S T A T E   O F   N E W   Y O R K
 ________________________________________________________________________
 
                                  6331--A
 
                        2021-2022 Regular Sessions
 
                           I N  A S S E M B L Y
 
                              March 16, 2021
                                ___________
 
 Introduced  by  M.  of  A.  KELLES, MITAYNES, THIELE, BICHOTTE HERMELYN,
   GOTTFRIED, EPSTEIN, PAULIN,  GONZALEZ-ROJAS,  CARROLL,  SIMON,  QUART,
   MAMDANI,  REYES,  FAHY, LUPARDO, GALLAGHER, McDONALD, STECK, D. ROSEN-
   THAL, CLARK, PICHARDO, SEAWRIGHT, L. ROSENTHAL, KIM, FORREST,  ZEBROW-
   SKI,  CRUZ, PERRY, JACKSON, BURGOS, WALKER, ZINERMAN, DICKENS, SEPTIMO
   -- read once and referred to the Committee on  Governmental  Employees
   --  committee  discharged,  bill amended, ordered reprinted as amended
   and recommitted to said committee
 
 AN ACT to amend the education law, in relation to requiring the New York
   state teachers' retirement system to divest the retirement  system  of
   any  investments in corporations or companies included on an exclusion
   list of coal producers and oil and gas producers
 
   THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND  ASSEM-
 BLY, DO ENACT AS FOLLOWS:
 
   Section  1. This act shall be known and may be cited as the "teachers'
 fossil fuel divestment act".
   § 2. Legislative findings. 1. a. Climate change is a real and  serious
 threat  to  the  health, welfare, and prosperity of all New Yorkers, now
 and in the future. Maintaining the status  quo  of  fossil  fuel  energy
 production will lead to catastrophic results.
   b.  In  July  2019,  New  York state passed the climate leadership and
 community protection act and committed to reducing statewide  greenhouse
 gas  emissions  by eighty-five percent by 2050 and net zero emissions in
 all sectors of the economy. Other  cities  and  states  have  chosen  to
 pursue similar paths to reduce greenhouse gas emissions.
   c.  The threat of climate change, and the transformation of the global
 energy system that will be necessary to mitigate it, will have a serious
 negative impact on investors whose assets are not aligned with the  goal
 of  keeping  the  global  average temperature increase below 1.5 degrees
 Celsius, as determined by the United Nations Intergovernmental Panel  on
 Climate Change.

  EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                       [ ] is old law to be omitted.
              

