On Tuesday, New York City announced it would divest pension funds from fossil fuel interests, joining New York State, a cadre of other U.S. cities, and some private universities who say they will pull investments from companies that extract coal, gas, and oil. De Blasio also announced the city’s plans to sue five major oil companies for their role in damages brought on the city by climate disasters. [...]
The money on the table is significant. New York state’s common retirement fund is the third-largest in the nation, worth $200 billion, and provides pensions for more than 1 million New Yorkers. The fund has stakes in 50 oil and gas companies, with $1 billion tied to ExxonMobil alone. New York City’s pension fund, which pays for city employees like police officers, firefighters, and teachers, is also a huge bucket, worth $191 billion. Currently, $5 billion is currently tied up in fossil fuels. (For comparison, San Francisco’s has invested $1 billion; and Seattle’s, $17.6 million.) [...]
But it’s become as much an economic strategy as an environmental one. “Quickly, that advocacy opened the black box of the business model of the fossil fuel industry, and drew the attention of investors who said: Wait, there’s a whole financial conversation as well,” Dorsey said. As founder of 350.org Bill McKibben sees it, the future of energy—and, by extension, the financial markets—lies elsewhere. [...]
Divestment has been criticized by some as an empty, primarily symbolic move: Each million- or billion-dollar divestiture can have only marginal ripple effects to a $5 trillion dollar fossil fuel industry. Multi-billionaire Bill Gates called divestment a “false solution” in 2015, arguing that pouring funds into renewable energy sources—to ignite innovation in those sectors—would be more effective. Since then, however, he has divested his $187 million stake in BP oil.
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