Date:         December 11, 2018

To:            The Alaska Permanent Fund Corporation Board of Trustees

From:        Doug Woodby, co-chair of 350Juneau

Subject:     Testimony

Mr. Chairman and members of the Board, my name is Doug Woodby. I’m a retired fisheries scientist formerly with the Alaska Department of Fish and Game.

I’m here in my capacity as co-chair of 350Juneau Climate Action for Alaska. 350Juneau is a local affiliate of 350.org, an international climate action organization. The number 350 refers to the concentration of carbon dioxide in the atmosphere in parts per million that scientists tell us is an upper limit, above which life as we know it is not sustainable. The atmospheric level of CO2 is now over that limit at about 409 ppm and rising.

On behalf of 350Juneau, I would like to thank the Board for working to realize the highest investment gains for the benefit of all Alaskan residents.

Members of 350Juneau have come before you this past February and May with concerns and requests. In our several testimonies:

• we asked if the corporation was keeping itself apprised of the increasing trends in fossil fuel divestment occurring on a global scale,
• we expressed concern with what appeared to be excessive concentration of fossil fuel investments,
• we asked you to assess the financial performance of the Funds energy sector investments, and
• we asked you to perform a risk assessment focused on fossil fuel holdings, and to make that assessment available to shareholders in a transparent manner.

We also submitted a petition with over 400 signatures of Fund shareholders asking you to take appropriate action by divesting the Fund of fossil fuel holdings.

We received a response on the 25^th of May from Mr. Moran and Ms. Rodell, and we truly appreciate the attention that you gave to our concerns. The response listed fossil fuel exposure as an annual percentage of total assets from 2011 to 2017. We note, however, that the holdings only represented public stocks and corporate bonds for companies whose primary business was extraction and production of hydrocarbons and that is not likely the full representation of fossil fuel related holdings across all assets in the Fund. Even though not fully representative, those data showed a substantial downward trend in exposure, apparently due to loss in value as well as divestment.

The closing paragraph of the letter affirmed the Board’s commitment to maintain the fiduciary based investment process for its decisions and the Board’s intention to not abruptly divest from fossil fuel companies.

While that appears to be a prudent strategy, we suggest that prior methods of assessing risk may not be relevant today. Today we face a global climate crisis, effectively a global pandemic of economic risk. The vaccines of the past are not likely to protect us as the global crisis accelerates and evolves.

The protection that we are requesting is a full climate risk assessment as described in the letter we’re submitting today.

Thank you.

Date:         December 11, 2018

To:            The Alaska Permanent Fund Corporation Board of Trustees

From:        Elaine Schroeder, co-chair of 350Juneau

Subject:     Testimony

My name is Elaine Schroeder and I am here representing 350 Juneau—Climate Action for Alaska. I would like to thank the Board of Trustees for your working to realize the highest investment gains for the benefit of all Alaskan residents.

I and hundreds of Alaskans around the state again request that you provide to the public an accounting of how our fossil fuel investments have performed as well as future projections and risks to these holdings. We urge you to divest from all fossil fuels. I am submitting the divestment petition now signed by over 400 Alaskans. The names of the petitioners are on the Alaska Climate Action Network.

It’s been less than 5 years since the idea of fossil fuel divestment first took hold. This movement has been sweeping around the globe, doubling in size since 2015. Although the ethical impetus for fossil fuel divestment is to forestall the worst effects of climate disruption, many of institutions are divesting for purely economic reasons, in other words to meet their fiduciary responsibilities.

Over 830 institutional investors worldwide, with an estimated value of 6 trillion dollars, have made commitments to divest their funds from fossil fuels. Just the other day Ireland announced its plan to divest from all fossil fuels. Major cities around the world have divested their pension funds and other equities from fossil fuels including Seattle, New York, Washington, DC, San Francisco as well as Copenhagen, Berlin, Sydney and Paris.

Numerous foundations including the Rockefeller Brothers Fund (whose wealth was built on oil) have divested. The World Council of Churches and the Lutheran Worldwide Fund and numerous universities such as the Universities of Washington, Oregon, Massachusetts, Maine, Hawaii, California, plus Georgetown, Stanford and Syracuse universities have either fully or partially divested from fossil fuels.

The World Bank said it would no longer be lending money for oil and gas exploration.

