New York City Teacher’s Retirement Fund Lost $135 Million In Fossil Fuel Investments
The Teacher’s Retirement System of the City of New York lost approximately $135 million due to investments in oil and gas companies in 2015.
An analysis of publicly disclosed material conducted by investment adviser Advisor Partners on behalf of 350.org has found that New York City’s biggest pension fund, the Teacher’s Retirement System of the City of New York, lost approximately $135 million from investments in oil and gas companies during the fiscal year ending June 30, 2015.
According to Advisor Partners (PDF), the Teacher’s fund saw a decline of more than 25% in its oil and gas stocks during the period in question. Specifically, Exxon Mobil and Chevron Corp were the largest contributors to this downfall, representing a loss of more than $39 million on their own.
“Oil & gas companies are volatile investments,” explained Rahul Agrawal, CIO, Equities, for Advisor Partners. “The fact that these companies underperformed both the US and broader global index by more than 25% confirms the riskiness of these companies. Portfolio managers should carefully reassess their exposure to these securities before investing in them.”
The investments of pension funds have come under close scrutiny over the past year, with many seeing massive losses due to risky fossil fuel investments.
In August of 2015 it was revealed that California’s two public pension funds had lost over $5 billion over the previous year due to investments in the top 200 fossil fuel companies. The California Public Employees’ Retirement System (CalPERS) and California State Teachers’ Retirement System (CalSTRS) were found to have seen a 25% decline in their coal stocks over the previous financial year.
“This is a material loss of money, which directly impacts the strength of the pension fund,” said Matthew Patsky, CEO of Trillium Asset Management, who conducted the analysis on CalPERS and CalSTRS on behalf of 350.org. “Fossil fuel stocks are volatile investments. Investors and fiduciaries should take this moment to reassess their financial involvement in carbon pollution, climate disruption and the financial risk fossil fuels plays in their portfolio.”
Across the ocean, it was revealed in October that UK local council pension funds had lost up to £683 million because of failed investments in coal. Once again, on behalf of 350.org, analysis was conducted (by Platform London) which found that local councils in the UK had lost significant amounts of investment in coal companies, with one such, the Greater Manchester city’s interests in coal, crashing by £148 million.
At the same time as 350.org has been discovering the millions lost to investments in fossil fuel, several pension funds have been acting to minimize their losses. In November of 2014, Norway’s largest pension funds manager KLP announced that it would be divesting its $75 million worth of coal investments. Not long after, two Canadian pension funds announced that they had moved to acquire a portfolio of renewable energy and water infrastructure assets, valued at over $2 billion. In fact, pension funds the world over have been investing heavily in renewable energy — in South Africa, Denmark, and the UK.
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I’m enjoying my money being parked in SPYX, and ETF with No Investment in Fossil Fuels. It enjoys Much Less Volatility. I’m skipping the mass bankruptcy of coal, and the wild fluctuations in oil.
We need to get the large fund companies to start offering fossil-free choices. Moving money out of employer-organized mutual fund houses is a chore – so it would be nice if Fidelity, Vanguard, etc. could show some leadership here and establish a couple fossil-free choices. Hell, I’d be happy with a S&P Index fund less the dinosaurs.
A Vanguard Total Stock Index where one could deselect sectors.
I could deal with that. Spread the risk over hundreds of stocks and keep the management fee low.
Maybe. There are energy companies set for great growth, it’s just that they’re not the oil, coal, gas, refinery, oilfield services, or electric utility companies (dirty energy). They’re the storage companies, panel and turbine producers, system installers & integrators, energy retrofit, etc. instead. Maybe even brownfield remediation… As a “sector”, cleantech is poised for massive growth. Trying to pick the individual companies though? Definitely not for me!
Yes the energy sector has at least three parts, dino sector, green sector, and mixed. So you should be able to say, green only. I know getting my investment coal, oil, gas free was a bit of work 5 years ago.
Don’t be the last rat on the ship.
This makes me wonder about the abilities of fund managers. It’s been fairly obvious even to me that climate change doesn’t even have to be true for fossil fuel stocks to be risky investments. All it takes is the perception of climate change problems, and the fossil fuel stocks could tank overnight. Now add the reality of climate change and this becomes a no-brainer. What were these people thinking?
Much as I would love for this to be the beginning of oil’s death spiral, I have to believe these funds will bounce back. It depends on which companies they were in, however, how soon it will happen. Demand for oil is in good shape and the Saudis can’t keep up this level of production — they are selling at a loss. I still think we are five to ten years at least before oil begins its true decline.
The companies really getting hurt are those who have a lot of assets tied up in oil that’s more expensive to extract — such as US shale oil concerns. They might not come back for a long time. Hopefully never.
The Saudis are selling at a loss? What are you smoking? If anyone can afford to pump oil at this price it’s the Saudis, numbers I’ve heard for their production cost range from $11/barrel down to as low as $3. Russia can also produce at low cost, as can Iran as they’re getting back into the market and keeping the prices sliding ever lower.
Everyone else is in free fall, from tight oil as you said, to offshore, to tar sands. Which makes the “Divest fossil fuels” movement seem prescient in hindsight.
But yes, at some point curtailment by all of those high-cost producers reduces supply, and the price goes back up. Many players stockpiled oil last year believing that would happen at $60, then $50, then $40…
Not really at a loss in production cost, but all the oil exporting countries need the oil profits to pay national debt.
Thats where they lose. Saudi Arabla has started to borrow money to pay debt. Russia is in economic decline because of low oil prices.
http://static4.businessinsider.com/image/55acfaa92acae7c7018b7e62-749-577/screen%20shot%202015-07-20%20at%209.39.38%20am.png
http://www.businessinsider.com/break-even-oil-prices-for-all-the-major-producers-in-the-world-2015-7
I suspect demand can now be cut faster than prices can rise in most places in the world – substituting a barrel of oil for “something else” is getting quite cheap and will only get cheaper. The former oil prices were based on projections of ever-increasing demand.
If China makes good on their EV targets, and India and Africa also leapfrog to EVs, much of the world’s predicted petroleum demand increase disappears even in the case of robust economic growth…