STATE OF NEW YORK ________________________________________________________________________ 1580 2025-2026 Regular Sessions IN ASSEMBLY January 10, 2025 ___________ Introduced by M. of A. KELLES, MITAYNES, BICHOTTE HERMELYN, EPSTEIN, PAULIN, GONZALEZ-ROJAS, R. CARROLL, SIMON, MAMDANI, REYES, LUPARDO, GALLAGHER, STECK, ROSENTHAL, CLARK, SEAWRIGHT, KIM, FORREST, CRUZ, JACKSON, WALKER, ZINERMAN, SEPTIMO, DAVILA, BURDICK, STERN, ANDERSON, CONRAD, JACOBSON, McMAHON, LUNSFORD, SAYEGH, RAMOS, COLTON, LAVINE, GLICK, HEVESI, BRONSON, BURKE, TAYLOR, OTIS, DINOWITZ, SHRESTHA, CHAN- DLER-WATERMAN, EACHUS, CUNNINGHAM, RAGA, SHIMSKY, LEVENBERG -- read once and referred to the Committee on Governmental Employees AN ACT to amend the education law, in relation to requiring the New York state teachers' retirement system to divest the retirement system of any investments in corporations or companies included on an exclusion list of coal producers and oil and gas producers 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 "teachers' 2 fossil fuel divestment act". 3 § 2. Legislative findings. 1. a. Climate change is a real and serious 4 threat to the health, welfare, and prosperity of all New Yorkers, now 5 and in the future. Maintaining the status quo of fossil fuel energy 6 production will lead to catastrophic results. 7 b. In July 2019, New York state passed the climate leadership and 8 community protection act and committed to reducing statewide greenhouse 9 gas emissions by eighty-five percent by 2050 and net zero emissions in 10 all sectors of the economy. Other cities and states have chosen to 11 pursue similar paths to reduce greenhouse gas emissions. 12 c. The threat of climate change, and the transformation of the global 13 energy system that will be necessary to mitigate it, will have a serious 14 negative impact on investors whose assets are not aligned with the goal 15 of keeping the global average temperature increase below 1.5 degrees 16 Celsius, as determined by the United Nations Intergovernmental Panel on 17 Climate Change. EXPLANATION--Matter in italics (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD01506-01-5
A. 1580 2 1 d. There are no existing legal or fiduciary duties that require New 2 York state's pension funds to invest in energy sources that are harmful 3 to the environment, or in contradiction to the goals of the climate 4 leadership and community protection act. Rather, there are alternative 5 investments that are available to our pension funds that do not present 6 such harms. 7 e. Many cities and states have recognized the harmful effects of 8 pension and investment funds investing in fossil fuels and have commit- 9 ted to divesting those funds. Over 1,100 institutional investors repres- 10 enting more than $11 trillion in holdings have chosen to pursue full or 11 partial divestment from fossil fuel producers, including the New York 12 city employees retirement system, the endowment and pension funds of the 13 University of California system, and the sovereign wealth funds of 14 Norway and Ireland. 15 2. a. Continued investment in fossil fuel producers poses unacceptable 16 risks to the people of the state of New York, as well as the long-term 17 sustainability of the New York state teachers' retirement system. 18 b. Investment in dangerous and harmful fossil fuels is not mandated by 19 law. The New York state common retirement fund, consistent with its 20 fiduciary duties, has committed to complete reviews of all fossil fuel 21 investments by 2025 and to divest from companies that fail to meet mini- 22 mum standards. It has also set a precedent by choosing to divest from 23 certain industries in the past due to the moral implications of their 24 business models, including private prisons, firearms manufacturers, and 25 companies doing business with Sudan, all while complying with the comp- 26 troller's fiduciary obligations. 27 c. New York owes duties to its residents, and the New York state 28 teachers' retirement system owes duties to future beneficiaries. These 29 duties can and should reasonably include considerations of human inter- 30 ests, quality of life, public safety and security, and ultimately 31 require a shift away from fossil fuels to help mitigate the future 32 adverse effects of climate change. 33 d. According to the U.S. Department of Labor's interpretive bulletin 34 2015-1, environmental issues "may have a direct relationship to the 35 economic value of the plan's investment, and are not merely collateral 36 considerations or tie-breakers, but rather are proper components of the 37 fiduciary's primary analysis of the economic merits of competing invest- 38 ment choices." 