The New York State Common Retirement Fund (Fund) will restrict investments in 21 shale oil and gas producing companies, including Pioneer Natural Resources Co., Hess Corp. and Chesapeake Energy Corp., that have failed to demonstrate they are prepared for the transition to a low-carbon economy, New York State Comptroller Thomas P. DiNapoli, trustee of the Fund, announced today.
These restrictions are part of DiNapoli’s comprehensive Climate Action Plan to address investment risks from climate change and his commitment to transition the Fund’s investment portfolio to net zero greenhouse gas emissions by 2040.
“As market forces and new policies drive the energy transition, we must align our investments with a profitable and dynamic future,” DiNapoli said. “The shale oil and gas industry faces numerous obstacles going forward that pose risks to its financial performance. To protect the state pension fund, we are restricting investments in companies that we believe are unprepared to adapt to a low-carbon future.”
The oil and gas industry, including shale oil and gas companies, has been named by the Financial Stability Board’s Task Force on Climate-related Financial Disclosure (TCFD) as an industry that may be most affected by climate change and the transition to the emerging net zero economy.
After reviewing 42 companies, the Fund determined 21 failed to show viable transition strategies. The 21 companies are:
- APA Corp.
- Apache Corp.
- Baytex Energy Corp.
- Birchcliff Energy Ltd.
- Callon Petroleum Co.
- Centennial Resources Development Inc.
- Chesapeake Energy Corp.
- Comstock Resources Inc.
- Continental Resources Inc.
- Crescent Point Energy Corp.
- Crew Energy Inc.
- Diamondback Energy Inc.
- Enerplus Corp.
- Hess Corp.
- Laredo Petroleum Inc.
- Magnolia Oil & Gas Corp.
- Matador Resources Co.
- Oasis Petroleum Inc.
- PDC Energy Inc.
- Pioneer Natural Resources Co.
- SM Energy Co.
The Fund will divest more than $238 million in public equity and debt securities issued by these companies. These securities will be sold in a prudent manner and timeframe, consistent with the Comptroller’s fiduciary duty.
The evaluation of the Fund’s shale oil and gas holdings is part of DiNapoli’s broader review of the transition readiness of energy sector investments that face significant climate risk. DiNapoli’s prior reviews of oil sands and coal companies led to the Fund’s divestment from 34 firms that the Fund determined failed to demonstrate transition readiness. The Fund will next evaluate integrated 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 one of the largest public pension funds in the United States with assets of approximately $279.7 billion as of Dec. 31, 2021. 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.