To Mitigate Wildfires, Divest from Fossil Fuels

Sun-cloaked orange skies paint a worrying picture of a present climate, changed, and a worsening climate-changed future, if humans continue to burn fossil fuels at the present rate – the United States, representing 4% of the world’s human population, was responsible for 15% of the world’s carbon emissions in 2018.

The same year (2018), California set a record for emergency fire suppression expenditures of $773 million, compared to $12 million in 1980; and 2020 will be more expensive: from January 1 to October 6, 4 million acres of land has burned in California, 53% of the acreage burned nationally year to date. The United States Fire Service acknowledges fire conditions are worsening, estimating fire suppression costs to require two-thirds of the agency’s overall budget, four years faster than expected.

The call to action for a healthy environment is succinct: stop burning fossil fuels. Eighty percent of the United States’ energy needs in 2019 were met by petroleum, natural gas, and coal, yet burning these fossil fuels is the single largest inducer of climate change. In today’s climate crisis, continuing to explore, produce, and burn fossil fuels freely, worsens the crisis conditions.

Beyond correcting the market failure of environmental externalities, Americans need to use less energy (or use more efficiently) and utilize a higher percentage of renewables for energy needs. For example, in Executive Order N-19-19 Governor Newsom set a vision for reducing statewide greenhouse gas emissions, like satisfying 100% of California electricity needs with clean energy by 2045.

Transforming the country’s electric grid in less than 25 years to accommodate renewable sources requires a reengineering of the energy grid and electrifying entire industries. This unprecedented task demands significant capital investment, which is why the financial sector holds a primary and unique influence in providing the capital necessary to transition the country’s energy infrastructure.

To highlight the important role of financiers in the transition, Governor Newsom released the “California Climate Investment Framework” to call on the state’s largest pension funds, CalPERS, CalSTRS, and the University of California, to lead the financing of a low-carbon economy. In the report, a central difference between the University of California (UC) system and the Cal system (PERS & STRS), is that as of May 2020, UC has fully divested from fossil fuels, while calSTRS and CalPERS continue to invest in oil, gas, and coal producers.

At the 2020 Bloomberg Green conference, Chris Ailman, Chief Investment Officer of CalSTRS, defended the Fund’s position of investing in one hundred of the world’s most polluting companies, packaged as a “Low-Carbon Economy” strategy, because shareholder voting rights grant CalSTRS an insider position to help influence companies to act on climate change through “engagement.”

A key problem with the corporate engagement strategy is not that it is packaged as a climate-related investment decision, though fossil-fuel backed, it is that investor engagement passes the responsibility of climate action onto corporations and worse, onto fossil fuel companies, the perpetrators of decades-long misinformation campaigns that continue to conceal real, everyday dangers of a warming planet (intensifying wildfires, hurricanes, and floods) caused by burning fossil fuels.

That CalSTRS and CalPERS expect the fossil fuel industry to act on climate and lead on renewables, is like giving the keys of retirees’ futures to drivers who have proven reckless endangerment. How could the largest state pension funds and fellow corporate engagers believe the reckless, polluting industries that orchestrated the climate crisis will lead the public out of danger?

Where CalPERS and CalSTRS invest its combined $670 billion signals to the market and the fund’s nearly 2 million beneficiaries what is a smart, long-term investment. Currently, the California public pension funds believe fossil fuel companies are the future, though a growing number of its members (future and present retirees) disagree, viewing investment in fossil fuel companies as a risky experiment to rescue a dying industry.

To respond appropriately to the urgency of the crisis, the financial sector can directly act on climate, as the University of California system did, by utilizing a strategy that does not pass responsibility onto corporations and does not make climate crisis conditions worse: divest from fossil fuels.

Reposted from Common Dreams