Washington, DC — Alaska’s state fund derived from oil and gas revenues is investing substantially less in, while also earning much less from, fossil fuel companies, according to Permanent Fund figures posted today by Public Employees for Environmental Responsibility (PEER). The amount of Alaska Permanent Fund holdings in oil and gas companies is down by more than half since 2011, a trend that “suggests the Fund may not be invested in such companies five to ten years from now,” in the words of its leadership.
Alaska established its Permanent Fund shortly after the oil from the North Slope began flowing to market through the Trans-Alaska Pipeline System more than 40 years ago. Its investments are managed by a state-owned corporation, the Alaska Permanent Fund Corporation (APFC). These investments also produce a dividend paid annually to Alaska residents, amounting to $1,600.00 each in 2018.
In a May 25, 2018 letter to Rick Steiner, a retired University of Alaska professor and PEER board member who has long campaigned for the APFC to divest from fossil fuels, Board Chair William Moran and Chief Executive Officer Angela Rodell cite the steep drop in the Fund’s portfolio invested in fossil fuels during recent years, now only $1.6 billion of its $60 billion portfolio (less than 3%) in 2017, writing:
“The Fund’s exposure to such fossil fuel companies has been steadily declining, both in total holdings and as a percentage of the overall portfolio. This indicates that both our internal and external managers believe these companies do not contribute the same value today as they did…”
“Two things are happening simultaneously: The Fund has indeed been quietly divesting fossil fuels, and those remaining investments have lost a lot of value,” said Steiner, pointing out that the APFC Fossil Fuel Returns from 2011 to 2017 show a nearly 50% drop in Weighted Average Share Price, indicating that the Fund could have earned more by investing those funds in higher yield companies. “We urge the Fund to cut its losses, and fully divest this year rather than prolong the financial bleeding another decade.”
The APFC resists that course of action, however, maintaining “we intend to let our process drive that decision rather than abruptly divesting from such companies today” but also warns that –
“A public company whose business strategy is not poised to evolve as the market it operates in changes will invariably become less profitable and the investment criteria that we rely upon will organically result in such investments being culled from the portfolio.”
“These figures signal that the companies marketing fossil-based fuels are themselves becoming dinosaurs,” stated PEER Executive Director Jeff Ruch, noting that unlike the lion’s share of publicly-managed funds that consider environmental, social, and governance issues as investment factors, the APFC does not, claiming to “invest in companies not causes.” “For Alaska to ignore the long-term consequences of its investments on its people, environment, and wildlife is producing a bottom line that is both penny-unwise and pound foolish.”
“As Alaska is suffering catastrophic effects from climate change, the Permanent Fund needs to fully divest from the cause,” Steiner concluded, referencing yesterday’s public hearing in Anchorage on opening the Arctic National Wildlife Refuge to drilling. “Financial markets are signaling an end to fossil fuels, and it makes no sense for the Trump administration to charge forward with drilling in the Arctic Refuge or the Arctic Ocean.”
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