Vermont Governor Pushes for Coal Divestment

In a rare move, Gov. Peter Shumlin, D-Vermont, went before the board overseeing state employee, teacher and municipal retirement funds and asked the committee to divest from Exxon Mobil and from companies that mine coal for the production of electricity.

The Vermont Pension Investment Committee is in charge of about $4-billion in retirement funds.

Shumlin, who outlined the idea last month in his state of the state address, argued the future value of those energy companies is questionable, and said he believes divesting from the stock holdings will encourage other states to follow, eventually sending a strong message about moving away from fossil fuels to combat climate change.

"It's the cumulative impact of other states doing this that's going to make a difference," Shumlin told the panel. "Time is not our friend here. If you don't [divest], I will push the Legislature to do it, because I think it must be done."

Shumlin said he will work with Gov. Jerry Brown, D-California, to encourage other governors to follow the two states in divesting from coal, if Vermont does so. Last year, Brown authorized a law requiring several retirement funds to divest from thermal coal holdings.

Vermont State Treasurer Beth Pearce, a Democrat, serves on the Vermont Pension Investment Committee and reiterated Tuesday that she believes issues related to retirement fund choices should be left to the investment committee, not the Legislature.

"There are a lot of decisions to be made," Pearce told Shumlin. "We need a process; we need to have discussions."

Pearce and Tom Galonka, the chair of the VPIC, promised to look at the Governor's divestment concerns over the next few months.

Several members of the committee warned there could be costs to dumping stocks or setting up systems to screen companies for whether they’re worthy, because so many of Vermont's funds are bundled with other commodities or companies.

Money managers would need to be consulted to assess the impact of possible costs, committee members noted.

"The money is owned by the pension beneficiaries, it's not owned by the state," Galonka said. "So we really have to be careful to make sure we're doing our fiduciary duty for the pension fund."

One member of the VPIC, Karen Paul, said she shares Shumlin's goal of divesting from the fossil fuel sources he identified.

According to the Associated Press, Irving, Texas-based Exxon Mobil Corp. has said models predicting the effects of global warming aren't very good and technology can help deal with rising sea levels or changing weather patterns.

Environmental groups welcomed the conversation before the VPIC, as well as the board's stated willingness to seriously consider divestment.

"We are pleased that having Governor Shumlin's support for divestment has created a new dialogue and that there is a greater willingness to an open and transparent process," said Robb Kidd of the Vermont chapter of the Sierra Club. "The question remains how do we get to yes on divestment, not how we can't."