San Francisco has a lot of money tied up in fossil fuels

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Screen grab from "Exxon - Energy Everywhere" produced by Mike Damanskis.

The San Francisco Employees Retirement System has more than $113 million in holdings in Exxon Mobil. It’s a lucrative investment in a dirty business. On March 29, Exxon’s Pegasus Pipeline ruptured, spilling as much as 7,000 barrels of oil in a toxic slick that coated a residential Arkansas neighborhood and prompted the evacuation of 21 homes.

SFERS also has $60 million invested in Chevron, which has its own checkered history. Environmentalists have long shamed the oil giant for its “toxic legacy” in Ecuador, but closer to home it was recently fined nearly $1 million for workplace violations arising from last year’s Richmond Refinery blaze. That incident sent a column of toxic smoke skyward, and resulted in about 200 hospital visits for respiratory problems from the fumes.

Further down the list of SFERS’ public equities holdings in fossil fuels is $28 million in Royal Dutch Shell, a company whose name, in some circles, is synonymous with human rights abuses in Nigeria. (Shell was also tapped to administer San Francisco’s CleanPower SF program, but that’s another story.)

The retirement system also has about $18 million tied up in Occidental Petroleum, a major player in the fracking industry that was responsible for drilling 675 new oil wells in California in 2011 alone, according to industry data. The retirement system portfolio includes about $5.4 million in BP, the company responsible for the infamous Deepwater Horizon explosion and epic oil spill in the Gulf of Mexico three years ago.

And the city's retirement portfolio includes more than $1.2 million in Arch Coal, one of the largest coal suppliers in the U.S., which has faced millions in fines for Clean Water Act violations and was sued for firing a miner who complained about unsafe working conditions.

SFERS provided the Guardian with details of its energy company holdings in response to a public records request.

Earlier today, the Budget and Finance Subcommittee of the San Francisco Board of Supervisors took up a resolution, introduced by Sup. John Avalos, to urge SFERS to divest from fossil fuel companies.

The resolution is nonbinding; even if it unanimously passes at the full Board in a couple weeks, SFERS is under no legal obligation to tweak its investment portfolio. But support for such a strategy is gaining momentum as major environmental organizations seek to bring the issue of climate change to the forefront.

Avalos’ resolution was inspired in part by 350.org, an organization that has sowed the seeds for divestment campaigns at 260 colleges and universities nationwide. Celebrated 350.org founder and environmental writer Bill McKibben is betting that the kids are going to win. His campaign hinges on the idea that the planet can only sustain combustion of another 565 gigatons of carbon before things really go off the rails climate-wise; the industry has five times as much in reserve.

Despite San Francisco's green reputation, change is likely to happen slowly, if at all. According to numbers shared by Retirement Board executive director Jay Huish at the April 10 hearing, SFERS has a total of some $500 million tied up in companies that deal in dirty energy. That's substantial, and there could be more on the private asset side. “We gave them a list of 200 fossil fuel companies” targeted by environmentalists because they hold underground carbon reserves, noted Avalos aide Jeremy Pollock. “They had stock in 81.”

Avalos' divestment resolution cleared the way to proceed to the full board, but only after Sup. Mark Farrell requested a couple amendments.

Farrell asked to add language making it clear that the retirement board could receive a lower return on investment if went through with divestment, and inserted another clause to underscore the point that the Board resolution shouldn't infringe upon SFERS’ “fiduciary responsibility.”

The resolution is expected to go to the full Board on April 23.

Comments

fails to have enough funds for the retirees risks legal action. Exxon is something like 2% of the index and so, if all they did was own index funds, they would own that much Exxon.

That's why Calpers will ignore any symbolic SF motion, and they should, as they are professional investors and not political operatives.

Avalos demonstrated his almost complete ignorance of business and markets in the mayorial election, where he was roundly defeated for that reason alone. For him to now try and lecture fund managers on how to practice their craft is risible.

And I notice that even you cannot resist a wry self-parody when, in whining about Shell, you note SF's clean energy deal is a cute arrangement with Shell.

You and Avalos should stick to politics, and leave investment management to the big boys.

Posted by Guest on Apr. 10, 2013 @ 4:07 pm

as much as it adds to its out of touch meaningless resolution reputation.

Posted by Matlock on Apr. 10, 2013 @ 5:00 pm

SF should invest in green technology, like Calpers!

"California’s public employee pension system has lost millions of dollars on its green investments, which a top investment officer for the fund called “a noble way to lose money.”

