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10/20/2021 03:00 AM
Pennsylvania State Senate
https://www.legis.state.pa.us/cfdocs/Legis/CSM/showMemoPublic.cfm?chamber=S&SPick=20210&cosponId=35694
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Senate of Pennsylvania
Session of 2021 - 2022 Regular Session

MEMORANDUM

Posted: May 20, 2021 05:52 PM
From: Senator Katie J. Muth
To: All Senate members
Subject: Achieving Fossil Fuel Free Investments for our State Managed Public Funds
 

Fossil fuel investments are a risk for investors, the planet, and public health.  Further, the fossil fuel industry faces huge litigation risks, including class action suits that seek to quantify investor losses. These lawsuits are the direct result of company and industry-wide mismanagement of climate change and other social and environmental issues. This legislation will ensure all state managed public funds work toward divestment in a measurable, trackable way to ensure transparency and accountability, and implement a fossil fuel free investment plan rooted in social and fiscal responsibility. Ultimately, this bill will create the requirements to achieve total divestment.

We will achieve this goal by pursuing the following steps:
  • Require all state managed public funds to identify fossil fuel companies in which such public funds have direct or indirect holdings and create a list of fossil fuel companies in which state managed public funds have direct or indirect holdings by December 31, 2022 as well as updating that list on a quarterly basis. 
  • Require state managed public funds to divest of all direct and indirect holdings in fossil fuel companies over a period of 5 years or as soon as contractually permitted to do so.
  • Prohibit the state managed public funds from making new investments in fossil fuel companies.
  • Require the systems to redirect and reinvest the net divestment proceeds in investments that align with environmental, social and governance sought under a companion ESG proposal in this legislative package 
Latest trends show that entities who have divested have profited not only morally but also financially.  Fossil fuel divestment efforts are underway across the nation with more than 1,300 institutions nationally—including 12% that are pension funds, 13% that are government institutions and 15% each that are educational institutions and philanthropic foundations—that collectively manage over $14.56 trillion have made divestment commitments, according to gofossilfree.org
      
The move to sell holdings in fossil fuel companies mirrors the divestment from tobacco companies that began two decades ago.  In one of the biggest moves in this country, New York City Mayor Bill de Blasio announced in 2018 a goal of divesting his city’s pension funds of fossil-fuel investments by 2022.   New York City’s top pension funds are executing on their intentions to cut $4 billion in fossil-fuel investments.

There is precedent in Pennsylvania for mandated divestment of certain holdings.  Act 44 of 2010 required divestiture by the State Treasurer, the State Employees' Retirement System and the Public School Employees' Retirement System of investments in companies doing business in Iran and Sudan.

Please join me in meeting our collective moral and fiscal obligations to future generations to minimize the impact of climate change and ensuring financial security by cosponsoring this important legislation..