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State Treasurer candidates weigh in on fossil fuel divestment

PUBLISHED: | UPDATED:

By Andy Metzger

STATE HOUSE NEWS SERVICE

SOMERVILLE — Two of the three Democratic candidates for state treasurer told the News Service they support a careful divestment of the state pension fund from fossil fuel holdings while the third favors working with other states for a potentially larger-scale divesture.

Meanwhile, Republican candidate for treasurer Mike Heffernan predicted divestment would hurt the fund’s performance and increase costs, but called socially responsible investing a “worthy goal.”

Environmentalists are renewing their push this week for the state to pull the Pension Reserves Investment Trust out of investments in fossil fuels, which scientists say are one of the leading contributors to climate change, while pension fund managers have warned the fund’s finances would be affected.

“I support it in a gradual and responsible way,” said Sen. Barry Finegold. He said, “The important thing is it has to be gradual; it has to be responsible, and we have to do it in a way that we don’t hurt people, pensioners.”

In recent decades lawmakers have directed the fund to divest from then Apartheid-ruled South Africa and the tobacco industry.

“I support divestment of fossil fuels and doing so in a way that doesn’t impact the pension fund negatively, so we have to do it in a very responsible manner,” said Deb Goldberg, a former Brookline selectwoman whose family built the Stop & Shop grocery chain. “I believe that climate change is a huge problem. If this winter and last summer didn’t prove that to people, then they really have their eyes closed and have no clue about what’s going on.”

Rep. Tom Conroy, a Wayland Democrat seeking election as treasurer, said in a Sunday statement “simple divesture reduces our leverage,” and he would favor lobbying other states for a wide-scale divestment.

“(A)s treasurer I would lead an effort of all the state treasurers around the country related to collectively divesting from fossil fuel companies. As shareholders, our collective voice could express interest in changing the business models of oil, coal, and gas companies. For my part, I would articulate goals such as ending the practice of fracking, reducing fossil fuel pollution, and investing more in renewable, clean energy research, development, and production,” Conroy said. He said, “Simple divestiture reduces our leverage and removes our voice from the process and our ability to affect change.”

Earlier, at a caucus at Somerville High School on Saturday where Goldberg and Finegold told the News Service they support divestment, Conroy declined to comment on the issue.

“We’re going to roll it out in due time,” Conroy said. “I’m not ready to make a formal statement about that topic.”

The nine-member Pension Reserves Investment Management Board is chaired by the treasurer, who appoints one member as well. Goldberg said she would move the board to carefully divest and Finegold said the board would need to be convinced.

“You have two votes out of nine, so you’re going to have to convince other people to agree with your position,” Finegold said. “It’s not something that will happen overnight.”

Finegold said one of his first votes in the Legislature was a vote to divest from tobacco, which he said hadn’t hampered the fund. The pension fund’s investment profits provide the money for retirement checks to former public employees.

“Anything that you do – movement that you do within the pension fund has to be done responsibly. You have an obligation, a fiduciary duty, to the Mass. state retirees,” Goldberg said. She said, “You can’t just dump it all at once. So yes, we would be doing that but over time.”

In a statement, Heffernan, the GOP candidate for treasurer, didn’t specify if he was for or against the idea.

“The Massachusetts pension system is currently unfunded by $28.3 billion. Not only does that loom over the shoulders of every current and future retiree, but it also carries negative consequences for taxpayers and the state’s credit rating,” Heffernan said. “Socially responsible investing is a worthy goal, but must be balanced with the goal of securing the retirement of our hardworking state and local employees who rely heavily on the returns for their retirement goals. This bill will negatively affect fund performance as well as permanently increase the administrative costs of our pension assets.”

A bill (S 1225) filed by Sen. Benjamin Downing, a Pittsfield Democrat, would require the state’s pension fund to divest from the fossil fuel industry, though the divestment could be stopped if evidence showed the strategy had resulted in the fund earning 0.5 percent less than it would have otherwise.

On Wednesday morning, environmental activists will take to the State House steps to lobby for the bill to be reported favorably out of the Committee on Public Service. On Thursday, Downing, and Reps. Ellen Story and Frank Smizik will host a briefing by Trillium Asset Management portfolio manager Stephanie Leighton on the financial arguments around divestment.

Treasurer Steven Grossman, who is running for governor this year, has said divesting without harming the fund would be a “challenge,” and PRIM Executive Director and Chief Investment Officer Michael Trotsky wrote in a letter that Downing’s bill “would impose and additional restriction on the pension fund, which would add, at a minimum, significant administrative and operational burden and cost.”

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