A coalition of youth climate activists and former government employees is calling out the system that oversees how to invest the retirement funds of Maine’s teachers, judges, municipal workers and other public employees, saying it has not done enough to divest its holdings in fossil fuel companies.
The group, called Divest Maine, plans to protest a meeting of the Maine Public Employees Retirement System’s board of trustees in Augusta on Thursday.
A first-in-the-nation law that the Legislature passed in 2021 ordered the state pension fund, known as MainePERS, and Maine’s treasurer to divest all holdings in fossil fuel companies by Jan. 1, 2026.
MainePERS has said that it cannot meet the 2026 deadline because it violates the system’s fiduciary duty, outlined in the Maine Constitution, to make decisions that are in the best interests of pensioners.
As of June 30, 2023, MainePERS held $1.2 billion in fossil fuel assets, according to its most recent annual report filed in December. That is about 6.4% of the $18.8 billion it had invested at that time.
System officials couldn’t provide updated numbers on Wednesday, saying the June 30 numbers “are our most recent.”
In June 2022, 7.8% of MainePERS investments were tied to the fossil fuel industry.
Representatives of the system told lawmakers on Tuesday that they do not plan to fully enforce the divestment mandate and that they have already implemented as much of the law as they can.
“There is significant cost if we had to divest before 2026. We can’t implement the piece of this legislation that some (climate advocates) would like to,” Rebecca Wyke, CEO of MainePERS, said during a Labor and Housing Committee meeting. “The primary thing that (MainePERS) trustees are charged with doing under the law is to exercise their fiduciary duties in the best interests of these members, by making sure that they are following sound investment criteria. And what you’re asking them to do is to shift their criteria and to shift those practices.”
Divest Maine said that as the fossil fuel industry becomes more volatile – and as climate change poses long-term financial risks – MainePERS officials need to reframe their thinking.
“I don’t really see how it could be within one’s fiduciary duty to not consider and act on the risk that fossil fuel investments have in the future,” said Cassie Cain, a climate finance campaigner supporting Divest Maine. “It’s really important for pensioners and public employees for pension funds to be divesting and considering climate risk in their work.”
According to the United Nations, the fossil fuel industry contributes 75% of global greenhouse gas emissions. Removing financial support from that industry is a crucial step in slowing climate change, environmental advocates say.
“It doesn’t make sense for Maine to have all these policies to deal with the effects of climate change, or try and mitigate climate change, while also still having its institutions and state institutions investing in fossil fuels,” Cain said.
Other states and public entities with divestment requirements have been able to eliminate investments in fossil fuel companies while upholding their fiduciary duties.
The New York City Board of Education Retirement System and New York City Employees’ Retirement System announced they had divested $3 billion from fossil fuel securities after determining that “climate change is generating increasingly devastating effects that risk undermining the stability and health of the global economy,” a city website said.
MainePERS officials anticipate that the system’s investments in fossil fuel companies will continue to decline in the next several years, but not to the point where there are zero ties to the industry.
“To change what we’re doing for no other reason than we decide not to invest in fossil fuels … would be to act contrary to what we believe is in the best interests of the members,” Wyke said. “It’s tempting to pull a piece off like that. But the whole picture is what’s important to us. It’s what’s important to the trustees who bear that responsibility ultimately on behalf of the beneficiaries. And it is the approach that we feel is sound and the right approach.”
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