An act authorizing independent retirement systems to divest from fossil fuel companies (H.3662, S.636)
Filed by Rep. Dylan Fernandes (Barnstable, Dukes & Nantucket) and Rep. Jay Livingstone (8th Suffolk) in the House and Sen. Mark Pacheco (1st Plymouth & Bristol). (Read current text of bill)
Why divest from fossil fuels?
The fossil fuel era is ending and is being replaced by a low-carbon economy. This is necessary to mitigate climate change. Prudent investors must recognize climate-related financial risks and manage their portfolios accordingly to fulfill their fiduciary duty. By divesting, retirement systems eliminate exposure to substantial losses from the fossil fuel industry, which is now considered high risk.
Purpose of Bill:
To allow independent public retirement systems, subject to oversight by the Public Employee Retirement Administration Commission (PERAC), to divest their holdings in full or in part from the fossil fuel industry. Currently, PERAC is blocking systems from doing so, stating that there needs to be a statutory requirement. There are 104 independent public retirement systems in MA with nearly $86 billion in combined assets. These funds are separate from the MA Pension Reserves Investment Trust, which has nearly $71 billion in assets. A review of the holdings for Somerville and Cambridge shows that less than 4% of their total assets under management were in fossil fuels.
This bill is a direct reflection of feedback from leadership on the Public Service Committee. It is a successor to HB 4365, filed by Rep. Provost in 2018: An Act authorizing the Somerville Retirement Board to divest from fossil fuel companies. In a letter to Rep. Provost from Public Service Committee Chair Rep. Parisella dated May 8, 2018, he suggested a legislative approach that allows retirement systems to make investment decisions based on social concerns, while maintaining their fiduciary duty to retirees, and eliminates the need for many home rule petitions and divestment bills in future legislative sessions.
Who supports fossil fuel divestment?
Municipalities that have passed resolutions in support of fossil fuel divestment include: Amherst1, Boston2, Brookline3, Cambridge4, Concord5, Falmouth6, Framingham7, Great Barrington8, Lexington9, Lowell10, Newton11, Northampton12, Provincetown13, Somerville14, Sudbury15, and Truro16.
Five public sector unions have endorsed fossil fuel divestment: SEIU Local 50917, SEIU Local 88818, the MA Nurses Association19, the Boston Teachers Union20, and the MA Teachers Association.21 Educational institutions that have committed to divest in full or in part, include Boston University22, Brandeis University23, Hampshire College24, Salem State University25, and University of Massachusetts.26 Notably, the MA Clean Energy Center also has divested.