2021 TALKING POINTS

NJ Fossil Fuel Divestment Legislation (S416 / A1733)

 

We are Facing a Climate Crisis of Existential Proportion

 

• More than 97% of climate scientists agree that the burning of fossil fuels is the main driver of climate change caused by human activity.Climate change is the main reason for increasing temperatures and the crisis we are facing.

  • The world’s 5 hottest years on record have occurred since 2015 according to NOAA’s National Centers for Environmental Information.

  • The UN Intergovernmental Panel on Climate Change, Special Report October 2018, has determined that we have until 2030 to keep the temperature increase to 1.5 deg Celsius to avoid irreversible tipping points.

  • Scientists warn that if we reach a tipping point huge parts of the planet will become uninhabitable, there will be extensive hunger and lack of fresh water leading to millions of climate refugees, wars over scarce resources and mass extinctions.

  • In many countries, climate change is already driving people off of their land.  Many of our southern neighbors are risking their lives to come to the US from Honduras, Guatemala and El Salvador because climate change has made it impossible to grow food at home.

 

• New Jersey faces unique challenges in terms of sea level rise and temperature.

  • The sea level around New Jersey’s coast is rising at twice the rate of the global average because our coast is also sinking, according to the Department of Earth and Planetary Sciences at Rutgers.

  • Our temperature rise is about 2 deg Celsius since 1895 and is double the average of the other 48 states.

 

• To avoid climate catastrophe 80% of all known fossil fuels must not be burned.

 

Why Fossil Fuel Divestment Now?

 

• Divestment has become a powerful tool and it weakens the industry’s financial position.

  • The threat of large-scale divestment presents a material risk to their business.

  • Although naysayers argue others will buy the divested stock, in fact, that has not been the case with fossil fuels.Awareness of the damage fossil fuels are doing to our future is moving investors away from fossil fuels and towards renewables.

  • Divestment is hurting the bottom line of fossil fuel companies and making it harder for companies to get financing for expansion projects.

 

• Divestment is a leadership statement, generating greater awareness of the dangers of fossil fuels and inspiring action by more institutions and individuals.

  • It appropriately stigmatizes the fossil fuel industry for its culpability in the climate crisis.

  • It will eventually weaken the lobbying strength of the industry, which is significant in NJ.

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Fiscal Responsibility in an Era of Climate Change

 

• The state has a fiduciary responsibility to protect the retirement funds from risky investments.

• Fossil fuels have become the riskiest investment in their portfolio.

  • Prior to COVID-19 the energy sector had been significantly lagging the rest of the financial markets. It was the worst performing sector of the S&P’s 500 for the decade 2009-2019.It had and continues to be a drag on the rest of the NJ pension funds’ portfolio.

  • Given the climate crisis, there is NO FUTURE in fossil fuels.Its impact on all businesses with the potential for disruptions of supply chains and commerce is an increasing concern for all investors.

  • It is estimated that $1 trillion in oil reserves and $300 billion in natural gas reserves will become ‘stranded assets’ and need to be written off resulting in enormous loss of value.

  • Given the recent collapse of the oil industry post COVID, Shell has cut back significantly on its dividends which has been one reason the pension funds are holding on to these investments.It is only a matter of time until the other major oil and gas companies do the same.

 

• The world transition to renewable energy and battery storage is accelerating rapidly.Renewable energy is already less costly than fossil fuel energy for more than 2/3 of the world.Renewables with storage is now price competitive with other fossil fuel options and is on the rise everywhere.

 

 

Why New Jersey?

 

• New Jersey and all states must take the lead since the Trump administration has abandoned all responsibility regarding climate change.It has increased subsidies to the fossil fuel industry during the present COVID crisis while eliminating health and safety regulations for theses companies.

 

• Governor Murphy ran as a climate champion.The State Investment Council, which oversees the pensions funds in NJ, should align itself with the Governor’s goal of renewable energy.

 

• NJ's pension is the #49th most underfunded pension in the country. This makes it all the more critical that the NJ State Investment Council makes prudent and responsible financial and fiduciary decisions for the pension. 

 

• New Jersey is very vulnerable to climate impacts, with sea level rise threatening lives, property, tourism, transportation networks, and fresh water aquifers. Rising temperatures will cause agricultural disruption, harm to our forests, and grave health impacts to residents. Extreme weather events will routinely batter us costing our residents precious tax dollars that should be going to our pension funds.  

 

• There is currently a Fossil Fuel Divestment bill in the NJ State Legislature, S416 / A1733, reintroduced into the 2020-2021 session requiring the state to divest from the 200 largest fossil fuel companies.Working with our Legislature to get this passed is a powerful way to send the message to the State Investment Council that it is TIME TO DIVEST FROM FOSSIL FUELS NOW!

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