The New York State Common Retirement Fund plans to sell the shares and bonds, worth $238m, it holds in 21 shale oil and gas companies.
The move comes as these energy firms, including Chesapeake; Hess; and Pioneer Natural Resources, have failed to show interest in shifting their business towards a low-emissions economy, stated the approximately $280bn pension fund.
New York State Comptroller and trustee of the fund Thomas DiNapoli said: “As market forces and new policies drive the energy transition, we must align our investments with a profitable and dynamic future.
“The shale oil and gas industry faces numerous obstacles, going forward, that pose risks to its financial performance. 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 office spokesman informed Reuters, via email, that the companies considered for sale continue to make investments in high-cost and high-risk assets.
The state pension fund will, however, keep its investment in another 21 oil and gas producing companies that include ConocoPhillips, CNX Resources, and EQT.
The decision to sell the investments, by one of the largest public pension funds in the US, follows an internal review of its shale oil and gas holdings. This forms part of DiNapoli’s wider plan to assess the energy sector’s transition readiness.
Earlier reviews of oil sands and coal companies, by DiNapoli, resulted in the sale of the fund’s securities from 34 firms, due to their failure to demonstrate transition readiness.
The pension fund plans to next review integrated oil and gas companies.
The latest decision will contribute to DiNapoli’s climate action plan, which aims to address investment risks from climate change.
It also supports DiNapoli’s commitment to transition the investment portfolio of the fund to net-zero greenhouse gas emissions by 2040.
Last year, Canadian pension fund Caisse de dépôt et placement du Québec announced that it was divesting all of its oil assets by the end of this year.