Joseph Dear, CalPERS’ chief investment officer, made the comments at the Wall Street Journal’s ECO:nomics conference this week, where he said the pension fund has pulled back on its clean energy investments to avoid losing even more.

“We’re all familiar with the J-curve in private equity. Well, for CalPERS, clean-tech investing has got an L-curve for ‘lose,’ Dear told the conference, the Sacramento Bee reported. “Our experience is that this has been a noble way to lose money. And we’re not here to lose money. We have dialed back.”
CalPERS has $900 million invested in clean tech, which has seen an annualized return of negative 9.7 percent, the Washington Free Beacon reports."

If you want to pay decent pensions, invest in fossil fuels and ammo factories.

Posted by Demented, Yet Terribly, Terribly, Persistent on Apr. 10, 2013 @ 10:29 pm

well in any markets i.e. tobacco, alcohol, gambling, arms, big oil, big pharma etc. That is what we should investment our retirement dollars i.e. the exact opposite was what Avalos thinks.

Posted by Guest on Apr. 11, 2013 @ 7:03 am

Once you've disinvested in energy stocks, what about WalMart and other companies that eschew unions? Better disinvest in those too.

What about companies that won't give healthcare benefits to same-sex couples? Disinvest in those too?

Oh, and those banks that are foreclosing on homeowners? Disinvest in those, along with brokers, real estate firms, ratings agencies and the whole shebang.

Before you know it, all you can invest in is muni bonds. Oh wait, maybe that's Avalos's read aim here, so that the city can borrow enough to ensure that at least he gets his inflated pension.

Posted by anon on Apr. 11, 2013 @ 9:38 am

Oh, anon, you're a big fan of slippery-slope fearmongering. Let's turn it around: Is there any corporate policy egregious enough to make divestiture a good thing, in your opinion?

Posted by Hortencia on Apr. 11, 2013 @ 9:53 am

you never know where to stop.

Chances are that a rabid socialist like Avalos doesn't really like any S&P 500 company.

So what do you end up investing in, when every security represents a form of capitalism that you are ideologically opposed to?

Posted by Guest on Apr. 12, 2013 @ 8:03 pm

Israel, Turkey, Sri Lanka, Tibet, China, Angola, Congo, Rwanda, United States, France, Syria, Columbia, Russia, Armenia, Azerbaijan, oil and gas extraction, tobacco, fatty foods, minerals extraction, non support of GLBT rights, non-sustainable fishing practices, non-sustainable agricultural practices, human trafficking etc...

The list never ends. And in the end no corporation with operations anywhere would meet the criteria.

Posted by Lucretia Snapples on Apr. 12, 2013 @ 8:16 pm

Environmental concerns must be preponderant in these types of contracts, but also, given that Wall Street investments (actually Ponzis) dividend distributions are greatly decreased, while Wall Street profits soar—and the possibility that fossil fuel supplies have already “peaked” (fewer mega-deposits), makes it more necessary to avoid these contracts. This would be a frugal choice as Wall Street profits will continue to disproportionately soar while the source of the mineral deposit (supply) for extraction (performance-input of human capital as part of demand cost) fails.

Posted by Awayneramsey on Apr. 12, 2013 @ 11:30 am

it does not follow that any particular share is bad value. If everyone knows what you say, then it is priced in already.

Posted by Guest on Apr. 15, 2013 @ 10:41 am

Why would anyone price in costs if they are due when IBGYBG?

Posted by marcos on Apr. 15, 2013 @ 11:50 am

And that is why you can rarely beat the market, because it knows far more than you do and, moreover, doesn't get all emotional like you.

Posted by Guest on Apr. 15, 2013 @ 12:11 pm

Never misunderestimate the market's ability to externalize inconvenient truths. This is why market theory is faulty, it could not even predict the 2008 asset bubble crash.

Posted by marcos on Apr. 15, 2013 @ 12:39 pm

It's true that many investors did not predict the 2008 bear market but you could equally argue it did not predict all the bull markets either.

If that scares you then don't invest in the markets. But some of us can profit from being right more than most, and unless you wish to legislate away my right to do that, I'm not sure what you're suggesting here.

Posted by Guest on Apr. 15, 2013 @ 12:52 pm

@Guest: On the contrary, markets reflect the moral hazard incorporated into their quasi-regulated structures and are manipulated by humans. Markets don't process anything. They are inanimate things. Humans do the processing.

Posted by Awayneramsey on Apr. 17, 2013 @ 8:58 am

Ultimately all those pro and against, bull and bear opinions distill into a net excess of supply and demand that drive prices up and down

As we have seen many times, governments cannot ultimately control markets and so, for all it's flaws, the market is the ebst arbiter of what is going on.