                                                            LBD09701-03-1

 A. 6331--A                          2
 
   d.  There  are  no existing legal or fiduciary duties that require New
 York state's pension funds to invest in energy sources that are  harmful
 to  the  environment,  or  in  contradiction to the goals of the climate
 leadership and community protection act. Rather, there  are  alternative
 investments  that are available to our pension funds that do not present
 such harms.
   e. Many cities and states  have  recognized  the  harmful  effects  of
 pension  and investment funds investing in fossil fuels and have commit-
 ted to divesting those funds. Over 1,100 institutional investors repres-
 enting more than $11 trillion in holdings have chosen to pursue full  or
 partial  divestment  from  fossil fuel producers, including the New York
 city employees retirement system, the endowment and pension funds of the
 University of California system,  and  the  sovereign  wealth  funds  of
 Norway and Ireland.
   2. a. Continued investment in fossil fuel producers poses unacceptable
 risks  to  the people of the state of New York, as well as the long-term
 sustainability of the New York state teachers' retirement system.
   b. Investment in dangerous and harmful fossil fuels is not mandated by
 law. The New York state common  retirement  fund,  consistent  with  its
 fiduciary  duties,  has committed to complete reviews of all fossil fuel
 investments by 2025 and to divest from companies that fail to meet mini-
 mum standards. It has also set a precedent by choosing  to  divest  from
 certain  industries  in  the past due to the moral implications of their
 business models, including private prisons, firearms manufacturers,  and
 companies  doing business with Sudan, all while complying with the comp-
 troller's fiduciary obligations.
   c. New York owes duties to its  residents,  and  the  New  York  state
 teachers'  retirement  system owes duties to future beneficiaries. These
 duties can and should reasonably include considerations of human  inter-
 ests,  quality  of  life,  public  safety  and  security, and ultimately
 require a shift away from fossil  fuels  to  help  mitigate  the  future
 adverse effects of climate change.
   d.  According  to the U.S. Department of Labor's interpretive bulletin
 2015-1, environmental issues "may have  a  direct  relationship  to  the
 economic  value  of the plan's investment, and are not merely collateral
 considerations or tie-breakers, but rather are proper components of  the
 fiduciary's primary analysis of the economic merits of competing invest-
 ment choices."
   e.  Attempting  to profit from investments in companies whose business
 models, public relations campaigns, and lobbying efforts not  only  fail
 to  comply  with  New  York's  statutory climate goals, but also put the
 stability of our society and the safety of  our  citizens  at  risk,  is
 neither  morally  acceptable  nor  in  compliance with the legislature's
 responsibility to protect the financial security of current  and  future
 pension beneficiaries.
   f.  Currently, the majority of fossil fuel producers are not adjusting
 their business models to take into account the changing  energy  market,
 investing  billions of dollars in exploring and extracting new reserves,
 creating stranded asset risk and the potential  for  rapid,  unexpected,
 and significant loss of value.
   g.  Attempting  to  beat the market by holding these investments until
 the last possible moment is a high-risk strategy that  could  result  in
 the  loss  of  investment principal. In the words of the decarbonization
 advisory panel for the New York state common retirement fund, "being too
 early in the avoidance of the risk of permanent loss is much less  of  a
 danger than being too late."

