The Harmful Impact of Divestment on Every American Family

 

Anti-energy activists and some elected officials are pledging to divest (or “sell off”) energy stocks from public pension funds. What this could actually mean is defaults on pension payments to firefighters, teachers, and other public employees. For individuals who do not have a public pension, it means potential tax hikes and less tax dollars for essential city services.

A study by Sonecon (2015) found that among endowment holdings, investments in oil and natural gas stocks outperformed every other asset class.

• Divestment could cause shortfalls in cities’ public pension funds. To make up for the shortfalls as a result of divestment, pension funds would need to either: cut payments to pensioners or seek taxpayer bailout.
• Divestment could cut funds essential to city services and community projects, such as emergency services, schools, infrastructure repairs, and community and safety programs.
• Divestment introduces a “slippery slope” of potential restrictions on future investments that could bring significant benefits for public pension retirees.

Resources
• Divestment could cost the nation’s top pension funds trillions – Download Prof. Fischel Report
• Harvard, Yale, Columbia, Massachusetts Institute of Technology and New York University could lose $195 million each year if they were to divest – Download Prof. Cornell Report
• Divesting from fossil fuel is a costly and ineffective strategy – Download Prof. Fischel Report