The New York State Common Retirement Fund (Fund) will restrict investments in oil sands companies that have not demonstrated that they are prepared for the transition to a low-carbon economy, New York State Comptroller Thomas P. DiNapoli, trustee of the third largest public pension plan in the country, announced today.
This action is tied to DiNapoli’s comprehensive Climate Action Plan to lower investment risks from climate change and transition the Fund’s investment portfolio to net zero greenhouse gas emissions by 2040.
“As nations around the world become increasingly serious about addressing the threat of climate change and as market forces drive a low-carbon economic transition, we need to make sure our investments line up with this reality,” said DiNapoli. “We have carefully reviewed companies in the oil sands industry and are restricting investments in those that do not have viable plans to adapt to the low-carbon future. Companies responsible for large greenhouse gas emissions like those in this industry, pose significant risks for investors.”
Oil sands companies produce a heavy type of crude oil from oil sands which are a mixture of sand, water, clay and bitumen. Oil sands production is more costly and carbon-intensive than other forms of crude production.
Today’s announcement follows the Fund’s detailed assessment that evaluated each company’s transition strategies, capital expenditures, and greenhouse gas reduction targets, among other factors.
The Fund determined the following seven companies failed to show they are transitioning out of oil sands production:
- Imperial Oil Ltd.
- Canadian Natural Resources Ltd.
- Husky Energy Inc.
- MEG Energy Corp.
- Athabasca Oil Corp.
- Cenovus Energy Inc.
- Japan Petroleum Exploration Ltd.
The Fund will not directly purchase or directly hold debt or equity securities, or invest through an actively managed account or vehicle, in these companies, and more than $7 million in such securities currently held by the Fund will be sold in a prudent manner and timeframe.
The evaluation of the Fund’s oil sands holdings are part of DiNapoli’s broader review of the transition readiness of energy sector investments that face significant climate risk. Last year, DiNapoli’s review of coal companies led to the Fund’s divestment from 22 firms that failed to demonstrate transition readiness. The Fund will next evaluate shale oil and gas companies.
Background on Climate Investment Actions
Since taking office in 2007, DiNapoli has been recognized as a global leader for his efforts to protect the Fund’s investments, address material risks from climate change and pursue sustainable investment opportunities for the Fund. In 2019, DiNapoli released a Climate Action Plan, a multi-faceted strategy that includes a goal of committing $20 billion to sustainable investments, dedicated staff to pursue climate solution investments, and minimum standards for portfolio companies that will inform engagements, investments and potential divestment decisions. Building on the Climate Action Plan’s solid foundation, in December 2020, DiNapoli announced the Fund has adopted a goal to transition its portfolio to net zero greenhouse gas emissions by 2040.
Background on New York State Common Retirement Fund
The New York State Common Retirement Fund is the third largest public pension fund in the United States with assets of approximately $247.7 billion as of Dec. 31, 2020. The Fund holds and invests the assets of the New York State and Local Retirement System on behalf of more than one million state and local government employees and retirees and their beneficiaries. It has consistently been ranked as one of the best managed and best funded plans in the nation.
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