What is perhaps most relevant to the APFC is Norway’s decision to divest their Sovereign Wealth Fund from fossil fuel investments on financial grounds. As a NY Times article stated about Norway’s divestment plans, this is “a sign that even Europe’s dominant producer does not have full confidence in oil’s future.”

Thank you.

Date:         December 11, 2018

To:            The Alaska Permanent Fund Corporation Board of Trustees

From:        Michael Tobin, 350Juneau Member

Subject:     Testimony

My name is Michael Tobin. I live in Juneau and am a shareholder of the Alaska Permanent Fund. I am testifying as a board member of 350 Juneau-Climate Action for Alaska. We are asking that the Permanent Fund Board perform a climate risk assessment on all the funds holdings.

You have heard my colleagues summarize our previous testimony and this years’ climate catastrophes. I want to stress that we are all in this together and that we, as shareholders, have a vested interest in you, the board, doing the right thing.

I spent my career as an emergency physician. Imagine yourself as an emergency doctor. There has been a disaster out there and you are about to be drawn into it. Would you like to have the best information about how many patients you are about to receive, when they might arrive and what injuries have been identified in the field? You might need to call in extra nurses and surgeons and open extra operating rooms. Or perhaps you would rather wing it and just deal with the situation when the patients arrive? I think we can agree that doing the right thing would be gathering information in a timely way before needing to act.

Some large institutional investors, many of whom are your peers, recognize we have a climate emergency, and have been acting in the face of climate change by performing climate risk assessments.

Climate related financial risk refers to a set of conditions caused by both the physical impacts of climate change and the regulatory, technological, and legal responses to the global effort to transition to a low carbon economy. It will likely impact assets in general, either depress or destroy the value of fossil fuel assets, and lead to declines in investment returns. Climate related financial risk assessment is a tool you should use to protect us. If you have not done such an assessment we ask that you do so.

The International Forum of Sovereign Wealth Funds, of which the Alaska Permanent Fund is a member, held an online seminar in March, 2017, “How Can Sovereign Wealth Funds Respond To Climate Change?” That document and the accompanying Mercer Report have numerous recommendations about methods used to perform a climate risk assessment, establish governance criteria, and improve performance. They emphasize establishing, and disclosing publicly, criteria and methods regarding how the organization identifies and manages climate risk. Our accompanying letter details responses by Vanguard, BlackRock, the Bank of England and others in this direction.

The effects of climate change are fast upon us. We request of you fiduciary responsibility in changing times. Incorporate periodic, climate risk assessment across all asset classes, including corporate bonds, not just public equities, into the governance of the Alaska Permanent Fund and make the results public.

Thank you.

Date:      May 18, 2020

To:          Chairman Richards and Trustees of the Alaska Permanent Fund Corporation,

From:    Doug Woodby

First, I thank you and the staff of the Permanent Fund Corporation for your efforts to protect and grow the funds for all the benefit of Alaskans. It is a lot of responsibility and I appreciate the care and concern you bring to your duties every day. 

I’m here today because I’m concerned with the decade long underperformance of the energy sector (graph below) and whether the inclusion of this sector in the pension portfolios has been a drag on the value of the funds.

It is apparent that the recent drastic reduction in the value of oil and gas assets is not simply an ephemeral anomaly, but the current expression of a four decade long downward trend of the once dominant energy sector, as shown in the following graph:

The long-term trend relative to the overall market suggests that the attractiveness of dividends from the traditional energy sector is no longer a fair rationale when compared to the loss in value and poor year to year performance in the graphs above. 

Widespread Divestment Threatens Fossil Fuel Holdings

The global commitment to divestment of fossil fuel assets has now topped $14 trillion by 1195 institutions, including pension funds, universities, churches, and governments.  Significant among these is Norway’s $1.1 trillion sovereign fund, which will divest companies dedicated to oil and gas exploration and production in a bid to shield itself from a long-term fall in oil prices.  

Other notable institutions committed to divestment include the government of Ireland, New Zealand’s public superannuation funds, pension funds of London and New York City, and the University of California system’s pension and endowment funds. The managers of the UC system funds cited the financial risk of continued investment in fossil fuels as the rationale for their action.

In prior testimony, I have encouraged the Corporation to conduct an analysis of the risk that climate change poses to the long-term value of the fund. My understanding is that the Corporation will have an intern, perhaps later this year, to look into this issue. This was good news and I thank you for moving forward on this. 

Thank you for considering my concerns.

Respectfully,

Doug Woodby

Co-chair of 350Juneau