On Wednesday, May 25, the Oakland Police and Fire Retirement System (PFRS) voted to divest their pension funds from investments in coal. Next month, PFRS will consider whether to divest from oil and gas as well.
During the morning’s Investment Committee meeting, members of Fossil Free California commented on the damaging effects of coal, after which the committee discussed the matter briefly. David Sancewich of the Pension Consulting Alliance, the fund’s investment consultant, then answered their questions about the specifics of divesting from coal stocks, and the committee voted to recommend coal divestment to the full board. In the afternoon, the board took even less time to vote in favor of that recommendation in a 4-1 vote.
Julie Walsh, one of those making pubic comment, gave expression to our response to the PFRS coal divestment vote: “Limited exultation!” Of course it’’s good news to get more funds to divest from coal. But with coal already losing market value, it is becoming a less and less attractive investment. And we know that coal divestment alone will not get us to the reductions in CO2 that we must have.
Divestment from other fossil fuels (gas and oil) was a very brief agenda item for this meeting. PCA’s informational report on replacing fossil fuel investments with alternative investments was approved without discussion. It was basically the same report that had been given in the previous two meetings, but a more detailed report, relevant to the PFRS holdings, is promised for June. That’s the meeting where the important discussion of oil and gas divestment will take place.
Public comment at both morning and afternoon sessions helped get that important discussion started. Julie Walsh, Professor of Public Health at UC Berkeley, gave a great overview of the health effects of climate change that are occurring right now because of global warming. She included such examples as the increase in cases of the Zika virus, now making its way to Puerto Rico and beyond. In the afternoon, PFRS board member Steven Wilkinson asked her to explain how Zika was related to climate change. She gave a compelling explanation, showing how the severe heat and drought in Rio de Janeiro led people to conserve water in pots around their houses — just the place for these mosquitos to breed. And the extra heat produces mosquitos that bite more.
Threat to Oakland
Retired biologist Ruby MacDonald spoke to the board of her son, daughter-in-law, and 4-year-old grandson, who live in Oakland:
Besides fossil fuels being a threat to every Oakland resident’s health, fossil fuels are becoming a shaky investment…. If their yields fall below 6.75 percent, Oakland taxpayers like you and my son and daughter-in-law will have to help bail out your pension fund…. Oakland could be forced to cut back on police and firefighter staff.
Retired police officers and firefighters can continue to guard the safety of Oakland residents as they did during their working careers by investing in companies giving retirees good financial return without jeopardizing the health of Oakland residents they always served.
I spoke to the Investment Committee as well, pointing out the stark choice investors have to make, given the Paris agreement’s plan to avoid climate chaos by keeping global temperatures from rising more than 2 degrees C.
Do we look to the past and carry on with business as usual? If we do, the World Bank warns we’re on track for an “unlivable world” that is 4°Celsius warmer than today’s. A world marked by extremes — sea levels flooding coastal cities, heat waves, loss of food and water.. Or do we look forward, toward a future where climate chaos is prevented, and where fossil fuels are replaced by renewable energy?
The Mercer Report, “Investing in a Time of Climate Change,” was recently commissioned by the California State Teachers’ Retirement System — CalSTRS. [The report shows that] … the present-day CalSTRS portfolio would be most negatively impacted ,,, if the world is successful in holding the temperature rise to 2 degrees…. In the other scenarios, their present portfolio would be “well insulated from loss” — because the world would still be burning fossil fuels. But the study points to such terrible physical catastrophes in a 4-degree climate—even a 3-degree one—that the whole notion of any kind of safe investment becomes absurd.
At June’s meeting in Oakland, investment consultant PCA will no doubt continue to present the preferred choice of financial consultants across the country: shareholder engagement, rather than divestment. They will, of course, argue that engagement is a viable choice. We hope to have many people come to the June 29th meeting, where we can show that engagement is a false choice, since no oil and gas company is going to change their core business practices.