State Treasurer Beth Pearce says she opposes a plan that calls for the divestment of fossil fuel companies from the state's pension funds.
But backers of the legislation say Pearce's analysis contains some very serious flaws.
In his State of the State address last week, Gov. Peter Shumlin said the time has come for the state's major pension funds to sell off their investments in fossil fuel companies like Exxon Mobil.
Shumlin said Vermont has adopted strong renewable energy policies to reduce carbon emissions and that's it wrong for the pension funds to support businesses that contribute to climate change.
But State Treasurer Beth Pearce argues that the pension funds will lose roughly $10 million a year if these stocks are sold off. And she says her job is to protect the integrity of the funds for the nearly 50,000 people who rely on them.
"As a trustee of those systems,” Pearce says, “as a fiduciary to those systems, I have a obligation to those individuals to preserve those retirement funds. It's a trust that important. It is a promise that has been made to those individuals."
"As a trustee of those systems, as a fiduciary to those systems, I have a obligation to those individuals to preserve those retirement funds." — State Treasurer Beth Pearce
Pearce says it's a mistake to allow social policy to influence financial policy.
"It also sets a dangerous precedent. When you start to legislate what you're going to invest in I think that's a situation where you could end up with other stocks and other issues going down to the road. I think the term slippery slope does apply there."
Washington County Sen. Anthony Pollina is the lead sponsor of the Senate divestment bill. He thinks there should be a direct link between social and financial policies.
“It doesn't make any sense for the state of Vermont to say that we're going to fight climate change and then invest in companies that are in fact causing climate change,” Pollina says. “So divesting from carbon producing companies is a way of making sure that our policy goals are in line with our economic goals."
"It doesn't make any sense for the state of Vermont to say that we're going to fight climate change and then invest in companies that are in fact causing climate change." — Washington County Sen. Anthony Pollina
And Pollina says it makes sense to sell off the stocks of the fossil fuel companies because they've turned out to be bad financial investments.
“A recent analysis showed that the pension funds have lost abut $75 million over the past couple of years,” Pollina explains, “because of the downward trend in the value of stocks in fossil fuel companies. In the long run, we're going to find that divesting from fossil fuels companies is a good economic decision because those companies are going to continue to lose value."
Pollina says his bill would phase out the state's investments in fossil fuel companies over a five year period to reduce the financial impact that divestment might have on the pension funds.
The Senate Government Operations Committee plans to take a close look at this legislation in the coming weeks.
