EXCLUSIVE New York pension fund to sell half of its shale companies

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A view of a well site that sits atop the natural gas-rich Marcellus Shale formation in western Pennsylvania outside of Union City, Pennsylvania, U.S., October 23, 2020. REUTERS/Shannon Stapleton/File Photo

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BOSTON, Feb 9 (Reuters) – The New York state pension fund will sell $238 million worth of stock and debt it holds in 21 shale oil and gas companies, including Chesapeake Energy Corp, Hess Corp (HES.N) and Pioneer Natural Resources (PXD.N), saying they have not shown they are ready to move to a low-emissions economy.

However, the fund will retain 21 other shale companies, including CNX Resources Corp (CNX.N) and EQT Corp (EQT.N) according to documents reviewed by Reuters from New York Comptroller Thomas DiNapoli, who oversees pension assets.

“To protect the state pension fund, we are restricting investments in companies that we believe are unprepared to adapt to a low-carbon future,” DiNapoli said in a statement sent by a spokesperson. A review found the companies being sold continue to invest heavily in high-risk, high-cost assets, a spokesperson for DiNapoli’s office said via email.

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None of the companies responded to messages seeking comment.

A method pioneered in the United States of pumping water, sand and chemicals into shale rock formations releases trapped oil and gas. Shale discoveries in recent decades have made the United States the world’s largest oil producer and one of the leading exporters of natural gas.

New York State’s $280 billion fund isn’t a top holder of shale companies, but as the third-largest US state pension fund, its decisions are followed by close as other institutions grapple with whether to move away from fossil fuel stocks.

Last year, DiNapoli said the fund would sell $7 million worth of Canadian oil sands companies and begin its review of shale companies. Then, it will examine whether similar measures should be taken for the large integrated oil companies. Read more

Some activists have pushed for more comprehensive divestment and won over universities and institutions, including New York City retirement funds. Maine state pension officials are developing plans to sell fossil fuel stocks, as required by a new law. Read more

But the main pension fund, the $500 billion California Public Employees’ Retirement System (Calpers), is not ready to divest broadly, Simiso Nzima, its managing director of global equities, said in an interview on Tuesday.

“When you divest, you don’t solve climate change, you don’t solve problems,” he said. Instead, Calpers will likely vote against more corporate executives this year on topics like the environment or board diversity, Nzima said.

Additionally, some Republican state officials have opposed investor efforts to pressure fossil fuel companies. Read more

New York will sell shale stocks “in a prudent manner and timeframe,” the statement said.

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Reporting by Ross Kerber in Boston, additional reporting by Gary McWilliams in Houston, Editing by Richard Pullin

Our standards: The Thomson Reuters Trust Principles.

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