The New York State Common Retirement Fund plans to restrict its investments in eight integrated oil and gas companies, including Exxon Mobil Corp (NYSE:XOM).
The move reflects New York Comptroller Thomas DiNapoli's review of the transition readiness of energy sector investments that face significant climate risk.
DiNapoli said, "Climate change is an increasingly urgent risk facing all investors, and I am determined to protect the state's pension fund by keeping it at the forefront of efforts to mitigate risks to our investments. This reduces our fund's exposure to fossil fuels."
"Consistent with my fiduciary duty to maximize investment returns for the benefit of our members and retirees, these actions should help accomplish the goals of our Climate Action Plan."
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The fund plans to divest its corporate bonds and actively manage public equity holdings in eight integrated oil and gas companies that are determined to be not transition-ready.
Apart from Exxon, the companies to be divested and restricted in the coming months are Delek Group (OTC:DELKY), Guanghui Energy Company Ltd., Echo Energy PLC, IOG PLC, Oil and Natural Gas Corporation Ltd and Dana Gas Co and Unit Corp.
As of Dec. 31, 2023, the total value of these holdings is around $26.8 million.
The fund "will continue to hold Exxon and the others that are restricted in its passive index holdings at this time," a spokesman for DiNapoli said to Reuters.
As per the report, spokesman Matthew Sweeney said that while the fund will divest about $25 million worth of Exxon shares, other Exxon holdings total about $500 million.
Sweeney further said, "The passive strategy is fundamental to the Fund and has been successful. The review determined that removing it from the passive index would go against fiduciary duty at this time."
Earlier in 2023, the Fund updated its assessments of shale oil and gas, oil sands, and coal companies, leading to restrictions on investment in around 50 firms that it determined failed to demonstrate transition readiness, including six new coal companies and four new shale oil and gas companies.
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