Divestment from Fossil Fuels: Coming to a City Near You?
The fossil fuel divestment movement is rallying across six continents and 48 countries for Global Divestment Day to demand action on climate solutions. So far, an estimated 200 institutions worldwide, with combined investment assets of more than $50 billion, have committed to divest, including $4.1 billion from philanthropies, $2.7 billion from individuals, and the rest from universities, retirement and pension funds, charitable foundations, and religious endowments. Particularly notable is that the Rockefeller Brothers Fund – the legacy of a business empire founded on oil – shed all fossil fuel holdings last September.
The case for divestment goes like this: Ethically, our investments shouldn’t contribute to dangerous climate change. Financially, fossil fuel stocks are over-valued as most of their reserves cannot be burned. By divesting from fossil fuels and investing in clean energy instead, we can enjoy strong, safe returns while helping to grow a low carbon economy. Both the president of the World Bank and the governor of the Bank of England have warned of the risk posed to fossil fuel assets by climate change action. And a number of recent studies (from MSCI, Advisor Partners, Impax, Aperio,S&P Capital IQ and BNEF) indicate that divestment would have a positive impact on returns, while reducing investment risk.
One crucial point of divest-invest pressure is aimed at massive state retirement plans and pension funds, like California’s teachers’ pension fund (CalSTRS) and public pension fund (CalPERS). The largest in the U.S., CalSTRS has $190 billion in assets and 870,000 members, while CalPERS has $300 billion in assets, representing 3,064 public school, local agency, and state employers, and a membership of 1.6 million in its retirement system and 1.3 million in its health plans. Although not divested yet, the funds have committed to work with the state legislature, and CalPERS pledged to map the carbon footprint of its investment portfolio and develop an engagement strategy for carbon footprint reduction targets.
As the divestment movement continues to build momentum, mayors and local politicians have a unique opportunity to cross-pollinate and learn from other campaigns about how to actively engage with their constituents in a way that best reflects their priorities. And as more and more cities and states ramp up their efforts to fight climate change, divestment from fossil fuels provides a concrete policy for investing responsibly on behalf of the public good, and for future generations.
California calls on pension funds to divest from coal in climate change push
By Suzanne Goldenberg | The Guardian | February 11, 2015
America’s biggest state pension funds came under rising pressure on Tuesday to dump coal companies from their combined $500bn portfolio, in a major escalation of the fossil fuel divestment campaign.
The California senate leader, Kevin de Leon, said he was introducing a bill on Tuesday calling on the two state funds – CalPERS, the public employees’ pension fund, and CalSTRS, the teachers’ pension funds, drop all coal holdings.
The bill is part of a larger package of climate measures – endorsed by Governor Jerry Brown – aimed at gearing up California’s efforts to fight climate change.
The former US vice-president and climate champion Al Gore spoke to the CalSTRS board in Sacramento last Friday. Gore has long argued that fossil fuels are a risky proposition as a long-term investment.