City of Encinitas Tells CalPERS to Divest
On Wednesday, September 22, 2021, the Encinitas City Council unanimously passed Resolution 67-2021 (see pp. 15-16) urging CalPERS to divest from fossil fuels. Fossil Free California congratulates all the local groups and individuals who have been working on this initiative for more than two years.
The City of Encinitas (population 63,000) is a beach town about 25 miles north of San Diego, famous for surf spots, flower gardens, and a lagoon that attracts thousands of migratory birds. Encinitas has also been notably active on the need to address climate change, passing a far-reaching Climate Action Plan in 2018 and opening the discussion on fossil fuel divestment with an Environmental Commission recommendation in September, 2019. After being asked to rework the recommendation to better define “fossil fuel investment”, Commissioners Christian Adams and Inge Bisconer presented the Environmental Commission on April 8, 2021 with an updated Agenda Report that found that:
- Encinitas does not currently hold direct fossil fuels investments. However, the City does bank and invest in firms and funds that do through its participation in “pooled funds”.
- Many cities have communicated with CalPERS to urge them to divest their retirement funds from fossil fuels.
- Through commissioner-initiated research, and in collaboration with City staff, it has been concluded that there is no current consensus in the investment community on how to define an investment’s level of participation in a fossil fuel business.
The Environmental commission then approved the following recommendations with a 6-1 vote:
- Adopt a resolution advocating for divestment from fossil fuels; and
- Update the City of Encinitas Investment Policy.
At that time, the lone “No” vote was from Commission Chair Art Novy, who said “I do believe that to solve this problem, we need fossil fuel companies to convert to renewable fuel companies and this actually disincentives that.”
Vice-Chair Christian Adams, whose tag line on LInkedIn is “Making the world a better place before I leave it” has spearheaded the research and development of the resolution and investment policy revisions. As with many divestment campaigns, the successful completion of this initiative required patience and persistence. On September 22, the vote was unanimous.
Although the City of Encinitas currently has no direct investments in fossil fuel companies and explicitly bans making any future investments or ownership stakes in these entities, it has resolved to ask that its investments in pooled County and State funds divest as well. Specifically, the Encinitas City Council resolution requests that CalPERS and its other fund managers divest from current fossil fuel holdings over the next 5 years and ban future investments. Encinitas is targeting not only CalPERS, but also its investments in other pooled funds. Under the terms of this Resolution, the City Treasurer will:
- Send formal communications to pooled fund managers requesting that pooled funds, including the California Pooled Money Investment Accounts/Local Agency Investment Funds (PMIA/LAIF), California Public Employees’ Retirement System (CalPERS), the California Asset Management Program (CAMP), and the San Diego County Pool, divest current holdings from fossil fuel companies over the next 5 years and ban future investments in such companies.
- Petition various pooled-fund managers to define or develop a methodology to rate an investment according to an Environmental Social Governance (ESG) score.
- Annually report the City’s progress on divestment from fossil fuels in the pooled funds.
- Share a certified copy of the adopted Resolution with local and regional elected officials.
The Encinitas resolution means, at a minimum, that Encinitas will be pushing CalPERS to divest, every year. The citizens of Encinitas will be informed of CalPERS’ progress or lack thereof. And, Encinitas will be encouraging local and regional elected officials to join the divestment movement! Kudos to Encinitas for passing such a thoughtful resolution.