39 e. Attempting to profit from investments in companies whose business 40 models, public relations campaigns, and lobbying efforts not only fail 41 to comply with New York's statutory climate goals, but also put the 42 stability of our society and the safety of our citizens at risk, is 43 neither morally acceptable nor in compliance with the legislature's 44 responsibility to protect the financial security of current and future 45 pension beneficiaries. 46 f. Currently, the majority of fossil fuel producers are not adjusting 47 their business models to take into account the changing energy market, 48 investing billions of dollars in exploring and extracting new reserves, 49 creating stranded asset risk and the potential for rapid, unexpected, 50 and significant loss of value. 51 g. Attempting to beat the market by holding these investments until 52 the last possible moment is a high-risk strategy that could result in 53 the loss of investment principal. In the words of the decarbonization 54 advisory panel for the New York state common retirement fund, "being too 55 early in the avoidance of the risk of permanent loss is much less of a 56 danger than being too late."
A. 1580 3 1 h. In addition to the risks regarding retirement security, continued 2 investment in the fossil fuel industry is counterproductive to the goals 3 set forth in the climate leadership and community protection act. 4 § 3. The education law is amended by adding a new section 508-b to 5 read as follows: 6 § 508-b. Fossil fuel divestment. 1. Definitions. As used in this 7 section: 8 a. "coal producer" means any corporation or company, or any subsidiary 9 or parent of any corporation or company or partnership or other legal 10 entity, that derives at least ten percent of annual revenue from thermal 11 coal production, or accounts for more than one percent of global 12 production of thermal coal, or whose reported coal reserves contain more 13 than 0.3 gigatons of potential carbon dioxide emissions; 14 b. "exclusion list" means the list created pursuant to paragraph a of 15 subdivision two of this section; 16 c. "oil and gas producer" means any corporation or company, or any 17 subsidiary or parent of any corporation or company or partnership or 18 other legal entity, that derives at least twenty percent of annual 19 revenue from oil or gas production, or accounts for more than one 20 percent of global oil or gas production, or whose reported combined oil 21 and gas reserves contain more than 0.1 gigatons of potential carbon 22 dioxide emissions; 23 d. "oil or gas production" means exploration, extraction, drilling, 24 production, refining, processing, or distribution activities related to 25 oil or gas; 26 e. "thermal coal production" means mining, transport, processing, or 27 exploration activities related to thermal coal; 28 f. "oil and gas equipment, services, transportation and storage" means 29 services, transportation or storage activities related to oil and gas; 30 and 31 g. "index fund" means a passive investment strategy that tracks a 32 market index. 33 2. Fossil fuel company exclusion list. a. Within six months of the 34 effective date of this section, the retirement board shall create an 35 exclusion list of all coal producers and oil and gas producers in whose 36 stocks, securities, equities, fixed income, assets, or other obligations 37 the retirement system has any monies or assets directly invested. 38 b. Upon completion of the exclusion list, it shall be made publicly 39 available and a copy shall be sent to the temporary president of the 40 senate and the speaker of the assembly. 41 c. The retirement board shall submit notification to any corporation 42 or company that has been included in the exclusion list informing them 43 of their inclusion on such list, as well as the requirements of this 44 section. 45 d. At the retirement board's discretion, but no later than two years 46 after the completion of the exclusion list, and no less frequently than 47 biennially thereafter, the retirement board shall update the exclusion 48 list to remove any corporation or company that is no longer a coal 49 producer or an oil and gas producer and add any corporation or company 50 necessary to comply with paragraph a of this subdivision. 51 3. Removal from the exclusion list. a. At any time following the 52 publication of the exclusion list, any corporation or company included 53 in the list may submit to the retirement board a request for removal on 54 the basis of clear and convincing evidence that they are not currently a 55 coal producer or an oil and gas producer as defined in subdivision one 56 of this section.
