One Hospital’s Fossil Fuel Divestment Campaign Shows Why Biden Should Reverse Trump-Era Pro-Oil Pension Rule

Under Trump, pension managers couldn’t consider climate change in their investment decisions. A new executive order by Biden could change that.
Opinion
One Hospital’s Fossil Fuel Divestment Campaign Shows Why Biden Should Reverse Trump-Era Pro-Oil Pension Rule
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'Divest Now!' projection in New York City. Credit: 350.org. CC BY-NC-SA 2.0

By Don Lieber

I am a surgical technologist (the “pass the scalpel guy” in the operating room) at one of the country’s most prestigious hospitals: Memorial Sloan Kettering Cancer Center in New York City.

In September 2019, I organized a fossil fuel pension plan divestment campaign at the hospital. More than 20 doctors, nurses, and other staff signed on to demand our pensions be divested from fossil fuels.  

I presumed that an influential medical institution such as ours would have no choice but to recognize the well-documented threats to human health posed by the climate crisis and fossil fuels. This includes both from direct exposure to the hundreds of toxic chemicals intrinsic to the life-cycle of fossil fuel production, like benzene, formaldehyde, and sulfur dioxide, and from the impacts of extreme weather episodes now occurring with greater frequency and intensity such as heatwaves, catastrophic storms, and flash floods.

Exposure to wildfire smoke triggers asthma attacks and increases incidents of pulmonary embolism and stroke. Massive rain and flash flooding increases the spread of waterborne diseases such as salmonella and E. coli. And extreme heat kills people.  

Recognizing these threats, the world’s leading medical and science institutions including the American, British, and Canadian Medical Associations all call for strong climate action, including divestment from fossil fuels. The National Academy of Medicine says climate change “represents one of most significant threats to human health in the 21st Century.”   

The Lancet, perhaps the most revered medical journal in the world, goes one step further, saying “climate change is the greatest global health threat in the 21st Century.”   

I therefore presumed that our hospital would heed these calls and apply the same ethical parameters which it expects of our doctors to its investment practices: “First, do no harm.”   

I was wrong. Our hospital rejected our demands to divest, in multiple exchanges between us from December 2019 through August 2021.

In their rejections, however, they not once referenced the impacts on human health of climate change. Their multiple responses contained not a single word about health.

Instead, the reason cited by our hospital’s investment director was the legal restrictions placed on him by the Employee Retirement Investment Security Act of 1974 (ERISA). This is the set of federal regulations and oversight of private pension plans.

In November 2020, the Trump Administration amended ERISA, requiring pension fund managers to consider one thing, ‘pecuniary factors’ (financial) — exclusively — in their investment decisions.

This created a de-facto ban on managers looking at ESG considerations (Environment, Social and Governance), including climate change. The ERISA changes were seen as a deliberate defense of the oil and gas industry as the calls for fossil fuel divestment were growing.

This past May, however, President Biden issued an “Executive Order on Climate Related Financial Risk” which, among other provisions, directs the Secretary of Labor, Marty Walsh, to consider revising, suspending, or rescinding the Trump-era ERISA limitations on ESG. Rescinding the ESG restrictions would strip private pension managers of the ‘legal’ excuse to avoid divesting. Walsh’s recommendations are due to be released for public comment this month; final recommendations will be sent to President Biden by November in advance of the next United Nations Climate Change Summit in Glasgow.

It’s not yet clear if the Biden Administration will in fact rescind the ESG limitations in ERISA, but the language of Biden’s Executive Order — and a concurrent policy statement that the Administration “will not enforce” the Trump-era ESG restrictions — indicates a clear inclination to remove, in some form, the ESG restrictions put in place under Trump.    

Activists, meanwhile, are pressuring the administration to move forward on these changes. On August 10, 2021, a group of 100+ leading international, national, and local climate and environmental justice organizations with Stop the Money Pipeline coalition sent a letter to the Biden administration, detailing their specific expectations for the upcoming policy recommendations, including the ERISA review. Officials from the Treasury and Labor Department agreed to meet with coalition representatives prior to the draft recommendations to discuss these demands in greater detail.

The expectations include: a ban on all new fossil fuel projects; net-zero emission goals as a condition for companies’ inclusion in government programs; rejection of “carbon-capture” as a method to achieve net-zero emissions; direct lending programs with zero interest for green recovery programs; prioritizing investments in Black, Brown, and Indigenous communities who have suffered disproportionately; removing the Trump-era ESG restrictions, and more. 

Divestment campaigners around the country, like me, are waiting for the results of this review with bated breath.  If the Biden Administration rescinds the previous administration’s ESG restrictions on private pension plans, investment managers across the country — like the one where I work — will no longer be able to cite this pro-oil, restrictive federal rule in refusing to consider climate change and fossil fuel divestment in their investment decisions.

Don Lieber is a freelance writer whose work has been published by DeSmog, the United Nations, the International Campaign to Ban Landmines, and others. He’s also a freelance bassist and scrubs surgeries.

One Hospital’s Fossil Fuel Divestment Campaign Shows Why Biden Should Reverse Trump-Era Pro-Oil Pension Rule

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