Bill Text: NY S00899 | 2023-2024 | General Assembly | Introduced
Bill Title: Establishes the teachers' fossil fuel divestment act; requires the New York state teachers' retirement system to divest the retirement system of any stocks, securities, equities, assets, or other obligations of corporations or companies included on an exclusion list of coal producers and oil and gas producers.
Spectrum: Partisan Bill (Democrat 26-0)
Status: (Introduced) 2024-01-03 - REFERRED TO CIVIL SERVICE AND PENSIONS [S00899 Detail]
Download: New_York-2023-S00899-Introduced.html
STATE OF NEW YORK ________________________________________________________________________ 899 2023-2024 Regular Sessions IN SENATE January 9, 2023 ___________ Introduced by Sens. BRISPORT, ADDABBO, BAILEY, BROUK, CLEARE, COMRIE, COONEY, GIANARIS, HARCKHAM, HINCHEY, HOYLMAN, JACKSON, KRUEGER, MAY, MAYER, MYRIE, PARKER, RAMOS, RIVERA, SALAZAR, SANDERS, SEPULVEDA, SERRANO, SKOUFIS -- read twice and ordered printed, and when printed to be committed to the Committee on Civil Service and Pensions AN ACT to amend the education law, in relation to requiring the New York state teachers' retirement system to divest the retirement system of any investments in corporations or companies included on an exclusion list of coal producers and oil and gas producers The People of the State of New York, represented in Senate and Assem- bly, do enact as follows: 1 Section 1. This act shall be known and may be cited as the "teachers' 2 fossil fuel divestment act". 3 § 2. Legislative findings. 1. a. Climate change is a real and serious 4 threat to the health, welfare, and prosperity of all New Yorkers, now 5 and in the future. Maintaining the status quo of fossil fuel energy 6 production will lead to catastrophic results. 7 b. In July 2019, New York state passed the climate leadership and 8 community protection act and committed to reducing statewide greenhouse 9 gas emissions by eighty-five percent by 2050 and net zero emissions in 10 all sectors of the economy. Other cities and states have chosen to 11 pursue similar paths to reduce greenhouse gas emissions. 12 c. The threat of climate change, and the transformation of the global 13 energy system that will be necessary to mitigate it, will have a serious 14 negative impact on investors whose assets are not aligned with the goal 15 of keeping the global average temperature increase below 1.5 degrees 16 Celsius, as determined by the United Nations Intergovernmental Panel on 17 Climate Change. 18 d. There are no existing legal or fiduciary duties that require New 19 York state's pension funds to invest in energy sources that are harmful 20 to the environment, or in contradiction to the goals of the climate EXPLANATION--Matter in italics (underscored) is new; matter in brackets [] is old law to be omitted. LBD03486-01-3S. 899 2 1 leadership and community protection act. Rather, there are alternative 2 investments that are available to our pension funds that do not present 3 such harms. 4 e. Many cities and states have recognized the harmful effects of 5 pension and investment funds investing in fossil fuels and have commit- 6 ted to divesting those funds. Over 1,100 institutional investors repres- 7 enting more than $11 trillion in holdings have chosen to pursue full or 8 partial divestment from fossil fuel producers, including the New York 9 city employees retirement system, the endowment and pension funds of the 10 University of California system, and the sovereign wealth funds of 11 Norway and Ireland. 12 2. a. Continued investment in fossil fuel producers poses unacceptable 13 risks to the people of the state of New York, as well as the long-term 14 sustainability of the New York state teachers' retirement system. 15 b. Investment in dangerous and harmful fossil fuels is not mandated by 16 law. The New York state common retirement fund, consistent with its 17 fiduciary duties, has committed to complete reviews of all fossil fuel 18 investments by 2025 and to divest from companies that fail to meet mini- 19 mum standards. It has also set a precedent by choosing to divest from 20 certain industries in the past due to the moral implications of their 21 business models, including private prisons, firearms manufacturers, and 22 companies doing business with Sudan, all while complying with the comp- 23 troller's fiduciary obligations. 24 c. New York owes duties to its residents, and the New York state 25 teachers' retirement system owes duties to future beneficiaries. These 26 duties can and should reasonably include considerations of human inter- 27 ests, quality of life, public safety and security, and ultimately 28 require a shift away from fossil fuels to help mitigate the future 29 adverse effects of climate change. 