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Failure to Divest from Fossil Fuels Leads to over $1 Billion Shortfall for MA Pension Fund

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CONTACT:
Stephanie Leighton, Trillium Asset Management, sleighton@trilliuminvest.com, (617) 423-6655
Jon Grossman, SEIU Local 509, jgrossman@seiu509.org, (617) 312-7180

Failure to Divest from Fossil Fuels Leads to over $1 billion Shortfall for MA Pension Fund

 

June 1, 2018 // Boston, MA – A recent financial analysis conducted by MassDivest Coalition and Trillium Asset Management, a Boston-based sustainable and responsible investment firm, found that the Massachusetts Pension Reserves Investment Trust (PRIT) lost an estimated $79 million on its $1.6 billion fossil fuels equities for the five years ending June 30, 2017. The analysis was released just as legislators failed to pass bill H.3281, a petition which would divest the PRIT from coal holdings.

The loss estimate was calculated after careful examination of initial values and subsequent returns for PRIT’s stocks operating in the coal, integrated oil and gas, and fossil fuel exploration and production industries. In the five years ending in fiscal year 2017, coal stocks in the PRIT lost an estimated 25 million. The estimated five-year cumulative total decline is 44% on its $56 million starting investment in coal equities.  In the same five year period the broader market, as measured by the S&P 500, gained 78% on a cumulative basis.

“The Fund’s loss of over $79 million dollars in a 5 year period is significant and directly impacts the strength of the pension fund and our state’s ability to meet its obligation to its retirees,” said Matthew Patsky, CEO of Trillium Asset Management. “The opportunity cost loss of $1 billion incurred by PRIT staying heavily invested in fossil fuel investments, especially coal – which has been in secular decline for years – , is staggering. Our public employees’ pension fund would be healthier today if its managers had taken steps to divest from these volatile investments years ago.”

If the fund’s $1.6 billion in fossil fuel stocks had instead been invested in MSCI All World Country ex-Fossil Fuels Index these assets would have grown by approximately 57.7% or $1 billion over this five years, instead of a $79 million loss in value.

“Investing in companies that contribute to global warming and the destruction of our planet is completely against the values of educators. Every day, educators consider how their work contributes to a better future for their students. That is why members of the MTA voted in favor of directing their pension plan to divest from coal and fossil fuel companies,” said MTA President Barbara Madeloni during the hearing for H.3281 this fall.

Bill H.3281, sponsored by Rep. Marjorie Decker, was intended to protect the Commonwealth’s economic and environmental future by requiring the Massachusetts Pension Fund to completely divest from all thermal coal companies within 5 years – an industry that is a leading contributor to global warming and the climate change consequences we are experiencing right here in the Bay State.

“As human service workers, we work every day to protect the Commonwealth’s most vulnerable and to ensure a safer, brighter future for its children. We do not want our own hard-earned retirement money undoing that work by investing in companies that degrade our earth and harm our future” said Peter MacKinnon, president of SEIU Local 509.

“At a time when the Trump administration is handing the fossil fuel industry an unprecedented amount of power and attempting to reverse the so-called “war on coal”, Massachusetts had a clear-cut opportunity to respond – by divesting the pension fund from coal,” said Darcy DuMont, a retired teacher and MassDivest Coalition organizer.

There is widespread support for divestment. Five public sector unions – SEIU Local 509, SEIU Local 888, the Massachusetts Nurses Association, the Boston Teachers Union, and the Massachusetts Teachers Association – have endorsed divestment, along with close to 50 legislators and dozens of religious, community and student groups. Fourteen towns and cities across the state have passed resolutions in support of divestment. The California Public Employees’ Retirement System has divested from coal, in compliance with a 2015 law that required it and the California State Teachers’ Retirement System to divest from coal by July 1, 2017.

 

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Trillium Asset Management, LLC is the oldest independent investment advisor devoted exclusively to sustainable and responsible investing. With over $2.6 billion in assets under management, Trillium has been managing equity and fixed income investments for individuals, foundations, endowments, religious institutions, and other nonprofits since 1982. A leader in shareholder advocacy and public policy work, Trillium’s goal is to deliver both impact and performance to its investors.

MassDivest Coalition fights for a better future for Massachusetts retirees and citizens by seeking divestment of the state pension fund from fossil fuel companies and investment in a 100% clean and renewable energy future. Current members include unions, faith, climate, environmental, high school, higher education students, faculty, and alumni divestment groups, business and community groups.

The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy, and is not a complete summary or statement of all available data.

 

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