As the individual responsible for overseeing the pension system for current and former state employees, New York Comptroller Thomas P. DiNapoli needs to make wise decisions when it comes to investments.
The New York State Common Retirement Fund recorded an estimated value of $247.7 billion at the end of last year. This makes it the third-largest public pension plan in the country.
So it’s vital for DiNapoli and his staff members to understand what investments will bring the best returns. With more than 1 million participants counting on the expertise of the comptroller’s office, managing the 100-year-old retirement fund for state workers and retirees is a serious undertaking.
DiNapoli also grasps that wise investments give him some leverage when it comes to influencing how corporations conduct themselves. While meeting with members of the Watertown Daily Times editorial board nearly four years ago, DiNapoli responded to a question about a call for his office to divest from fossil fuel companies.
Community leaders gathered June 5, 2017, in Albany to demand that DiNapoli withdraw state funds from such firms. This was part of a movement designed to pressure these corporations to become more environmentally friendly.
Proponents of this approach believe firms will alter their practices if enough people remove their investments. But DiNapoli said this risked losing any bargaining power his office has with companies in which it invests.
And DiNapoli has periodically used this tactic.
He urged Facebook to address concerns raised by U.S. senators during a hearing in April 2019. The New York State Common Retirement Fund held more than $1 billion of shares in the social media giant at the time, and DiNapoli told Chief Executive Officer Mark Zuckerberg in a letter that he would vote against the nominees for Facebook’s board of directors in 2020 unless the company made some substantial changes.
More recently, DiNapoli helped persuade an Ohio-based electric company to report on measures to reduce greenhouse gas emissions as well as publicize its political spending. The New York State Common Retirement Fund holds about $21.2 million of shares in FirstEnergy Corp., which represents about 0.14% of all its shares, a story published Monday by the Watertown Daily Times reported.
“According to a report from Mr. DiNapoli, FirstEnergy has contributed at least $4.5 million in corporate funding to various political causes since 2010, but that number does not include what the comptroller called ‘secret payments’ to political powerbrokers and influential leaders in exchange for benefits,” the Times story reported. “Federal investigators say FirstEnergy and its family of companies spent more than $60 million to lobby for a state bailout of two nuclear energy plants owned by a former subsidiary of the company. In July 2020, former Speaker of the Ohio House of Representatives Larry L. Householder, former Ohio Republican Party chairman Matt Borges and three other people were accused of taking the money and using it to expand their own political influence and enrich themselves. While nobody from FirstEnergy nor the company itself [has] been charged criminally, Chief Executive Officer Chuck Jones was fired in October following an internal investigation.”
The comptroller’s office reported last month that FirstEnergy Corp. will examine its actions to reduce C02 emissions and compare them to former President Barack Obama’s goals; review the age and life of its existing fossil fleet and future replacement generation drivers; and research how standards of performance for greenhouse gas emissions from new stationary sources and the regulation of carbon pollution from existing power plans under the Clean Air Act affect the company, according to a Jan. 15 news release. Since 2010, 12 companies have reached agreements with DiNapoli on reducing corporate climate impacts.
On Monday, the comptroller’s office reported that FirstEnergy Corp. will “post semi-annual comprehensive reports listing its corporate spending on candidates, political parties, ballot measures, payments over $25,000 to any trade associations used for political purposes and payments made to any organization that writes and endorses model legislation,” according to a news release.
“The retirement fund used shareholder resolutions to pressure the company to begin keeping closer track, in public view, of what political causes it donates funding to,” according to the Times article. “The shareholder resolutions would have gone to a vote at the next FirstEnergy shareholder meeting, and if passed would have required the company to implement a financial disclosure plan. Under the agreement announced Monday, the shareholder resolutions were withdrawn. FirstEnergy will instead voluntarily disclose all corporate political activity on their website twice per year through May 2024.”
Over the past decade, the New York State Common Retirement Fund has filed more than 155 shareholder proposals on political spending. In response, 43 companies have agreed to be more open in this regard.
These actions should assure investors in FirstEnergy Corp. that the company is acting in the public’s best interests. This is a notable accomplishment for DiNapoli and members of his office. It shows they are on the right track when it comes to guiding corporations toward greater responsibility and ensuring good returns for the money they invest.