An act relating to divestment of State pension funds of investments in the fossil fuel industry
S.72 would direct the Vermont Pension Investment Commission, working with the Office of the State Treasurer, to review the carbon footprint of the holdings in three public retirement systems: the State Employees’ Retirement System, the State Teachers’ Retirement System, and the Municipal Employees’ Retirement System. The review would be due by December 15, 2025, and would assess exposure to fossil fuel companies and related entities, including subsidiaries, affiliates, and parent companies.
The bill then requires the Commission to develop a divestment plan by December 31, 2030, to remove fossil fuel holdings from those pension funds, while also setting a longer-term goal of divesting private investments that contain fossil fuel assets by December 31, 2040 if consistent with fiduciary duties. The bill defines “carbon footprint” and “de minimis exposure,” creates exceptions for minimal exposure and certain private investments until divestment is prudent, and requires the Commission to define “fossil fuel company” and explain its methodology for measuring portfolio exposure. It also requires multiple reports to legislative committees and the Joint Public Pension Oversight Committee between 2026 and 2041, and appropriates $127,000 in FY 2026 for one staff position to support implementation.
If enacted, S.72 would add a new statutory framework governing how Vermont’s public pension assets are reviewed, reported on, and potentially divested from fossil fuel-related investments. It would not immediately prohibit all fossil fuel investments, but it would impose deadlines, reporting obligations, and planning requirements on the Vermont Pension Investment Commission, while explicitly tying implementation to sound investment criteria and fiduciary obligations. The bill also creates a dedicated appropriation and allocates the cost across the three retirement funds, affecting the State Retirement Fund, Teachers’ Retirement Fund, and Municipal Retirement Fund.
Based on the bill text and the absence of recorded committee testimony or votes in the provided materials, the bill appears to be framed positively by its sponsors as a climate-risk and fiduciary-management measure. The introductory language emphasizes Vermont’s existing efforts on climate-related financial risk and presents divestment as a continuation of those efforts rather than a radical change. No formal vote history or committee debate is included, so there is no documented opposition or support beyond the bill’s stated purpose and structure.
The main points of potential contention are likely to be the balance between climate policy goals and fiduciary responsibility, the possible effect of divestment on returns and employer contribution rates, and the treatment of private investments. The bill repeatedly conditions divestment on consistency with sound fiduciary practice and requires consideration of increased ADEC and administrative costs, suggesting concern that divestment could raise costs for the retirement systems or employers. Another likely issue is the exception for de minimis exposure and private investments, which may be viewed by supporters as a practical safeguard and by critics as weakening the divestment mandate. The bill also leaves key implementation details to the Commission, including definitions and methodology, which could generate further debate.