The New York State Common Retirement Fund is evaluating 28 publicly traded oil and gas companies to determine if they are ready to transition to a low-carbon economy, according to a release from the state comptroller’s office.
The $272.1 billion pension fund is asking each company, which includes energy giants BP, Chevron, Exxon Mobil and Shell, to provide information on how prepared it is to transition to a net-zero economy.
“Oil and gas companies face significant and complex economic, environmental and regulatory challenges in the years to come,” New York State Comptroller Thomas DiNapoli, the pension fund’s trustee, said in a statement. “While energy companies are currently making record profits driven by high prices, their long-term prospects are far less certain. As investors, we will carefully review these companies and may restrict investments in those that do not have viable plans to adapt.”
DiNapoli said the pension fund is targeting companies that engage in all aspects of the oil and gas business, including exploration and production, transportation, refinement and retail sales. The move is part of DiNapoli’s Climate Action Plan, which aims to reduce climate change related investment risks and help the fund’s portfolio transition to net-zero greenhouse gas emissions by 2040.
The assessment of the pension fund’s integrated oil and gas holdings is part of its broader review of energy sector investments that it believes face significant climate risk. When DiNapoli announced in late 2020 that the pension fund would transition its portfolio to net-zero by 2040, he said the process would include completing a review of energy sector investments within four years to assess transition readiness, as well as a divestment of companies that don’t meet its climate-related investment risk standards.
Less than two years into that review process, which has so far included an evaluation of shale oil and gas, oil sands and coal companies, the pension fund has decided to divest from 55 firms that it determined were not prepared to transition to a net-zero economy.
According to a recent progress report on its climate action plan, in the past year the pension fund completed a review of shale oil and gas companies, which led it to restrict investments in or divest from 21 companies. The report also says that the value of the NYCRF’s holdings in fossil fuel producers totaled approximately $3.4 billion in its public equity and corporate fixed-income portfolios as of the end of 2021.