 A. 6331--A                          3
 
   h.  In  addition to the risks regarding retirement security, continued
 investment in the fossil fuel industry is counterproductive to the goals
 set forth in the climate leadership and community protection act.
   §  3.  The  education  law is amended by adding a new section 508-b to
 read as follows:
   § 508-B. FOSSIL FUEL DIVESTMENT.  1.  DEFINITIONS.  AS  USED  IN  THIS
 SECTION:
   A. "COAL PRODUCER" MEANS ANY CORPORATION OR COMPANY, OR ANY SUBSIDIARY
 OR  PARENT  OF  ANY CORPORATION OR COMPANY OR PARTNERSHIP OR OTHER LEGAL
 ENTITY, THAT DERIVES AT LEAST TEN PERCENT OF ANNUAL REVENUE FROM THERMAL
 COAL PRODUCTION, OR  ACCOUNTS  FOR  MORE  THAN  ONE  PERCENT  OF  GLOBAL
 PRODUCTION OF THERMAL COAL, OR WHOSE REPORTED COAL RESERVES CONTAIN MORE
 THAN 0.3 GIGATONS OF POTENTIAL CARBON DIOXIDE EMISSIONS;
   B.  "EXCLUSION LIST" MEANS THE LIST CREATED PURSUANT TO PARAGRAPH A OF
 SUBDIVISION TWO OF THIS SECTION;
   C. "OIL AND GAS PRODUCER" MEANS ANY CORPORATION  OR  COMPANY,  OR  ANY
 SUBSIDIARY  OR  PARENT  OF  ANY CORPORATION OR COMPANY OR PARTNERSHIP OR
 OTHER LEGAL ENTITY, THAT DERIVES  AT  LEAST  TWENTY  PERCENT  OF  ANNUAL
 REVENUE  FROM  OIL  OR  GAS  PRODUCTION,  OR  ACCOUNTS FOR MORE THAN ONE
 PERCENT OF GLOBAL OIL OR GAS PRODUCTION, OR WHOSE REPORTED COMBINED  OIL
 AND  GAS  RESERVES  CONTAIN  MORE  THAN 0.1 GIGATONS OF POTENTIAL CARBON
 DIOXIDE EMISSIONS;
   D. "OIL OR GAS PRODUCTION" MEANS  EXPLORATION,  EXTRACTION,  DRILLING,
 PRODUCTION,  REFINING, PROCESSING, OR DISTRIBUTION ACTIVITIES RELATED TO
 OIL OR GAS;
   E. "THERMAL COAL PRODUCTION" MEANS MINING, TRANSPORT,  PROCESSING,  OR
 EXPLORATION ACTIVITIES RELATED TO THERMAL COAL;
   F. "OIL AND GAS EQUIPMENT, SERVICES, TRANSPORTATION AND STORAGE" MEANS
 SERVICES,  TRANSPORTATION  OR STORAGE ACTIVITIES RELATED TO OIL AND GAS;
 AND
   G. "INDEX FUND" MEANS A PASSIVE  INVESTMENT  STRATEGY  THAT  TRACKS  A
 MARKET INDEX.
   2.  FOSSIL  FUEL  COMPANY  EXCLUSION LIST. A. WITHIN SIX MONTHS OF THE
 EFFECTIVE DATE OF THIS SECTION, THE RETIREMENT  BOARD  SHALL  CREATE  AN
 EXCLUSION  LIST OF ALL COAL PRODUCERS AND OIL AND GAS PRODUCERS IN WHOSE
 STOCKS, SECURITIES, EQUITIES, FIXED INCOME, ASSETS, OR OTHER OBLIGATIONS
 THE RETIREMENT SYSTEM HAS ANY MONIES OR ASSETS DIRECTLY INVESTED.
   B. UPON COMPLETION OF THE EXCLUSION LIST, IT SHALL  BE  MADE  PUBLICLY
 AVAILABLE  AND  A  COPY  SHALL BE SENT TO THE TEMPORARY PRESIDENT OF THE
 SENATE AND THE SPEAKER OF THE ASSEMBLY.
   C. THE RETIREMENT BOARD SHALL SUBMIT NOTIFICATION TO  ANY  CORPORATION
 OR  COMPANY  THAT HAS BEEN INCLUDED IN THE EXCLUSION LIST INFORMING THEM
 OF THEIR INCLUSION ON SUCH LIST, AS WELL AS  THE  REQUIREMENTS  OF  THIS
 SECTION.
   D.  AT  THE RETIREMENT BOARD'S DISCRETION, BUT NO LATER THAN TWO YEARS
 AFTER THE COMPLETION OF THE EXCLUSION LIST, AND NO LESS FREQUENTLY  THAN
 BIENNIALLY  THEREAFTER,  THE RETIREMENT BOARD SHALL UPDATE THE EXCLUSION
 LIST TO REMOVE ANY CORPORATION OR COMPANY  THAT  IS  NO  LONGER  A  COAL
 PRODUCER  OR  AN OIL AND GAS PRODUCER AND ADD ANY CORPORATION OR COMPANY
 NECESSARY TO COMPLY WITH PARAGRAPH A OF THIS SUBDIVISION.
   3. REMOVAL FROM THE EXCLUSION LIST.  A.  AT  ANY  TIME  FOLLOWING  THE
 PUBLICATION  OF  THE EXCLUSION LIST, ANY CORPORATION OR COMPANY INCLUDED
 IN THE LIST MAY SUBMIT TO THE RETIREMENT BOARD A REQUEST FOR REMOVAL  ON
 THE BASIS OF CLEAR AND CONVINCING EVIDENCE THAT THEY ARE NOT CURRENTLY A
 COAL  PRODUCER  OR AN OIL AND GAS PRODUCER AS DEFINED IN SUBDIVISION ONE
 OF THIS SECTION.

