divesting from fossil fuels is not the most critical step in combating the climate crisis. It’s true that there is no one solution. But politicians must take every opportunity to make clear that the era of burning fossil fuels is over and that we have to rapidly transition to a clean-energy future based on renewables and energy conservation.
At a minimum, state lawmakers need to convene public hearings and call for Dinapoli to document how he arrived at this startling decision. Human life on our planet will not survive timid politicians who understand that climate change is real but try to placate the fossil fuel industry and its tremendous wealth.
Mark Dunlea is author of “Putting Out the Planetary Fire: An Introduction to Climate Change and Advocacy.” For the past decade he has helped coordinate the divestment campaign for 350.org and Divestny.