The Democratic-led Legislature passed a bill two years ago to set a 2026 deadline for the state to dump investments in fossil fuels. A Republican-led effort targets divestment in Amazon after Whole Foods, its grocery chain, said it would stop buying Maine lobster.
While these come from different ends of the political spectrum, there are parallels here. There is also one big catch that could delay or doom legislative efforts in these areas.
The ultimate responsibility: Maine’s state pension system said in a January report that it will only reduce fossil fuel investments by about one-third by that deadline.
It is because of a provision in the Maine Constitution to act solely in the “best financial interests” of those invested in the system, meaning investment cannot be dumped quickly and can only be sold when it is financially rational to do so. That trumps any law made on the topic.
The context: Maine was the first state to force fossil fuel divestiture through legislation. Many other states have seen bills to do so, and there has been a backlash in conservative states that have looked to punish companies trying to get out of fossil fuel investments.
But these holdings are baked into the massive pools that make up pension systems. For example, Maine found in late 2022 that fossil fuels made up nearly 8 percent of the pension system, and such investments are both unintentional and “widespread” within a majority of asset classes.
“Achieving and maintaining a fossil fuel-free portfolio by 2026 would require both disposing of significant existing investments as well as making fundamental changes to [the public employees retirement system’s] investment approach,” the January report read.
What’s next: This teaches us a lot about the lobster approach, contained in a bill led by Sen. Eric Brakey, R-Auburn. It is far from as sweeping as the fossil fuel measure, with the retirement system estimating $70 million of exposure due solely to investments in Amazon, Maine Public reported earlier this year.
“By continuing on the current track, the State of Maine is also, in a sense, boycotting this critically important industry,” Brakey said in written testimony earlier this year. “It’s time to change the course.”
Divestment has proven to be politically popular, and it could again when it comes to Maine’s legacy fishery. But divestment does not have to mean divestment, even when lawmakers say so. Whether it is oil or Amazon, getting rid of these holdings is going to take years if it ever happens at all.