The New York State Common Retirement Fund is restricting its exposure in eight integrated oil and gas companies, including divesting a portion of its investment in Exxon Mobil Corp.
In a press release, New York State Comptroller Thomas DiNapoli said the decision was fueled by a review of the oil companies — Guanghui Energy Company, Echo Energy, IOG, Oil and Natural Gas Corp., Delek Group, Dana Gas and Unit Corp. — and their respective transition strategies to a low-carbon economy. Indeed, the pension fund won’t make further private market investments in funds focused on the extraction or production of oil, gas and coal.
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As at Dec. 31, 2023, the investment organization holds about $26.8 million in corporate bonds and public equity from these oil companies. However, it will continue to own roughly $500 million in Exxon after it divests approximately $25 million worth of shares. Its current exposure in the oil companies will be managed through a passive index holding.
The decision falls in line with the fund’s sustainability strategy, which DiNapoli recently announced had reached a goal of US$20 billion committed to sustainable investments and climate solutions. It now expects to reach US$40 billion by 2035.
The investment strategy adjustment won’t impact the exposure it currently has in other oil players like Chevron, BP and Shell, said the release. The fund is targeting companies that haven’t set targets to cut Scope 3 emissions, defined by the U.S. Environmental Protection Agency as “the result of activities from assets not owned or controlled by the reporting organization but that the organization indirectly affects in its value chain.”
In its most recent financial report, the fund said it held $260 billion in net assets thanks to a 6.18 per cent return during the third quarter of its fiscal 2023 financial year.
“Climate change is an increasingly urgent risk facing all investors and I am determined to protect the state’s pension fund by keeping it at the forefront of efforts to mitigate risks to our investments,” said DiNapoli. “This reduces our fund’s exposure to fossil fuels.”
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