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Unions slam state pension board for refusing to divest from fossil fuels

Several groups representing contributors to Massachusetts’ public employee pension fund slammed state overseers of the fund Monday for dismissing calls to divest from fossil fuels.

In July, a coalition of public-sector unions wrote to the state Pension Reserves Investment Management Board, or PRIM, arguing that Massachusetts should pull its investments in fossil fuel companies and funds for environmental reasons and because the sector is not performing well financially.

Last week, PRIM executive director Michael Trotsky replied to those advocates, saying in a letter that the board could not tell its managers to avoid certain investments unless the state Legislature directed it to do so.


“Having selected investment managers on the basis of their proven skill and abilities, PRIM does not then impose limitations upon these managers’... by instructing them that they must or that they may not invest invest in any particular stock/asset,” Trotsky wrote. “Indeed, it would be illogical to do so, and would be a very poor approach to investment management.”

Trotsky also declined a request by the groups to explain how it has evaluated the risk of investing in fossil fuels, saying PRIM leaves such work to the investment managers it retains.

The groups — which include the Massachusetts Nurses Association, the Massachusetts Union for Human Service Workers & Educators (SEIU Local 509), and Educators for a Democratic Union, a caucus within the Massachusetts Teachers Association — decried Trotsky’s response as dismissive.

“Divestment from fossil fuels is not only an ethical imperative; it is a clear financial imperative,” said Susan Tousignant, president of the Massachusetts Union for Human Service Workers & Educators, in a statement. “Our Commonwealth stands to lose money each and every day we remain invested in risky fossil fuels, and taxpayers are left holding the bag.”

The coalition cited a September study by Trillium Asset Management that found the pension fund had lost $500 million in fiscal year 2015 on its fossil-fuel investments. In the three-year period ending June 30, Trillium found, fossil-fuel stocks only earned a 1 percent return for PRIM.


Many colleges are under pressure to take similar steps, with environmental activists saying divestment would be at least a symbolic strike against global warming. Opponents of divestment say it could reduce the returns of institutional investors while having little impact on fossil fuel companies. In the Boston area, groups at Harvard University, Tufts University, and the Massachusetts Institute of Technology have called for their schools’ endowment managers to pull fossil fuel investments.

A bill in the Massachusetts Senate supported by the unions would require PRIM to dump its fossil fuel divestments, but has languished in committee.

A spokesman for PRIM did not immediately comment. A spokeswoman for Treasurer Deb Goldberg, who oversees the fund, did not immediately return a request for comment.

Dan Adams can be reached at dadams@globe.com. Follow him on Twitter @DanielAdams86.