Some Illinois Democrats are pushing the General Assembly to pass legislation that would require the state’s five pension systems to divest from fossil fuel companies.
Under Senate Bill 130, the pension systems for legislators, state employees, university employees, teachers and judges would be prohibited from investing in any fossil fuel companies or their affiliates. Pension systems would be required to complete divestment in fossil fuel companies by 2030 but would be prohibited from making any new investments in them once the bill is signed by the governor.
Fossil fuel companies covered under the legislation include subsidiaries, affiliates and parent companies of 200 publicly traded companies with the largest fuel reserves in the world, the 30 largest public companies owning coal-fired power plants and any company with fossil fuel operations at the core of its business.
Supporters of the bill said it is important Illinois not financially support fossil fuel companies as the state moves toward clean energy goals. Those goals include requiring coal and gas power plants close by 2045.
“It is really imperative for the state pension funds to be more mindful and aligned with the Climate and Equitable Jobs Act that we made a commitment to, and this will align with that,” bill sponsor Sen. Adriane Johnson, D-Buffalo Grove, said at a news conference.
Rep. Will Guzzardi, D-Chicago, a budget leader in the House, said he believes divesting from fossil fuel companies will ultimately lead to better investment outcomes for pension systems as lawmakers search for ways to improve pension liabilities. Illinois has a $143.7 billion unfunded pension liability, according to the Commission on Government Forecasting and Accountability.
“Divesting our pension funds from fossil fuels will increase returns in the long run,” Guzzardi said. “Not only is it aligned with our goals on climate, but it is aligned with our goals on guaranteeing a safe retirement for all public employees.”
Fossil fuel investments underperform other types of investments, according to Guzzardi. A University of Waterloo study found American pension funds would see greater investment returns without investments in the energy sector.
It’s not clear how much of Illinois’ pensions are invested in fossil fuel companies, Guzzardi said, which is why lawmakers are using the bill to ask the pension systems to disclose their investments in fossil fuels.
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