An Act Relative to Public Investment in Fossil Fuels (H.2220)
Filed by Rep. Marjorie Decker and Rep. Mindy Domb, and joined by 29 co-sponsors, H.2220 would push for divestment of state-controlled pension funds from the fossil fuel industry.
The bill would: require immediate divestment of Massachusetts state pension funds from holdings in thermal coal, create a Commission chaired by the State Treasurer which would analyze financial and environmental impacts of investments in gas and oil, and, if it recommends divestment, instruct the pension fund to cease new investment and divest its oil and gas holdings over 3 years, so long as the value of the fund does not drop more than 0.5% as a direct result of divestment.
Why Should Massachusetts Divest from Fossil Fuels?
We have an obligation to future generations to minimize the impact of climate change. We must transition from carbon-emitting fossil fuels toward renewable sources of energy. The U.S. and nearly every other country on earth has agreed that in order to maintain a livable planet, we must keep warming below an increase of 2°C (3.6°F). To stay below this threshold, the International Energy Agency calculates that the fossil fuel industry will need to leave approximately 80% of its reserves of coal, oil, and gas unburned. Divestment sends a strong message that our children’s future comes first!
Divestment is consistent with Massachusetts’ priorities. We have passed legislation to promote renewable energy such as the Green Communities Act, the Global Warming Solutions Act and our involvement in the Regional Greenhouse Gas Initiative. Meanwhile, fossil fuel companies continue to explore for new reserves despite the fact that most of their existing reserves are unburnable.
Divestment is a sound financial strategy. Investment professionals are increasingly concerned about financial risk associated with the fossil fuel industry. The cost of extracting gas and oil is trending upward, while yields are trending downward, both in terms of quantity and quality. Additionally, it is widely expected that fossil fuels eventually will become stranded assets, and their value on the stock market will plunge (the “carbon bubble”).
Divestment is a proven tool for change. This legislation is modeled on successful legislation that led to divestment of the state pension fund from financial interests in Iran (Chapter 232 of the Acts of 2010). Previous legislative efforts successfully divested the PRIT fund from South Africa, Sudan, and tobacco. Fossil fuel divestment efforts are underway across the country and internationally with colleges, nonprofit institutions, institutional investors, and cities and towns representing over $9 trillion in assets having divested so far.