- The New Jersey bill mandates total divestment from coal companies within two years
- New Jersey Treasury Department, which administers the pension fund, opposes the divestment bill
- The oil and gas sector now only accounts for about 2.5% of the market cap of the S&P 500 index
The State of New Jersey may soon order its state pension fund to divest from fossil fuels, following a long list of other state, municipal and national pension funds that have already done so.
In a recent op-ed published in the Newark Star-Ledger newspaper, Richard J. Codey (a former governor of New Jersey) and Tom Sanzillo (director of finance at the Institute for Energy Economics and Financial Analysis) wrote that it is high time for the Garden State to pull out of fossil fuel investments — for both environmental and financial reasons.
New Jersey State Senators Bob Smith and Linda Greenstein, both Democrats, have sponsored the Fossil Fuel Divestment Bill — Senate Bill S330 — which calls for the state pension fund to withdraw from fossil fuels.
Specifically, the bill would prohibit state pension funds from investing in any of the top 200 companies “that hold the largest carbon content fossil fuel reserves.”
The bill also mandates total divestment from coal companies within two years, and withdrawal from all other fossil fuel companies by Jan. 1, 2022.
However, the New Jersey Treasury Department, which administers the pension fund, opposes the bill, suggesting, among other things, that jettisoning energy investments would lower annual returns.
But the editorial disputed that assertion.
“The proposed legislation provides the right financial solution,” Codey and Sanzillo wrote. “Oil and gas companies once led the world economy and contributed mightily to pension fund returns. Today, however, and for the last 10 years, the oil and gas sector has performed