30 d. According to the U.S. Department of Labor's interpretive bulletin 31 2015-1, environmental issues "may have a direct relationship to the 32 economic value of the plan's investment, and are not merely collateral 33 considerations or tie-breakers, but rather are proper components of the 34 fiduciary's primary analysis of the economic merits of competing invest- 35 ment choices." 36 e. Attempting to profit from investments in companies whose business 37 models, public relations campaigns, and lobbying efforts not only fail 38 to comply with New York's statutory climate goals, but also put the 39 stability of our society and the safety of our citizens at risk, is 40 neither morally acceptable nor in compliance with the legislature's 41 responsibility to protect the financial security of current and future 42 pension beneficiaries. 43 f. Currently, the majority of fossil fuel producers are not adjusting 44 their business models to take into account the changing energy market, 45 investing billions of dollars in exploring and extracting new reserves, 46 creating stranded asset risk and the potential for rapid, unexpected, 47 and significant loss of value. 48 g. Attempting to beat the market by holding these investments until 49 the last possible moment is a high-risk strategy that could result in 50 the loss of investment principal. In the words of the decarbonization 51 advisory panel for the New York state common retirement fund, "being too 52 early in the avoidance of the risk of permanent loss is much less of a 53 danger than being too late." 54 h. In addition to the risks regarding retirement security, continued 55 investment in the fossil fuel industry is counterproductive to the goals 56 set forth in the climate leadership and community protection act.S. 899 3 1 § 3. The education law is amended by adding a new section 508-b to 2 read as follows: 3 § 508-b. Fossil fuel divestment. 1. Definitions. As used in this 4 section: 5 a. "coal producer" means any corporation or company, or any subsidiary 6 or parent of any corporation or company or partnership or other legal 7 entity, that derives at least ten percent of annual revenue from thermal 8 coal production, or accounts for more than one percent of global 9 production of thermal coal, or whose reported coal reserves contain more 10 than 0.3 gigatons of potential carbon dioxide emissions; 11 b. "exclusion list" means the list created pursuant to paragraph a of 12 subdivision two of this section; 13 c. "oil and gas producer" means any corporation or company, or any 14 subsidiary or parent of any corporation or company or partnership or 15 other legal entity, that derives at least twenty percent of annual 16 revenue from oil or gas production, or accounts for more than one 17 percent of global oil or gas production, or whose reported combined oil 18 and gas reserves contain more than 0.1 gigatons of potential carbon 19 dioxide emissions; 20 d. "oil or gas production" means exploration, extraction, drilling, 21 production, refining, processing, or distribution activities related to 22 oil or gas; 23 e. "thermal coal production" means mining, transport, processing, or 24 exploration activities related to thermal coal; 25 f. "oil and gas equipment, services, transportation and storage" means 26 services, transportation or storage activities related to oil and gas; 27 and 28 g. "index fund" means a passive investment strategy that tracks a 29 market index. 30 2. Fossil fuel company exclusion list. a. Within six months of the 31 effective date of this section, the retirement board shall create an 32 exclusion list of all coal producers and oil and gas producers in whose 33 stocks, securities, equities, fixed income, assets, or other obligations 34 the retirement system has any monies or assets directly invested. 35 b. Upon completion of the exclusion list, it shall be made publicly 36 available and a copy shall be sent to the temporary president of the 37 senate and the speaker of the assembly. 38 c. The retirement board shall submit notification to any corporation 39 or company that has been included in the exclusion list informing them 40 of their inclusion on such list, as well as the requirements of this 41 section. 42 d. At the retirement board's discretion, but no later than two years 43 after the completion of the exclusion list, and no less frequently than 44 biennially thereafter, the retirement board shall update the exclusion 45 list to remove any corporation or company that is no longer a coal 46 producer or an oil and gas producer and add any corporation or company 47 necessary to comply with paragraph a of this subdivision. 48 3. Removal from the exclusion list. a. At any time following the 49 publication of the exclusion list, any corporation or company included 50 in the list may submit to the retirement board a request for removal on 51 the basis of clear and convincing evidence that they are not currently a 52 coal producer or an oil and gas producer as defined in subdivision one 53 of this section. 