A law prohibiting Oklahoma public retirement systems from investing and contracting with financial companies accused of boycotting the fossil fuels industry could cost the state’s second-largest pension fund at least $9.7 million.
The Oklahoma Public Employees Retirement System is the first to release an estimate for how much it might cost retirees to shed investments from blacklisted companies. And the cost could be much higher after other trading costs are factored in, the retirement system’s chief financial officer warned Thursday.
Under Oklahoma’s Energy Discrimination Elimination Act, public retirement systems are banned from doing business with companies on a state blacklist for those accused of boycotting the fossil fuel industry. State and local agencies are also prohibited from contracting with blacklisted companies. Oklahoma enacted the law in 2022.
Oklahoma State Treasurer Todd Russ released his list of blacklisted companies in May, which
Includes some of the biggest names in the financial sector, including BlackRock, JPMorgan Chase and Bank of America. As The Frontier first reported, many firms on the list don’t actually qualify for inclusion under the law and the criteria for how companies can get off the list is murky at best.
Brad Tillberg, the Oklahoma Public Employees Retirement System’s chief investment officer, said at a meeting Thursday that divisting funds with blacklisted companies would affect nearly two-thirds of OPERS’s assets, or $6.9 billion. The vast majority of the affected funds are held through contracts with the multinational investment company BlackRock.
The OPERS investment committee voted to send a declaration to the full retirement system board, stating that divesting funds from blacklisted companies would be a breach of fiduciary duty to state retirees.
“It’s just patently obvious that this is just against any good sense,” said committee and board member Edward Petersen.
Russ, who sits on the OPERS board, later pushed back on the cost estimate, saying the figures were based on four-year old data. He also opposed the resolution against divesting affecting assets.
The committee’s recommendation died from lack of support.
Blacklisted companies have until Aug. 3 to demonstrate to the Oklahoma State Treasurer’s office that they are no longer boycotting oil and natural gas before the divestment process begins.
“If they just simply say we’re not boycotting anymore but none of the other actions and activities we’ve seen out in public and other places has changed … if that’s still happening, then our position probably won’t change,” Russ said.