 A. 6331--A                          4
 
   B. UPON SATISFACTION  THAT  A  CORPORATION  OR  COMPANY  HAS  MET  THE
 REQUIREMENTS  OF  PARAGRAPH  A OF THIS SUBDIVISION, THE RETIREMENT BOARD
 SHALL REMOVE SUCH CORPORATION OR COMPANY FROM  THE  EXCLUSION  LIST  AND
 PROVIDE  A  WRITTEN EXPLANATION FOR SUCH REMOVAL TO THE TEMPORARY PRESI-
 DENT OF THE SENATE AND THE SPEAKER OF THE ASSEMBLY.
   4.  COMPLIANCE WITH FIDUCIARY DUTIES. A. NOTHING IN THIS SECTION SHALL
 REQUIRE A BOARD TO TAKE ACTION AS DESCRIBED IN THIS SECTION  UNLESS  THE
 BOARD DETERMINES IN GOOD FAITH THAT THE ACTION DESCRIBED IN THIS SECTION
 IS CONSISTENT WITH THE FIDUCIARY RESPONSIBILITIES OF THE BOARD UNDER THE
 NEW  YORK  STATE  CONSTITUTION. ANY NEW INVESTMENTS MUST COMPLY WITH THE
 FIDUCIARY OBLIGATIONS AND  THE  PRUDENT  INVESTOR  RULE  AS  DEFINED  BY
 SECTION 11-2.3 OF THE ESTATES, POWERS AND TRUSTS LAW.
   B.  NO  PRIVATE RIGHT OF ACTION SHALL BE AVAILABLE AGAINST THE RETIRE-
 MENT SYSTEM, ANY OF ITS EMPLOYEES, OR ANY PRESENT,  FUTURE,  AND  FORMER
 BOARD  MEMBER  OF  THE RETIREMENT SYSTEM FOR DIVESTING RETIREMENT SYSTEM
 ASSETS PURSUANT TO THIS SECTION IN GOOD FAITH.
   C. NO PRIVATE RIGHT OF ACTION SHALL BE  AVAILABLE  AGAINST  THE  STATE
 PURSUANT TO THIS SECTION.
   5. DIVESTMENT. A. COMMENCING ONE YEAR AFTER THE EFFECTIVE DATE OF THIS
 SECTION, AND IN ACCORDANCE WITH SOUND INVESTMENT CRITERIA AND CONSISTENT
 WITH  ITS FIDUCIARY OBLIGATIONS, THE RETIREMENT BOARD AND ANY INVESTMENT
 MANAGERS UNDER CONTRACT WITH THE RETIREMENT SYSTEM SHALL: (I) DIVEST THE
 RETIREMENT SYSTEM OF ANY STOCKS, SECURITIES, EQUITIES, ASSETS, OR  OTHER
 OBLIGATIONS  OF CORPORATIONS OR COMPANIES ON THE EXCLUSION LIST IN WHICH
 ANY MONIES OR ASSETS OF THE RETIREMENT SYSTEM  ARE  INVESTED;  AND  (II)
 CEASE  NEW  INVESTMENTS OF ANY MONIES OR ASSETS OF THE RETIREMENT SYSTEM
 IN ANY STOCKS, SECURITIES, OR OTHER OBLIGATIONS OF  ANY  CORPORATION  OR
 COMPANY THAT IS A COAL PRODUCER OR OIL AND GAS PRODUCER AS DEFINED HERE-
 IN.
   B.  DIVESTMENT FROM OIL AND GAS PRODUCERS PURSUANT TO THIS SUBDIVISION
 SHALL BE COMPLETED NO LATER THAN TWO YEARS FROM THE  EFFECTIVE  DATE  OF
 THIS  SECTION.  DIVESTMENT  FROM  OIL  AND GAS PRODUCERS RETURNED TO THE
 EXCLUSION LIST PURSUANT TO PARAGRAPH  C  OF  SUBDIVISION  FOUR  OF  THIS
 SECTION  SHALL  BE  COMPLETED  NO  LATER THAN TWO YEARS FROM THE DATE OF
 RETURN TO THE EXCLUSION LIST.
   C. DIVESTMENT FROM COAL PRODUCERS PURSUANT TO THIS  SUBDIVISION  SHALL
 BE  COMPLETED  NO  LATER  THAN  ONE YEAR FROM THE EFFECTIVE DATE OF THIS
 SECTION.  DIVESTMENT FROM COAL PRODUCERS RETURNED TO THE EXCLUSION  LIST
 PURSUANT  TO  PARAGRAPH  C  OF  SUBDIVISION TWO OF THIS SECTION SHALL BE
 COMPLETED NO LATER THAN ONE YEAR FROM THE DATE OF RETURN TO  THE  EXCLU-
 SION LIST.
   D.  DIVESTMENT FROM PRIVATE EQUITY AND PRIVATE DEBT INVESTMENTS PURSU-
 ANT TO THIS SUBDIVISION  SHALL  OCCUR  EXPEDITIOUSLY  IN  A  GOOD  FAITH
 ATTEMPT  TO  COMPLY  WITH  THE  PROVISIONS OF PARAGRAPHS B AND C OF THIS
 SUBDIVISION, BUT NO LATER THAN FIVE YEARS FROM  THE  EFFECTIVE  DATE  OF
 THIS SECTION.
   E.  THE RETIREMENT SYSTEM SHALL HAVE THE DISCRETION TO DIVEST FROM ANY
 OTHER ENTITIES THAT IT IN GOOD FAITH BELIEVES ARE DIRECTLY OR INDIRECTLY
 FINANCING OIL AND GAS PRODUCERS, OR COAL PRODUCERS, REGARDLESS OF WHETH-
 ER SUCH ENTITY OTHERWISE MEETS THE CRITERIA OF THIS SUBDIVISION.
   6. LIMITATIONS ON INDIRECT INVESTMENT. NOTWITHSTANDING ANY  PROVISIONS
 IN THIS SECTION TO THE CONTRARY, AND IN ACCORDANCE WITH SOUND INVESTMENT
 CRITERIA  AND  CONSISTENT WITH ITS FIDUCIARY OBLIGATIONS, THE RETIREMENT
 BOARD SHALL BE PERMITTED TO INVEST IN INDEX FUNDS IF THE BOARD IS SATIS-
 FIED ON REASONABLE GROUNDS AND IN GOOD FAITH THAT SUCH INDIRECT  INVEST-
 MENT VEHICLE DOES NOT HAVE IN EXCESS OF ONE PERCENT OF ITS ASSETS, AVER-