54 b. Upon satisfaction that a corporation or company has met the 55 requirements of paragraph a of this subdivision, the retirement board 56 shall remove such corporation or company from the exclusion list andS. 899 4 1 provide a written explanation for such removal to the temporary presi- 2 dent of the senate and the speaker of the assembly. 3 4. Compliance with fiduciary duties. a. Nothing in this section shall 4 require a board to take action as described in this section unless the 5 board determines in good faith that the action described in this section 6 is consistent with the fiduciary responsibilities of the board under the 7 New York state constitution. Any new investments must comply with the 8 fiduciary obligations and the prudent investor rule as defined by 9 section 11-2.3 of the estates, powers and trusts law. 10 b. No private right of action shall be available against the retire- 11 ment system, any of its employees, or any present, future, and former 12 board member of the retirement system for divesting retirement system 13 assets pursuant to this section in good faith. 14 c. No private right of action shall be available against the state 15 pursuant to this section. 16 5. Divestment. a. Commencing one year after the effective date of this 17 section, and in accordance with sound investment criteria and consistent 18 with its fiduciary obligations, the retirement board and any investment 19 managers under contract with the retirement system shall: (i) divest the 20 retirement system of any stocks, securities, equities, assets, or other 21 obligations of corporations or companies on the exclusion list in which 22 any monies or assets of the retirement system are invested; and (ii) 23 cease new investments of any monies or assets of the retirement system 24 in any stocks, securities, or other obligations of any corporation or 25 company that is a coal producer or oil and gas producer as defined here- 26 in. 27 b. Divestment from oil and gas producers pursuant to this subdivision 28 shall be completed no later than two years from the effective date of 29 this section. Divestment from oil and gas producers returned to the 30 exclusion list pursuant to paragraph c of subdivision four of this 31 section shall be completed no later than two years from the date of 32 return to the exclusion list. 33 c. Divestment from coal producers pursuant to this subdivision shall 34 be completed no later than one year from the effective date of this 35 section. Divestment from coal producers returned to the exclusion list 36 pursuant to paragraph c of subdivision two of this section shall be 37 completed no later than one year from the date of return to the exclu- 38 sion list. 39 d. Divestment from private equity and private debt investments pursu- 40 ant to this subdivision shall occur expeditiously in a good faith 41 attempt to comply with the provisions of paragraphs b and c of this 42 subdivision, but no later than five years from the effective date of 43 this section. 44 e. The retirement system shall have the discretion to divest from any 45 other entities that it in good faith believes are directly or indirectly 46 financing oil and gas producers, or coal producers, regardless of wheth- 47 er such entity otherwise meets the criteria of this subdivision. 48 6. Limitations on indirect investment. Notwithstanding any provisions 49 in this section to the contrary, and in accordance with sound investment 50 criteria and consistent with its fiduciary obligations, the retirement 51 board shall be permitted to invest in index funds if the board is satis- 52 fied on reasonable grounds and in good faith that such indirect invest- 53 ment vehicle does not have in excess of one percent of its assets, aver- 54 aged annually, directly or indirectly invested in coal producers and oil 55 and gas producers.S. 899 5 1 7. Reporting. a. Commencing one year after the effective date of this 2 section and annually thereafter the retirement board shall issue a 3 report to the temporary president of the senate and the speaker of the 4 assembly and shall make such report publicly available, outlining all 5 actions taken to comply with this section. 6 b. To the extent that the retirement system has remaining private 7 equity or private debt investments in any oil and gas producers, or coal 8 producers, the retirement board shall prominently make note of such 9 investments and all attempts that have been made to expeditiously 10 complete its divestment obligations to date. The board shall provide 11 public notice of this annual report and an opportunity for public 12 comment on the retirement system's divestments pursuant to this act of 13 at least sixty days. 14 § 4. This act shall take effect immediately.
