Divestment won’t help environment, and it could hurt pensioners

The Nov. 27 letter “Fossil fuels are a bad investment for pension fund” asserts that Massachusetts’ $70 billion fund would be better off if it got rid of its oil and gas investments. The author writes this despite the fact that the fund has steadily outperformed its own investment targets — and its peers — over the past few years, while maintaining investments in the sector.

At a time when many funds nationwide are struggling to meet financial goals and are cutting benefits to pensioners to make up the shortfalls, it’s puzzling that one would advocate for an investment policy that harms returns, as divestment has been shown to do.


Indeed, a recent report we commissioned found that if some of the nation’s top pension funds divested, it could mean trillions in losses over the long term. Applying the same methodology to Massachusetts’ state pension fund would mean losses ranging from $41.6 million to $55.5 million per year.

But while divestment brings negative financial consequences, it does nothing to tangibly affect the environment or targeted companies — the same companies that are developing clean-burning natural gas and the energy we all rely upon every day. It’s simply a financial transaction that transfers funds from one owner to another.

That’s why Vermont rejected divestment last year, stating in its report that divestment “has not been shown to be in the best interests of [Vermont Pension Investment Committee] pension beneficiaries, and conflicts with VPIC governance structure.”

Divestment won’t help the environment, but it could hurt pensioners. Massachusetts should do what’s best for its residents and retirees and reject this empty gesture.

Jeff Eshelman
Senior vice president of operations and public affairs
Independent Petroleum Association of America
Washington, D.C.