Massachusetts Joins Institutional Carbon Clash

Massachusetts Joins Institutional Carbon Clash
Treasurer Steve Grossman

NOVEMBER 21, 2013: An article in today’s DCDB Daily Free E-Newsletter says that Massachusetts Treasurer and Receiver General Steve Grossman, Chairman of the Pension Reserves Investment Management (PRIM) Board, manager of the state’s more than $54 billion Pension Reserve Investment Trust (PRIT), has lodged support for mission-based investing focused on climate change.

Massachusetts, which joins the Carbon Asset Risk (CAR) fight that is made up of other large investors that manage up to $3 trillion in collective assets, is the latest signatory to the effort coordinated by Ceres and the Carbon Tracker Initiative that seeks change among the world’s 45 largest fossil fuel companies.  

Last month, nonprofit groups Ceres and the Carbon Tracker Initiative coordinated the effort of more than 70 investors in the U.S. and Europe for the CAR. It was seeking an analysis for future climate action from oil, gas, coal and electric power companies, the Oct. 24 statement said.

The investor group includes public pension funds and global asset management firms such as the $172 billion California State Teachers’ Retirement System, $278.5 billion California Public Employees’ Retirement System and New York State Comptroller Thomas DiNapoli and City Comptroller John Liu, whose office manages the Common Retirement Fund and the New York City Pension Funds, respectively.

Also, European asset managers Scottish Widows Investment Partnership and U.K.-based F&C Asset Management were listed.
This coalition of institutional investors reportedly sent letters to the fossil fuel companies last month in order to “receive detailed responses before their annual shareholder meetings in early 2014.”

Grossman said Nov. 21, "the group fight is “sending a clear and powerful message to fossil fuel industries.”

“As investors, we not only want strong shareholder value, but also responsible environmental practices,” Grossman explained. “Given the trend toward a low-carbon future, these companies need to reassess their long-term goals in the interests of their ongoing sustainability and profitability.”

MASS ASSOCIATION OF CONTRIBUTORY 
RETIREMENT SYSTEMS OPPOSED DIVESTITURE BILL

Last September, an 18 member Board representing the 105 Massachusetts Contributory Retirement Systems (MACRS) unanimously voted to oppose legislation that would require the state’s Pension Reserves Investment Management (PRIM) Board to divest all holdings in the fund, which include fossil fuel such as oil and natural gas.

A hearing on the bill, Senate 1225, sponsored by Senator Ben Downing (D-Pittsfield), drew strong support by members of the Legislature, college students and general public at the State House’s Gardner Auditorium on September 10th.

“The MACRS Executive Board vote was taken in order to ward off any knee-jerk reaction to divest of our pension funds which involve most of our 105 retirement systems,” said Association President Ralph White one of the Board’s members.

“MACRS President Denis Devine pointed out that every member of the Executive Board has a fiduciary responsibility to their system’s investments. Most of these systems have allocations in PRIM, therefore we had to immediately oppose the divestiture bill,” he said.

“Denis was right. We had to talk with our Boards about this legislation,” said White. “If they were going to lose money because of divestiture, they needed a voice. At the time the bill was heard by the Public Service Committee it appeared that it could be fast-tracked.

“But things have since settled down and we have no problem with Treasurer Steve Grossman’s approach at this point. There’s no divestiture vote on the immediate horizon, and the MACRS Executive Board will discuss this issue at its meeting next month.”

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