The bill would require the state's pension fund to divest from all fossil fuel companies within two years. (Getty Images)
The movement to divest pension funds from fossil fuel companies is gaining steam in New Jersey after lawmakers advanced a long-stalled bill Thursday.
“What’s proposed here is sending a signal to the fossil fuel world and industry that we’ve gotta find different ways to live — and you, the companies that produce these fuels, you’ve got to help us,” said Sen. Bob Smith (D-Middlesex), a prime sponsor of the bill and chair of the Senate Energy Committee.
The measure (S416) would require the state’s pension fund to divest from all other fossil fuel companies within two years. It’s controversial and has been proposed for years without much movement, but it is gaining ground in the wake of destructive hurricanes and worsening climate change threatening human life.
The state’s pension fund, which supports about 800,000 active and retired state and local government workers’ retirement accounts, is valued at about $92.9 billion, according to state Treasury data.
Treasury officials declined to comment on the pending legislation, and said data to determine how it would financially impact the pension fund has not been compiled.
It’s unclear which companies the state would be forced to divest from if the bill becomes law since fossil fuels can be defined in varying ways, the department said.
New Jersey’s pension fund is one of 14 in the country that invest in fossil fuels, according to Stand Earth, an organization focusing on corporations’ contributions to climate change.
Smith stressed how important it is to send a strong message to fossil fuel companies and the damage they’re doing on the heels of Hurricanes Fiona and Ian devastating Puerto Rico and Florida. Advocates echoed his concerns for the future of the planet and what New Jersey can do now.
“Fossil fuel companies are making record profits, so by divesting the pensions, we will send the signal that we want them to prosper in the future in a different way. That is something we can do because New Jersey, as a state, is a customer,” said Ed Potosnak, executive director of New Jersey League of Conservation Voters.
Potosnak sparred with Sen. Ed Durr (R-Gloucester), who taunted the activist with questions about how he heats his home and how he arrived at Thursday’s hearing. Potosnak said he drove using his electric car, which Durr said is made using fossil fuels.
Durr disagrees with divesting, saying it’s the “government picking winners and losers. I don’t agree with that.” He said the state would keep having a “bigger voice” by remaining as an investor in fossil fuel companies.
Potosnak responded that more companies are investing in either liberal or conservative causes, and customers are deciding whether or not to support those establishments with their wallets — like New Jersey should with fossil fuel investments.
He recalled consumers’ success in pushing Mcdonald’s to switch from plastic foam packaging to cardboard boxes after pressure from environmental groups.
“We have the power as a consumer here in New Jersey to send a message to the fossil fuel industry … this is a responsibility and a moral obligation,” Potosnak said.
Ray Cantor of the New Jersey Business and Industry Association said it’s the wrong time for the state to divest and should instead focus on making sound investments to recover from the pandemic and prepare for a potential recession.
“The state will have to pay those pensions regardless if we make that return on our investments or not. If we don’t make a return on those investments, it means higher taxes for the business community and all of us. For that reason alone, we should not be doing this,” he said.
David Hughes of the Rutgers AAUP-AFT union contended that, ultimately, fossil fuel stocks are performing poorly over time, citing a 2021 BlackRock study.
There’s still a moral argument for the pension fund going fossil fuel-free, he added. He also pointed to the state’s other projects signifying a transition away from fuels harmful to the environment, like the master energy plan and wind turbine installations.
“You want to be in a position 20 years from now where your children and grandchildren are thanking you for doing something good for the planet Earth rather than blaming you for wrecking our planet,” he said.
The bill advanced along party lines, with Republican Sens. Jean Stanfield (R-Burlington) and Durr voting against the bill due to its “unintended consequences.”
“The clock is ticking,” quipped Smith.
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