1

LISA DICAPRIO. FEBRUARY 29, 2016 SIERRA CLUB ATLANTIC CHAPTER

STATEMENT IN SUPPORT OF THE FOSSIL FUEL DIVESTMENT ACT
(S.5873/A.801 1-A)
My name is Lisa DiCaprio. I am a professor of Social Sciences at NYU where I teach
courses on sustainability. I am speaking today on behalf of the Sierra Club, the largest
grassroots environmental organization in the U.S. with about 40000 members in the
New York State Atlantic Chapter. Two years ago, our chapter adopted a resolution
calling for divesting fossil fuels from the NYS Retirement Fund and the NYS Teachers
Retirement System. We welcome the opportunity to participate in this forum to express
our support for the Fossil Fuel Divestment Act (S.5873/A.801 1-A) sponsored by State
Senator Liz Krueger and Assembly Assistant Speaker Feliz Ortiz.
As of September 2015. 500 institutions and individuals have pledged to divest fossil
fuels from assets worth a total of $3.4 trillion, as related in the report issued by Arabella
Advisors, Measuring the Growth of the Global Fossil Fuel Divestment and Clean
Energy Investment Movement.1
Fossil fuel divestment is part of a global campaign to keep fossil fuels in the ground and
transition to a new, green economy.
Today, climate change is the greatest threat to basic human rights the right to water,
food, health, housing, and human dignity. Paradoxically, the countries that have
contributed the least to global warming are now its main victims. However, as the
National Climate Assessment report issued in 2014 concluded, climate change is now
adversely affecting all regions of the U.S. and all sectors of our economy: agriculture,
manufacturing, transportation, and infrastructure, etc.2

In 2011, the Carbon Tracker Initiative developed data showing that we must keep twothirds of fossil fuel reserves in the ground if we are to remain below 2 degrees Celsius
(3.6 degrees Fahrenheit) of average global warming since the Industrial Revolution. Our
current rate of warming is .8 Celsius (1.5 Fahrenheit). (By some accounts, we may have
already reached .9 Celsius of warming.)
Based on this scientific concept of unburnable carbon, the Carbon Tracker Initiative
developed the financial concept of stranded assets, which can be summarized as
follows: The worth of fossil fuel companies is directly related to the extent of their
reserves, which comprise the assets of these companies. Coal, oil, and gas companies
are vastly overvalued because various long-term factors limiting carbon emissions will
result in stranded assets, i.e. reserves that cannot be extracted. This will lead to a
massive devaluation of fossil fuel stocks, which is distinct from the cyclical volatility in
fossil fuel prices.3
We are already seeing this devaluation, especially with regard to coal stocks, and the
risks to all fossil fuel investments will only increase with the implementation of current
and future carbon constraints, such as the new EPA carbon rules and federal, state,
and municipal goals for the reduction of greenhouse gas emissions; technical
innovations in renewable energy and battery storage, the use of alternative fuels for

transportation, financial incentives, including the recent five-year extension of federal

tax credits for solar and wind power; and the recently concluded Paris Agreement.
Each of these initiatives represents a puncture in the carbon bubble
of fossil fuel companies.

the inflated value

Here, I will focus on how environmental organizations as well as corporate and financial
analysts are predicting that the pledges made by 187 countries for the reduction of
greenhouse gas emissions at the COP 21 meeting in Paris in December 2015 will
transform energy markets by shifting investments from fossil fuels to renewable energy.
By all accounts, these pledges are not sufficient to keep average global warming below
2 degrees Celsius and certainly not below 1.5 Celsius, which is a more accurate, upper
threshold. However, the Paris Agreement is the first time that developed and developing
countries have committed to reducing their emissions and the five-year annual review
process will allow for more ambitious pledges to be made in the future on a regular
basis. Fulfilling these pledges will reguire increasing energy conservation and efficiency,
and expanding renewable energy all of which will displace fossil fuels worldwide,
strand fossil fuel assets, and devalue fossil fuel investments.

