Last week, the Maine Legislature passed a bill that will prohibit the state’s pension and annuity funds from making new investments in companies in the oil, gas and coal industries, and will require the funds to divest their existing holdings in fossil fuel companies over a five-year period. Gov. Janet Mills has not yet stated her position on the bill, but she has made addressing climate change a top priority of her administration.

If Mills signs the bill, Maine would be the first state to establish a policy of fossil fuel divestment through legislative action, although a few other states have done so administratively. For example, the Minnesota State Board of Investments has decided to divest its pension fund from companies that make more than 25 percent of their revenue from coal mining.

In New York State, Comptroller Thomas DiNapoli, an elected official whose office manages a retirement fund with $225 billion in assets, has announced a phased divestment of state funds from fossil fuel companies. By the end of 2024, New York will divest from firms in the coal and tar sands industries. Over the next 10 to 20 years, New York will divest from positions it holds in all aspects of the oil and gas industries: exploration, refining, marketing, transportation and pipelines. New York will not make new investments in fossil fuel industries, and will have fully decarbonized its portfolio by 2040.

Legislatures in other states, including California, Colorado, Massachusetts and New Jersey, are also considering divestment measures along the lines of that recently passed in Maine.

Similar legislation has been introduced in Vermont in recent years, but has not advanced to date, in part because of the strong opposition to divestment expressed by State Treasurer Beth Pearce. Just last week, Pearce reiterated her position that divestment decisions by public pension funds, foundations and institutional endowments have not been shown to influence the practices of corporate boards and management. She also believes that divesting from fossil fuels can cost pension funds money, thus leading to lower returns for the retirees who are the beneficiaries of those funds.

Pearce said she believes a more effective strategy is for pension funds to vote their shares in support of dissident investors who are attempting to elect new board members through proxy fights. She noted that the Vermont funds recently supported the successful efforts of an investment fund known as Engine No. 1 to oust three members of the ExxonMobil board and replace them with nominees committed to forcing the company to make a transition to renewable energy.

Pearce’s viewpoint, while shared by many public pension managers nationwide, seems to be in the minority among those responsible for large institutional investments in Vermont. In 2019, Middlebury College trustees voted in favor of phased divestment of fossil fuel assets from the college’s endowment. University of Vermont trustees voted for a similar policy last year. Green Mountain Power, which wants to eliminate all fossil-fuel generated electricity from its power portfolio, has also decided to divest its employee pension fund from fossil fuel assets.

Pearce has seen little opposition in five election cycles since being appointed Treasurer in January 2011. Could a credible progressive challenger to her emerge in the 2022 Democratic Primary? Environmental advocates may view such a challenge as a way of generating public support for fossil fuel divestment along the lines being pursued in other states. State employees’ and teachers’ unions might also support a challenger to Pearce to show their opposition to proposals the treasurer offered earlier this year that would have reduced benefits and increased employee contributions in Vermont’s public employee pension plans.

Environmental advocates and public employees are key parts of the Democratic base in Vermont. While defeating an incumbent in a primary is a very tall order, Pearce may need to work harder for re-election in 2022 than she has in recent years.

Eric L. Davis is professor emeritus of political science at Middlebury College.