Senator Clarkson presented S.42 to the House Government Operations Committee on Friday. She introduced the bill by saying that, "many of us wanted to have happen a long time ago" and that it was a "win for everyone." The bill was the result of negotiations between Third Act, the Treasurer's Office, the Vermont Pension Investment Committee (VPIC), the Senate Government Operations Committee, and other experts.
She described this as a "step forward" but we have a "ways to go." She highlighted that this is a phased-in approach that reviews pension funds fossil fuel investments and sets both short and long-term goals. This protects the funds and the Actuarial-Defined Employer Contribution (ADAC) to the pension funds, she claimed.
She believes we shouldn’t be using state funds to invest in fossil fuels – however, a carbon foot print is still in our investments. She pointed to the UN statement that investments must be eliminated immediately in order to deprive the fossil fuel industry of further capital investment resources. 71 countries have committed to divesting, representing $39T in assets. She believes this bill is a way "to do our part."
The bill sets out a guideline for VPIC to divest over next 17 years, tasking them with detailing a plan and providing annual progress updates for 2030 and 2040 targets. There was funding to help with additional staff but was reduced by the money Committees. Clarkson hopes that funding gets restored.
The bill states that divestitures can only happen if they are based on "sound fiduciary accountability" and would not negatively impact the pension funds. Clarkson admitted that VPIC does not support the bill as currently written. However, they have already been working on decarbonization.
the bill does contain exceptions for private investments and also de minimum investments in fossil fuel companies.
She noted that they want to limit our exposure to liabilities and lawsuits that will "be headed our way." She felt this effort was worthwhile though because "divestment from fossil fuel is a sound move for us."
Chairman McCarthy stated that he would want to her from Tom Golonka (Chair, VPIC) who wants to "raise concerns" for the Committee. He continued to ask about "Texas language" to limit the liability issues. Clarkson hadn't heard of the "Texas language" but confirmed that the "liability will be enormous."
Representative Hooper is a member of both this Committee and VPIC. He asked Clarkson what the definition of a fossil fuel company was. As there are a lot of ways fossil fuel could be used. Clarkson noted that was up to VPIC to draft a definition.
Hooper asked about the costs, which Clarkson confirmed were unknown at this point. Hooper was concerned there will be an increase in ADAC costs. Chairman McCarthy acknowledged that Hooper was "very knowledgeable about this issue" which will be a "real help" to the Committee.
Clarkson commented that she is "hopeful" that the Committee will "get the entire scope of testimony" that the Senate had.