NY pension drops 21 holdings in sustainability review

The shale oil and gas companies 'failed to demonstrate they are prepared for the transition to a low-carbon economy'

New York State’s $280bn pension fund is dumping its investments in 21 shale oil and gas companies, Comptroller Thomas DiNapoli’s office announced Wednesday.

The divestment, representing $238m, is one of several rounds the fund is making as part of a climate action plan announced more than a year ago, which includes a goal of net zero by 2040 for the portfolio. Previously, the fund dropped 34 companies after a review of oil sands and coal businesses. It will next evaluate its integrated oil and gas holdings, according to this week’s announcement.

The 21 shale oil and gas companies that are part of the most recent divestment “have failed to demonstrate they are prepared for the transition to a low-carbon economy,” according to the statement. Among other holdings, the list of firms includes Pioneer Natural Resources Co., Hess Corp. and Chesapeake Energy Corp. The holdings “will be sold in a prudent manner and timeframe, consistent with the comptroller’s fiduciary duty,” DiNapoli’s office stated.

The recent review included a total of 42 shale oil and gas companies, half of which remain investments within the pension fund.

The pension system’s climate action plan includes a goal of placing $20bn in sustainable investments, $11m of which has been committed so far, according to the fund’s 2021 annual report.

Last year, the pension also revised its ESG scorecards for investments with external managers, adding climate-specific criteria including “governance, risk assessments, engagements, proxy voting and climate reporting in line with [Task Force on Climate-related Financial Disclosures] recommendations,” the annual report noted.