by Guy Page

Another Senate bill seeking to reduce greenhouse gas emissions would put already vulnerable Vermonters at greater risk.

S.42  would divest state pension funds from investments in fossil fuel companies. Supporters of divestment say it will move the U.S. economy away from reliance on fossil fuels and reduce global warming. Critics say it would reduce the income stream to a state pension fund already challenged to keep its longterm commitments to state and public school retirees.

The state board charged with operating the pension fund has rejected S42 on a 6-1 vote.

Sponsored by Sens. Kesha Ram Hinsdale, Alison Clarkson, Ruth Hardy, Richard McCormack, Andrew Perchlik, Tanya Vyhovsky, Anne Watson, and Rebecca White, S42 would require a plan by this November to divest state investments from the fossil fuel industry by December 31, 2030 and prohibiting investments thereafter.  

Fossil-fuel related stocks tend to be high-performance ‘blue chip’ stocks, a consultant report commissioned following a divestment effort several years ago concluded. Vermont’s state pension is underfunded by several billion dollars. Efforts to close the funding gap have proven elusive over the last two decades. 

The Campaign for Vermont has closely followed the pension funding problem for many years. It says the cost of divestment to the pension funds is still unknown. The Vermont Pension Investment Commission, the organization responsible for these investments, is very nervous about moving down this road until the impacts here are well understood, CFV said. 

“Gambling with the retirement benefits of our public servants is not a good idea, particularly because those funds are already under stress right now,” CFV said in a recent statement. 

Also, Harvard and other top universities have chosen not to divest becaus it forfeits any ESG leverage over the business practices, products, or environmental impacts of those companies,” CFV said. 

“I was incredulous this week to hear legislators challenge the public pension professionals who testified before them,” CFV spokesperson Pat McDonald said. “To dismiss the concerns of the people we entrust to manage our public retiree benefits is just wrong. 

“This state is beyond fortunate to have people like Tom Golonka overseeing our investments. He and the rest of the Vermont Pension Investment Commission have the requisite expertise for the job and are highly qualified. They voted against supporting S.42 on a 6-1 vote, that should carry weight.”

“Given the work done over the past couple years to address the outstanding liability of the state employee and teacher pension plans, this is not the time to make rash decisions with our investments. I understand the desire to divest away from fossil fuels – I get it. Over time these investments will make less sense, but we should not toss “the baby out with the bath water” by tying our hands without understanding the impacts. Employing a little Vermont common sense would be called for right about now,” McDonald added.

S42 is now in the Senate Appropriations Committee.

Some content sourced from Campaign for Vermont news statement.