Over 50 people, including state employees, municipal employees, teachers, legislators, and students attended the Vermont Pension Investment Committee meeting in support of divesting Vermont’s pension from holdings in coal companies. After over 3 hours of discussion, VPIC voted against any fossil fuel divestment, despite testimony declaring that coal has not been profitable in over 25 years and many coal companies are facing bankruptcy.
"Divestment from fossil fuels, especially coal, is required of those with fiduciary responsibility over assets held in trust,” said Duane Peterson, co-president of SunCommon. “As the ravages of climate change become ever clearer, fewer of those buried minerals will be brought to the surface and burned. Such stranded assets will dampen the value of investments in legacy fuel companies stuck in a dying business model.” SunCommon, Vermont's largest residential solar business divested its employee retirement program from fossil fuels last month.
The public and outside experts were limited to a total of 30 minutes to provide alternative perspectives and analyses. VPIC members appeared distracted, eating their lunches, during the public comment, which included financial experts and Yolanda Stinson from the Connecticut Coalition for Environmental Justice. “For all of the committee’s talk about the importance of public comment, their lack of respect and consideration for those giving public comment was appalling,” said Taylor Cook, a Middlebury College student. “As Stinson shared about the effects of a coal-fired power plant on asthma rates in her community, members of VPIC noisily opened bags of chips, rendering her virtually inaudible.”
“This decision by VPIC today is premature,” said Ed Stanak, past president of the VSEA, “because VPIC did not thoroughly consider empirical data and analyses that factor in stranded assets.” Some investment consultants are warning of the risk of stranded assets, whereby tightening climate change regulation, low oil prices, or competition from alternative clean technologies will precipitate a decline in the value of fossil fuel assets.
Some have argued that divestment from fossil fuels could potentially increase risk and lower return; however, Stephanie Leighton, partner at Trillium Asset Management testified that, “in [her] firm’s 33 year history [they] have never invested in coal which is a very small part of the investment universe and it has been a very poor, underperforming investment.” Likewise, recent communications between Treasurer Pearce’s staff and some of VPIC’s investment managers echo this perspective on the coal industry. Excerpts from the VPIC Investment Manager’s Coal Thesis include:
“the Guggenheim outlook on the coal industry as a whole, it’s negative.”
“Champlain chooses not to hold shares in companies that are predominately [sic] generating revenues related to coal assets, because they do not feel the sector is currently profitable.”
“Aberdeen does not hold any exclusively coal or coal-related companies in their portfolio at this time. Their analysis has led them to conclude that these holdings do not meet their quality criteria.”
“KDP’s outlook on coal-related companies is that of extreme weakness.”
Guggenheim, Champlain, Aberdeen, and KDP are four of over 30 different investment managers used by VPIC. Despite these indications, VPIC voted to remain invested in coal.
Others are questioning the overall performance of VPIC. On July 16, the Burlington Employees’ Retirement Board voted unanimously, save one abstention, to withdraw their funds from VPIC’s management.