TRENTON, NJ—The goal is to make more money when investing money. Oil and gasoline company stocks have historically performed well for investors. Now, New Jersey wants to cease all investments in oil companies in a move that could weaken the state’s long term financial strategy.
The New Jersey Senate Environment and Energy Committee has taken a significant step towards environmental sustainability by advancing a bill that mandates the divestment of state retirement funds from major fossil fuel companies. Senator Bob Smith, the bill’s sponsor, emphasizes this action as a stride towards aligning New Jersey’s investments with its climate objectives.
Under bill S-198, the state must withdraw its investments from the top 200 carbon-heavy companies within a specified timeframe. Investments in coal companies must be divested within two years, while divestment from all other fossil fuel entities is to be completed within one year.
The move will pressure these companies into adopting renewable energy models, reflecting New Jersey’s commitment to combating climate change.
A study by BlackRock in 2021, analyzing the financial impact of such divestments, supports the initiative, indicating minimal negative financial consequences and highlighting the underperformance of fossil fuel stocks amidst increasing regulatory and market challenges.
The committee passed the legislation with a narrow 3-2 vote, signaling a contentious but critical shift in investment strategy to support clean energy and environmental goals.