Vermont Business Magazine Governor Peter Shumlin today applauded House and Senate action supporting divestment from coal and Exxon Mobil assets, which he called for in his State of the State Address in January. The governor also called for a number of steps to ensure the objectivity of the process the Vermont Pension Investment Committee (VPIC) will undertake to achieve the goals laid out by him and the Legislature. The VPIC would ultimately decide on divestment. State Treasurer Beth Pearce, who also is a member and vice-chair of the VPIC, opposes divestment because of her concern for the financial health of the state retirement funds. She also took umbrage with what she described as inaccuracies in the governor's statement (both the governor's letter and treasurer's response are below).
Governor Shumlin is joined by state senators in the governor's ceremonial office at the State House Thursday to urge divestment of coal and Exxon/Mobil holdings in Vermont's pension funds. Courtesy photo.
"There are substantive errors in the Governor’s press statements today. The letter from Government Operations from some members does not include a decision by May 2, but an update on the process. We have invited legislative involvement in the process, along with other interested parties, but I was clear in all my testimony that I did not support legislative membership on the subcommittee. That is consistent with my position that legislating investments is not appropriate," Pearce said in her statement.
In February, the House joined the governor’s call for divestment and passed H.R. 13, a resolution "urging that the State of Vermont remove the stocks of companies with coal holdings and the stock of the Exxon Mobil Corporation from its pension investment portfolios.”
The Senate has also weighed in on divestment with a letter from the Senate Government Operations Committee signed by the majority of members which calls on VPIC to “pursue: 1) the intent of the House resolution (H.R. 13) concerning divestment from coal companies and Exxon Mobil Corporation.” The Senate letter requests VPIC report to the Senate and House Committees on Government Operations by May 2, 2016, on the progress on divestment.
In response to calls for divestment from the governor and Legislature, VPIC has established a subcommittee to deal with divestment. The first meeting of that subcommittee is Friday morning. In the Senate letter, Senators have asked for one member from each the House and Senate be included in the subcommittee, a request the governor said he supports. In a letter to VPIC, the governor also outlined a number of steps as the process moves forward, including:
· A plan to divest from coal, as defined by the subcommittee, and Exxon Mobil with clear timelines and objectives by May 2, 2016 so that the subcommittee can report to the legislature on progress.
· To ensure objectivity, I ask that you include a VPIC member who remains open to divestment. I am concerned, due to public comments of VPIC members in various forums, that an objective process to reach the goals as set forth by the legislature would be challenging without at least one supportive VPIC voice.
· A clear method of incorporating public comments in the recommendations of the subcommittee to ensure all voices and viewpoints are considered.
· As the Senate Government Operations Committee has outlined, inclusion of objective financial experts as well as those who have experience with divestment in the process.
Pearce, on the other hand, said of the process outlined by the governor: "I find it unfortunate that we received a letter from the Governor that outlines a deadline and a conclusion before any discussion of the scope of the analysis has taken place."
The VPIC will meet Friday, March 18 at 11:30 to discuss the scope and process for the sub-committee (4thFloor Conference Room,109 State Street, Montpelier. Call In: 888-585-9008. Passcode: 366-829-558).
The Governor’s full letter to VPIC:
Dear VPIC Members:
I am encouraged by your commitment to form a subcommittee of the Vermont Pension Investment Committee with the goal of divesting from coal companies and Exxon Mobil and to explore divestment from other fossil fuel companies. As you know, I believe VPIC should not delay in moving to divest state pension funds. Not only is it the right thing to do for a livable planet, but it is a useful and proven tool to fight climate change. Putting aside the obvious moral and environmental reasoning, I know that upholding your fiduciary duty to the state of Vermont and its pension holders is paramount. When I spoke in front of you two weeks ago, I asked all of you to raise your hands if you thought being invested in coal was a good idea. Only one hand went up. As fiduciaries, I urge you to divest because I believe owning coal and Exxon Mobil poses a serious and long-term threat to the financial futures of our pension holders. I am pleased that VPIC has created and the legislature is supporting a process to divest.
I urge VPIC to take a number of steps to ensure the objectivity of the process and to heed the call of the House “to develop a strategy, in accordance with State law and prudent investment practices, to remove from the State’s pension investment portfolios all Exxon Mobil Corporation stock” (H.R. 13, 2016). I encourage the subcommittee to include the following parameters:
· A plan to divest from coal, as defined by the subcommittee, and Exxon Mobil with clear timelines and objectives by May 2, 2016 so that the subcommittee can report to the legislature on progress.
· To ensure objectivity, I ask that you include a VPIC member who remains open to divestment. I am concerned, due to public comments of VPIC members in various forums, that an objective process to reach the goals as set forth by the legislature would be challenging without at least one supportive VPIC voice.
· A clear method of incorporating public comments in the recommendations of the subcommittee to ensure all voices and viewpoints are considered.
· As the Senate Government Operations Committee has outlined, inclusion of objective financial experts as well as those who have experience with divestment in the process.
I believe if the above steps are taken, and a clear path is created to follow the legislature’s direction, we can work together for a responsible plan to divest.
Statement from Treasurer Beth Pearce March 17, 2016
As you know we invited the Governor to our February 23rd Vermont Pension Investment Committee (VPIC) meeting. At that time, the Governor said he would be pleased with a study as long as divestment was the result. My comments to the Governor at that time were that, presupposing divestment would be similar to drawing your curve and then plotting your data. Decisions should be made after a deliberative process not before.
While I appreciate the Governor’s passion for the issue, VPIC will continue forward with an analysis based on the H.R. 13 and the letter from some members of the Senate Committee on Government Operations in an objective, thoughtful, and thorough manner that takes into consideration the fiduciary duty that is owed exclusively to the 50,000 members of the retirement system.
I find it unfortunate that we received a letter from the Governor that outlines a deadline and a conclusion before any discussion of the scope of the analysis has taken place.
We are holding a meeting on Friday, March 18, to gather public input from interested parties and stakeholders from a variety of different viewpoints. From this collaborative effort we will be making recommendations to the VPIC regarding the scope and timeline of the analysis. As was requested by some members of the Senate Committee on Government Operations, we will provide an update on the process by May 2.
There are substantive errors in the Governor’s press statements today. The letter from Government Operations from some members does not include a decision by May 2, but an update on the process. We have invited legislative involvement in the process, along with other interested parties, but I was clear in all my testimony that I did not support legislative membership on the subcommittee. That is consistent with my position that legislating investments is not appropriate.
Predetermining the result and setting a deadline before understanding the scope is not productive for determining the best result for the beneficiaries.
I look forward to buckling down and getting to work on this important issue for Vermonters.