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S02126 Summary:

Amd 423, R & SS L
Limits investments of public pension funds in fossil fuel companies.
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S02126 Memo:

Memo not available
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S02126 Text:

                STATE OF NEW YORK
                               2019-2020 Regular Sessions
                    IN SENATE
                                    January 22, 2019
          SKY -- read twice and ordered printed, and when printed to be  commit-
          ted to the Committee on Civil Service and Pensions
        AN  ACT  to amend the retirement and social security law, in relation to
          limitations on investments of public pension funds
          The People of the State of New York, represented in Senate and  Assem-
        bly, do enact as follows:
     1    Section  1.  This  act  shall be known and may be cited as the "fossil
     2  fuel divestment act".
     3    § 2. Section 423 of the retirement and social security law, as amended
     4  by chapter 770 of the laws of 1970, is amended to read as follows:
     5    § 423. Investments.   [a.] 1.  On  and  after  April  first,  nineteen
     6  hundred  sixty-seven,  the comptroller shall invest the available monies
     7  of the common retirement fund in any investments and securities  author-
     8  ized  by  law for each retirement system and shall hold such investments
     9  in his name as trustee of such fund, notwithstanding any other provision
    10  of this chapter. Participating interests in such  investments  shall  be
    11  credited  to each retirement system in the manner and at the time speci-
    12  fied in [paragraph] subdivision two of section four  hundred  twenty-two
    13  of this article.
    14    [b.]  2.  (a)  To assist in the management of the monies of the common
    15  retirement fund, the comptroller shall appoint  an  investment  advisory
    16  committee  consisting of not less than seven members who shall serve for
    17  his term of office. A vacancy occurring from any cause other than  expi-
    18  ration  of  term shall be filled by the comptroller for the remainder of
    19  the term. Each member of the committee shall be experienced in the field
    20  of investments and shall have served, or shall be serving, as  a  senior
    21  officer  or  member of the board of an insurance company, banking corpo-
    22  ration or other financial or investment organization  authorized  to  do
    23  business  in the state of New York. The committee shall advise the comp-
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        S. 2126                             2
     1  troller on investment policies relating to  the  monies  of  the  common
     2  retirement  fund  and  shall  review,  from time to time, the investment
     3  portfolio of the fund and make such recommendations  as  may  be  deemed
     4  necessary.
     5    (b) The comptroller shall appoint a separate mortgage advisory commit-
     6  tee,  with  the advice and consent of the investment advisory committee,
     7  to review proposed mortgage and real estate investments  by  the  common
     8  retirement  fund. In making investments, as authorized by law, the comp-
     9  troller shall be guided by policies established by each  committee  from
    10  time  to  time; and, in the event the mortgage advisory committee disap-
    11  proves a proposed mortgage or real estate investment, such shall not  be
    12  made.
    13    (c)  No officer or employee of any state department or agency shall be
    14  eligible for  membership  on  either  committee.  Each  committee  shall
    15  convene  periodically  on  call  of  the  comptroller, or on call of the
    16  chairman. The members of each committee shall be entitled to  reimburse-
    17  ment  for  their  actual  and  necessary  expenses  but shall receive no
    18  compensation for their services.
    19    3. (a) Notwithstanding any provision of law to the contrary, the comp-
    20  troller shall not have the power to invest the available monies  of  the
    21  common  retirement  fund  in any stocks, debt or other securities of any
    22  corporation or company, or any subsidiary, affiliate or  parent  of  any
    23  corporation  or  company,  among the two hundred largest publicly traded
    24  fossil fuel companies, as established by carbon content  in  the  compa-
    25  nies'  proven  oil,  gas  and  coal  reserves. The comptroller shall, in
    26  accordance with sound investment criteria and consistent with his or her
    27  fiduciary obligations, divest any such stocks or other securities wheth-
    28  er they are owned directly or held  through  separate  accounts  or  any
    29  commingled  funds.  Divestment  pursuant  to  this  subdivision  must be
    30  completed within five years of the effective date of  this  subdivision,
    31  with  the  exception  of  companies engaged in the mining, extraction or
    32  production of coal, divestment from which must  be  completed  no  later
    33  than one year after the effective date of this subdivision.
    34    (b)  The comptroller shall be permitted to cease divesting from compa-
    35  nies under paragraph (a) of this subdivision, reinvest in companies from
    36  which it divested under paragraph (a) of this subdivision,  or  continue
    37  to invest in companies from which it has not yet divested upon clear and
    38  convincing  evidence showing that as a direct result of such divestment,
    39  the total and aggregate value of all assets under management by,  or  on
    40  behalf of, the common retirement fund becomes or shall become: (i) equal
    41  to  or  less  than ninety-nine and one-half percent; or (ii) one hundred
    42  percent less fifty basis points of the hypothetical value of all  assets
    43  under  management by, or on behalf of, the common retirement fund assum-
    44  ing no divestment from any company had occurred under said paragraph (a)
    45  of this subdivision.   Cessation  of  divestment,  reinvestment  or  any
    46  subsequent  ongoing  investment  authorized  by  this  section  shall be
    47  strictly limited to the minimum steps necessary to avoid the contingency
    48  set forth in the preceding sentence. For any  cessation  of  divestment,
    49  and  in  advance  of such cessation, authorized by this subdivision, the
    50  comptroller shall provide a written report to the attorney general,  the
    51  senate  standing committee on civil service and pensions, and the assem-
    52  bly standing committee on governmental employees, updated  semi-annually
    53  thereafter  as  applicable, setting forth the reasons and justification,
    54  supported by clear and convincing evidence, for its decisions  to  cease
    55  divestment, to reinvest or to remain invested in fossil fuel companies.

        S. 2126                             3
     1    (c)  Within  sixty days of the effective date of this subdivision, the
     2  comptroller shall facilitate the identification of fossil fuel companies
     3  from which the common retirement fund is required to divest under  para-
     4  graph  (a)  of  this  subdivision, and file a copy of this list with the
     5  attorney  general,  the  senate  standing committee on civil service and
     6  pensions, and the assembly standing committee on governmental employees.
     7  Annually thereafter, the public fund shall file a report with the attor-
     8  ney  general,  the  senate  standing  committee  on  civil  service  and
     9  pensions,  and the assembly standing committee on governmental employees
    10  that includes: (i) all investments sold, redeemed, divested or withdrawn
    11  in compliance with paragraph (a)  of  this  subdivision;  and  (ii)  all
    12  prohibited investments from which the common retirement fund has not yet
    13  divested under paragraph (a) of this subdivision.
    14    § 3. This act shall take effect immediately.
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