 A. 6331--A                          5
 
 AGED ANNUALLY, DIRECTLY OR INDIRECTLY INVESTED IN COAL PRODUCERS AND OIL
 AND GAS PRODUCERS.
   7.  REPORTING. A. COMMENCING ONE YEAR AFTER THE EFFECTIVE DATE OF THIS
 SECTION AND ANNUALLY THEREAFTER  THE  RETIREMENT  BOARD  SHALL  ISSUE  A
 REPORT  TO  THE TEMPORARY PRESIDENT OF THE SENATE AND THE SPEAKER OF THE
 ASSEMBLY AND SHALL MAKE SUCH REPORT PUBLICLY  AVAILABLE,  OUTLINING  ALL
 ACTIONS TAKEN TO COMPLY WITH THIS SECTION.
   B.  TO  THE  EXTENT  THAT  THE RETIREMENT SYSTEM HAS REMAINING PRIVATE
 EQUITY OR PRIVATE DEBT INVESTMENTS IN ANY OIL AND GAS PRODUCERS, OR COAL
 PRODUCERS, THE RETIREMENT BOARD SHALL  PROMINENTLY  MAKE  NOTE  OF  SUCH
 INVESTMENTS  AND  ALL  ATTEMPTS  THAT  HAVE  BEEN  MADE TO EXPEDITIOUSLY
 COMPLETE ITS DIVESTMENT OBLIGATIONS TO DATE.   THE BOARD  SHALL  PROVIDE
 PUBLIC  NOTICE  OF  THIS  ANNUAL  REPORT  AND  AN OPPORTUNITY FOR PUBLIC
 COMMENT ON THE RETIREMENT SYSTEM'S DIVESTMENTS PURSUANT TO THIS  ACT  OF
 AT LEAST SIXTY DAYS.
   § 4. This act shall take effect immediately.