A. 1580 4 1 b. Upon satisfaction that a corporation or company has met the 2 requirements of paragraph a of this subdivision, the retirement board 3 shall remove such corporation or company from the exclusion list and 4 provide a written explanation for such removal to the temporary presi- 5 dent of the senate and the speaker of the assembly. 6 4. Compliance with fiduciary duties. a. Nothing in this section shall 7 require a board to take action as described in this section unless the 8 board determines in good faith that the action described in this section 9 is consistent with the fiduciary responsibilities of the board under the 10 New York state constitution. Any new investments must comply with the 11 fiduciary obligations and the prudent investor rule as defined by 12 section 11-2.3 of the estates, powers and trusts law. 13 b. No private right of action shall be available against the retire- 14 ment system, any of its employees, or any present, future, and former 15 board member of the retirement system for divesting retirement system 16 assets pursuant to this section in good faith. 17 c. No private right of action shall be available against the state 18 pursuant to this section. 19 5. Divestment. a. Commencing one year after the effective date of this 20 section, and in accordance with sound investment criteria and consistent 21 with its fiduciary obligations, the retirement board and any investment 22 managers under contract with the retirement system shall: (i) divest the 23 retirement system of any stocks, securities, equities, assets, or other 24 obligations of corporations or companies on the exclusion list in which 25 any monies or assets of the retirement system are invested; and (ii) 26 cease new investments of any monies or assets of the retirement system 27 in any stocks, securities, or other obligations of any corporation or 28 company that is a coal producer or oil and gas producer as defined here- 29 in. 30 b. Divestment from oil and gas producers pursuant to this subdivision 31 shall be completed no later than two years from the effective date of 32 this section. Divestment from oil and gas producers returned to the 33 exclusion list pursuant to paragraph c of subdivision four of this 34 section shall be completed no later than two years from the date of 35 return to the exclusion list. 36 c. Divestment from coal producers pursuant to this subdivision shall 37 be completed no later than one year from the effective date of this 38 section. Divestment from coal producers returned to the exclusion list 39 pursuant to paragraph c of subdivision two of this section shall be 40 completed no later than one year from the date of return to the exclu- 41 sion list. 42 d. Divestment from private equity and private debt investments pursu- 43 ant to this subdivision shall occur expeditiously in a good faith 44 attempt to comply with the provisions of paragraphs b and c of this 45 subdivision, but no later than five years from the effective date of 46 this section. 47 e. The retirement system shall have the discretion to divest from any 48 other entities that it in good faith believes are directly or indirectly 49 financing oil and gas producers, or coal producers, regardless of wheth- 50 er such entity otherwise meets the criteria of this subdivision. 51 6. Limitations on indirect investment. Notwithstanding any provisions 52 in this section to the contrary, and in accordance with sound investment 53 criteria and consistent with its fiduciary obligations, the retirement 54 board shall be permitted to invest in index funds if the board is satis- 55 fied on reasonable grounds and in good faith that such indirect invest- 56 ment vehicle does not have in excess of one percent of its assets, aver-
A. 1580 5 1 aged annually, directly or indirectly invested in coal producers and oil 2 and gas producers. 3 7. Reporting. a. Commencing one year after the effective date of this 4 section and annually thereafter the retirement board shall issue a 5 report to the temporary president of the senate and the speaker of the 6 assembly and shall make such report publicly available, outlining all 7 actions taken to comply with this section. 8 b. To the extent that the retirement system has remaining private 9 equity or private debt investments in any oil and gas producers, or coal 10 producers, the retirement board shall prominently make note of such 11 investments and all attempts that have been made to expeditiously 12 complete its divestment obligations to date. The board shall provide 13 public notice of this annual report and an opportunity for public 14 comment on the retirement system's divestments pursuant to this section 15 of at least sixty days. 16 § 4. This act shall take effect immediately.