From our iconic working waterfronts to our sprawling forests, it is increasingly clear that the features that make Maine so special are incredibly vulnerable to a changing climate.
According to a recent report on the effects of climate change in Maine, we face significant impacts right here at home. These impacts include unpredictable weather such as droughts and severe storms, sea-level rise, a warming and increasingly acidified Gulf of Maine, decreased air quality, and threats to biodiversity within our ecosystems. Climate disruption is already harming our environment, economy, marginalized communities and the quality of life we all treasure.
That’s why we developed L.D. 99, An Act To Require the State To Divest Itself of Assets Invested in the Fossil Fuel Industry, which requires Maine’s Public Employee Retirement System to end its investments in large fossil fuel companies.
Fossil fuels have fanned the flames of the climate crisis, and investing in them is bad for both our retirees and our environment. As of its September 2020 disclosure, MainePERS had more than $1 billion invested in big fossil fuels, including Chevron, FirstEnergy, Berkshire Hathaway and Exxon. Continuing to invest state retirement funds in companies that produce fossil fuels runs counter to the ambitious environmental goals Maine has set for itself.
With bipartisan support, the governor and Legislature set goals to reduce greenhouse gas emissions by 45 percent before 2030 and 85 percent (relative to 1990 levels) by 2050. We also created the Maine Climate Council, which recently rolled out a roadmap to prepare for and mitigate the causes of climate change. In doing so, our state is committing to minimize our reliance on fossil fuels and setting a path to achieve that goal. When Gov. Mills addressed the United Nations General Assembly, challenging world leaders to do their part to address climate change, she said it best: “Maine won’t wait. Will you?”
To date, more than 1,100 institutions representing more than $12 trillion in assets have committed to divest from fossil fuels, including philanthropic organizations, universities, nonprofits and faith-based organizations, as well as national and state pension funds. Most recently, New York state committed to divesting its $225 billion retirement fund from fossil fuels. It’s time for Maine to divest our retirement system from fossil fuels as well.
In addition to ethical and environmental responsibilities, fossil fuel divestment fulfills our fiduciary responsibility to public employees who participate in the retirement system. For many years, fossil fuel holdings provided strong returns for retirement savings, but times have changed.
The energy sector used to command 28 percent of the S&P 500. Today, it amounts to only 2.8 percent. For most of the last decade, the oil and gas sector has been at the bottom of the stock market. For the last three years, it has been firmly in last place. The price of oil is down, and any increases are likely to be meager. The buying and selling of assets to consolidate the industry is producing anemic prices, and the outlook is negative.
As we transition to a reduced carbon economy, companies that are unable or unwilling to get out of fossil fuel production will lose value, making them a poor long-term investment. If Maine’s system divests from fossil fuel companies sooner rather than later, our retirees will likely avoid losses on such investments.
Maine is establishing itself as a leader in climate action. Investments in fossil fuels pose a substantial risk to our retirees and compromise our efforts to position Maine as a leader in the fight against climate change. Please support L.D. 99 both to ensure Maine retirees receive the most benefit from the global clean energy transition and to fulfill our obligation to leave future generations a habitable, healthy planet.
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