The Minnesota Investment Commission is scheduled to adopt a climate change roadmap at its meeting Tuesday.
“We will invest more than $1 billion in energy transition solutions over the next five years, expand our proxy voting power and strengthen our direct engagement efforts with companies,” SBI Executive Director Jill Schultz said in a statement, “and we believe it is these three activities that fit squarely with our mission and fiduciary duties.”
The board manages $142 billion in state funds, including more than $90 billion in public employee pension plans. It has regularly faced pressure from society to manage these funds in a way that promotes social movements. This includes recent demands for capital divestment from Israel, which protesters are expected to repeat at today’s meeting.
The Climate Roadmap Plan is the result of several years of research and analysis of the potential impacts of climate change. Schultz said the board considered several options for aligning investments with the state’s climate change priorities and ultimately rejected a net-zero approach that would divest state funds from fossil fuel companies.
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Schultz said that by investing in fossil fuel companies, states can influence their behavior. One example of investor activism, she said, is pushing oil companies to reduce natural gas flaring from oil wells.
The commission will be chaired by Gov. Tim Walz and its members will include the state auditor, secretary of state, and attorney general.
Walz said balanced investments are key to ensuring public servants’ retirement benefits are protected, which means preserving investments in traditional energy companies while expanding investments in clean energy.
“If you have a technology that’s proven to be effective, you should be able to invest in it. And I think you’re doing that judiciously,” Walz said. “Not all eggs are in her one basket, but it’s clear we’re moving in that direction.”
Schultz said the board will invest approximately $200 million annually in the energy transition industry over the next five years.
“For the world to get to where it needs to be to meet its climate goals, significant investments will need to be made in many things, most notably in the power sector,” she said. “You’ll probably find 70% of the investment you need there.”
Another area of investment could be the so-called “brown to green” industries. These industries contribute to climate-warming gas emissions, but they can adapt their operations to reduce their emissions.
Schultz said that while the climate change roadmap is a five-year plan, the board reevaluates the rapidly changing energy industry annually and adjusts the plan as necessary.