For example, the COP 21 meeting in Paris also featured the launch of the International
Solar Alliance by France and India, which will include 120 governments4 and the Global
Solar Council, comprising over 1000 companies, which seeks to promote solar power
internationally.5
As Clifford Krauss and Keith Bradsher wrote in their article, Climate Deal is Signal to
Industry: The Era of Carbon Reduction is Here, which appeared in the December 14,
2015 New York Times, If nothing else, analysts and experts say, the accord is a signal
to businesses and investors that the era of carbon reduction has arrived. It will spur
banks and investment funds to shift their loan and stock portfolios from coal and oil to
the growing industries of renewable energy like wind and solar.6
Similarly, Jennifer Morgan, the Global Director of the Climate Program from the World
Resources Institute stated that the Paris Areement sent a long-term signal about the
inevitable shift to a zero-carbon economy.
As reported in a December 12 The Guardian article, Paris Climate Agreement may
signal end of fossil fuel era, Paul Polman, the chief executive of Unilever, stated: The
consequences of this agreement go far beyond the actions of governments. They will be
felt in banks, stock exchanges, boardrooms and research centres as the world absorbs
the fact that it is embarking on an unprecedented project to decarbonise the global
economy.8 Unilever is a member of the Renewable Energy 100, an alliance of 53
companies that have committed to obtaining all of the energy required for their daily
operations from renewable sources.9
Institutional investors also view the Paris Agreement as a turning point, as related in the
article, Pension funds welcome momentous Paris climate agreement, which
appeared in a December15 edition of the publication, Investment & Pensions Europe.
According to this article, Investors said the agreement... showed great potential and

would accelerate the global transition away from fossil fuels to a low-carbon economy.
The article quotes Stephanie Pfiefer, the chief executive of the Institutional Investors
Group on Climate Change (ILGCC), as stating that the agreement was an unequivocal
signal to investors that an escalation of financing for low-carbon infrastructure was
needed to deliver the targeted reduction in carbon emissions.1 The ILGCC is a
network of 120 members, including some of the largest pension funds and asset
managers in Europe, who represent nearly 13 trillion in assets and take a pro-active
approach to managing risks and opportunities related to climate change.11
Investors worldwide must choose which side they are on. According to a 2012
International Energy Agency (lEA) report, a trillion dollars must be invested annually
and globally in green infrastructure and technologies if we are to remain below 2
degrees Celsius of global warming.12 Currently, these investments total $300 billion
annually. Institutional investors, such as the NYC and NYS pension funds, can and
must play a crucial role in meeting this goal by divesting from fossil fuels and
reinvesting, in whole or in part, in green infrastructure and renewable forms of energy.
In conclusion, we call on the New York State Legislature to support the Fossil Fuel
Divestment Act as an ethical and financial imperative. If there is a positive, long4erm
future for fossil fuel investments, then there is no future for a habitable planet.

NOTES:
1

See: http://www.arabellaadvisors.com/wp-contenUuploads/201 5/09/Measuring-the-Growth-ofthe-Divestment-Movement.pdfl

2

See: http://nca2Ol4.globalchange.gov

See: http://wwwcarbontracker.org/report/carbon-bubble and http://wwwcarbontracker.org/wD

contenUuploads/2014/09/Unburnable-Carbon-FuII-rev2-1 .pdf
See: http:I/newsroom.unfccc.inUclean-energy/international-solar-energy-alliance-launched-at
cop2l
See: http://www.renewableenergvfocus.com/v iew/43395/Ieading-solar-associations-un ite-to
Iaunch-global-solar-council-at-cop2l
See: hftp://www. nvtimes.com/201 5/12/1 4/business/climate-accord-draws-mixed-reaction-frombusiness-Ieaders.html
See: http://www.wri.org/news/2015/i 2/statement-cop2l-delivers%E2%80%9Chistoric%E2%80%9D-climate-agreement-paris.
8

See: http://www.theguardian.com/environment/20i 5/dec/i 3/pads-climate-agreement-signalend-of-fossil-fuel-era

See: http://there100.org/companies

See: http:llwww. ipe.com/news/esg/pension-funds-welcome-momentous-paris-climate

agreement/i 0011 178.fulladicle
See: http://www.iigcc.org
12

See: http://www.iea.org/Textbase/npsum/ETp20i25uM.pdf