Amendment #380 to H3600

Divestment

Ms. Decker of Cambridge moves to amend the bill by adding following new sections:-

SECTION 81:  As used in sections 82 through 84 of this act, the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Board”, the pension reserves investment management board established in section 23 of chapter 32 of the General Laws.

“Company”, a sole proprietorship, organization, association, corporation, partnership, joint venture, limited partnership, limited liability partnership, limited liability company or other entity or business association, including all wholly-owned subsidiaries, majority-owned subsidiaries, parent companies or affiliates of such entities or business associations that exist for profit-making purposes.

“Direct holdings”, all securities of a company held directly by the public fund or in an account or fund in which the public fund owns all shares or interests.

“Fossil fuel company”, a company identified by a Global Industry Classification System code in one of the following sectors: (1) coal and consumable fuels; (2) integrated oil and gas; (3) oil and gas exploration and production.

“Indirect holdings”, all securities of a company held in an account or fund, such as a mutual fund, managed by 1 or more persons not employed by the public fund, in which the public fund owns shares or interests together with other investors not subject to this act.

“Public fund”, the Pension Reserves Investment Trust or the Pension Reserves Investment Management Board charged with managing the pooled investment fund consisting of the assets of the State Employees’ and Teachers’ Retirement Systems as well as the assets of local retirement systems under the control of the board.

"Thermal coal", coal used to generate electricity, such as that which is burned to create steam to run turbines. Thermal coal does not mean metallurgical coal or coking coal used to produce steel.

"Thermal coal company" means a publicly traded company that generates 50 percent or more of its revenue from the mining of thermal coal, as determined by the board.

SECTION 82. Notwithstanding any general or special law to the contrary, within 30 days of the effective date of this act, the public fund shall facilitate the identification of all thermal coal and fossil fuel companies in which the fund owns direct or indirect holdings.

SECTION 83. Notwithstanding any general or special law to the contrary, the public fund shall take the following actions in relation to thermal coal companies in which the fund owns direct or indirect holdings.

(a) The public fund shall sell, redeem, divest or withdraw all publicly-traded securities of each thermal coal company identified in section 2 before December 31, 2017;

(b) If so recommended by the commission created in section 4, the public fund shall sell, redeem, divest or withdraw all publicly traded securities of each fossil fuel company identified in section 2 according to the following schedule: (i) at least 33 per cent of such assets shall be removed from the public fund’s assets under management before December 31, 2018; (ii) 67 per cent of such assets shall be removed from the public fund’s assets under management before December 31, 2019; (iii) 100 per cent of such assets shall be removed from the public fund’s assets under management before December 31, 2020.

(c) At no time shall the public fund acquire new assets or securities of thermal coal companies or, if so recommended by the commission created in section 4, fossil fuel companies.

SECTION 84. Notwithstanding any general or special law to the contrary, there shall be a special commission to investigate and study divestment of the public fund from fossil fuel companies as defined herein, but not including thermal coal companies according to the schedule in section 3 (b) of this act.

(a) The commission shall evaluate divestment from fossil fuels, not including thermal coal, weighed against any potential increased risk that divestment may pose to the Commonwealth’s pension funds and retirees.

(b) The commission shall consist of 7 members: 1 of whom shall be the Treasurer, who shall chair the commission; 1 of whom shall be the executive director of the public employee retirement administration commission, or the director’s designee; 1 of whom shall be a member of the Retired State, County and Municipal Employees Association of Massachusetts; 1 of whom shall be an active member of the Service Employees International Union, designated by the State Council; 3 of whom shall be private citizens, appointed by the Treasurer, based on the citizens’ expertise and current employment in Environment, Social and Governance related finance, institutional divestment, or climate science.

(c) The commission shall consult with experts in the relevant fields of economics, wealth management, fiduciary law, and environmental sciences, and file a report of its recommendations. The report shall include, but not be limited to: (i) recommendations on how to define fossil fuel companies; (ii) a basic sensitivity analysis of the potential impact of divestment on the fund’s return on investment, including an analysis of the potential impact that divestment from fossil fuel companies may have on the amortization schedules for the Commonwealth’s pension funds; (iii) an analysis and recommendations as to how best incorporate assessment of carbon risk into the Investment Policy Statement; (iv) an analysis of the potential environmental and policy benefits derived from divestment from fossil fuel companies; (v) recommendations on divestment of indirect holdings, particularly regarding potential exceptions for mutual funds and index funds that may invest in fossil fuel companies; (vi) analysis on the potential impact that divestment may pose to companies and employees based in the Commonwealth; (vii) recommendations on effective administration and oversight of fossil fuel divestment.

(d) The commission shall file a report of its recommendations, together with the actuarial analysis, if any, with the clerks of the house and senate and the chairs of the house and senate committee on ways and means not later than April 1, 2017. Upon the filing of the report of the commission, the public fund shall immediately take action to fulfill all affirmative recommendations, if any, with regard to the divestment of identified fossil fuel companies.

Additional co-sponsor(s) added to Amendment #380 to H3600

Divestment