'Green' Politics Could Cause Pension Funds to See Red

The report authors contend that global warming regulation is a key portfolio risk for state and local pension funds, and a substantial minority of state and pension fund administrators (15 states and local governments managing about $1.21 billion in assets or 45% of all actuarial assets of state and local pension funds) are actively promoting regulation that is likely to adversely impact their portfolios and beneficiaries.

Even though most state and local pension fund administrators are not actively promoting risky global warming regulation, they are not actively opposing it either, the study authors point out.

“State and local pension fund administrators may be breaching their fiduciary obligations to public employee-beneficiaries by promoting or failing to oppose global warming regulation that places portfolio assets at greater risk,” the report said.

According to the study, high gas prices and rising unemployment were key factors in the failure of the U.S. Senate to pass the Lieberman-Warner global warming bill in June 2008. In addition, a March 2008 study by the U.S. Environmental Protection Agency reported that the Lieberman-Warner global warming bill would shrink the size of the U.S. economy, as measured by GDP, as much as $2.9 trillion (6.9%) by the year 2050.

“It doesn’t take much imagination to foresee what will happen to pension fund stock market investments if these state officials get the across the board economy-killing energy price hikes that they are lobbying for,” said study co-author Tom Borelli, in a press release.

The report is available at http://www.nationalcenter.org/NPA575.html .