Divesting State Pensions (S.42) - March 28, 2023

Senator Clarkson presented S.42 to the Senate on Tuesday, positioning the bill as a "win-win." She listed a number of individuals that were involved for the bills development, including the Treasurer, the Vermont Pension Investment Committee (VPIC), and several other experts. She cast the bill as the result of "productive negotiations" lead by the Senate Government Operations Committee with with the intent of divesting fossil fuel investments while simultaneously protecting the state's pension funds and Actuarial-Defined Employer Contribution.

The Committee primarily focused on three key areas:

  1. Reviewing all pension funds by next February to identify how many fossil fuel investments are currently in the funds.
  2. Establishing short and long-term goals using a phase-in approach.
  3. Reviewing the and report with staff support to determine progress.

It's important that we be consistent, she noted. All new fossil fuel investments must stop immediately, joining many states (including Maine, Massachusetts's, New York, and 71 countries. The intent of this bill, she shared, is to fully divest over 17 years. VPIC will review investments with the Treasurer, making significant progress towards divesting by 2030 and then fully doing so by 2040; report years.

While VPIC did not endorse the bill, the Committee gave them additional "flexibility." The focus was to strike a "livable balance." Clarkson recognized that lawsuits will be coming from fossil fuel companies, but that they heard from over two dozen witnesses. The bill was passed out of Committee 6 -0.

Senator Perchlik spoke for the Appropriations Committee, and presented three amendments: 

  1. Recognizes VPIC and the work that they have been doing thus far.
  2. Adds a paragraph focusing on "sound fiduciary impacts."
  3. Deleted $100K appropriations for VPIC, the funding will be reviewed in a separate bill.

One Senator voiced concern about language relating to exemptions and the possibility that VPIC could back out of divesting. Clarkson replied that there are two exempting that are spelled out in the bill (she did not elaborate). She proceeded to read a statement from VPIC supporting the concept of moving away from fossil fuel investments, however they opposed the bill as written. 

Senator Brock was concerned that the work ‘sound’ was repeated "almost everywhere" and worried that the bill was "guided by politics." Other places allow retirees to make up their own mind whether their retirement investments should contain fossil fuel companies or not. Brock was concerned that the bill was making investment decisions for retirees based on a political agenda.

The two committee amendments were agreed to and the underlying bill was passed on to third reading. 

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