Posted by anon on Apr. 17, 2013 @ 9:17 am

Glass Steagall kept the economy from exploding for 70 years until the market fetishists insisted that the market would keep the economy on an even keel. Classical and neoclassical market economics could not even predict and explain an interest rate asset bubble that regulations repealed in the 1990s would have prevented.

Posted by marcos on Apr. 17, 2013 @ 9:25 am

when Glass-Steagall was still in place.

Anyway, there is nothing wrong with amrkets going up and down. It's what they do. Why do markets scare you?

Posted by anon on Apr. 17, 2013 @ 9:54 am

It is not about investing in the markets it is about hitching peoples' lives to erratic and irrational market forces that get it wrong when it counts for those who do not directly participate in the markets.

Even libertarians would stipulate to a massive class action tort where Wall Street took risks that damaged others who did nothing wrong. All of those casino investment banks should have been wiped out and their assets distributed to those who were harmed by their irresponsible conduct according to their actual losses.

Posted by marcos on Apr. 17, 2013 @ 9:16 am

But even so, nations with the biggest, freest capital markets are the most prosperous ones.

Ultimately Wall street just gives investors what they want and, if the mugs want leveraged mortgage security derivatives, then that's what Wall St. gives them, just like when Ben and Jerry's produces more ice cream of a fashionable flavor.

Markets separate the men from the boys, The laternative treats everyone as a child.

Posted by anon on Apr. 17, 2013 @ 9:24 am

The nations with the most regulated economies and highest wages are the most profitable. You support low regulation and wages. You hate America and you hate Americans.

Posted by marcos on Apr. 17, 2013 @ 9:31 am

While the kind of closed, regulated societies that you approve of, e.g. north Korea and Iran, are dismal backwaters?

Free market capitalism has created the most prosperous nations on the planet. Socialism has created mass subjugation and pverty.

Posted by anon on Apr. 17, 2013 @ 9:53 am

The US is in terminal decline, the paranoia of an empire about to expire is what we're seeing now. The US economy has not produced much of value in recent decades, only selling financial mumbo jumbo that nobody else trusts anymore. This game is over, dude, the mammoth has taken the spear to the side and is lumbering across the savannah slower and slower, fixing to collapse into a steaming bloody heap.

Posted by marcos on Apr. 17, 2013 @ 9:59 am

Take a trip to Marin or Santa Clara and you will see success and prosperity everywhere.

It's true that the US is not growing as fast as China. That is to be expected since they have further to go. But use of the word "decline" is highly misleading. We are merely growing at, say, 3% while China grows at 2 to 3 times that rate.

You confuse relative measures with absolute measures. It doesn't ultimately matter if other nations do better, as long as we are doing fine.

Posted by anon on Apr. 17, 2013 @ 10:14 am

Wages have fallen in real terms, homelessness and poverty have increased in absolute terms, the cost of living has risen, living standards have fallen and poverty is skyrocketing.

The US is reduced to using military force to sustain the flow of cheap raw materials stateside while those living over those raw materials are more inclined to cut business deals with BRIC which is likewise growing wary of US military and economic shenanigans.

The Dollar's days as global reserve currency are numbered, and with that, so is the ability of the US to dominate the global economy. The US has pissed off enough of the global community that it can expect no less.

Posted by marcos on Apr. 17, 2013 @ 10:29 am

but even then only in relative terms. They have still grown in dollar terms.

But if you're a college educated 25 year old now, opportunities to become a millionaire have never been better.

Posted by Guest on Apr. 17, 2013 @ 10:52 am

@Guest: I appreciated the in-puts to this essay. However, many “collectives of countries” conspired to “liberalize markets,” not only the US and Wall Street, but EU and BRIC also (after “shocks”). With this socioeconomic experiment in search of the infamous “Invisible Hand” we see shocks of violence, grand larceny, poverty, political graft and homelessness etc.—but no invisible hand because self-interested—sans perfect competition, governments and people colluded in this treasure hunt for indomitable growth quotas. Oh, there never was an invisible hand since the Protean neoclassical dogma was not the instrument “in play.” Neoliberalism was in play and continues today.

If you are an unskilled worker making $11,490 annually, then adding $1-more to this total does not lift one out of poverty and neither is a 1:17-million chance of becoming a millionnaire at age 25-years, “better.” It is unlikely.

Posted by Awayneramsey on Apr. 18, 2013 @ 12:41 pm

Fuckface.

Posted by marcos on Apr. 17, 2013 @ 10:30 am

Steve, the truth of it all is the majority of the shareholders are Mr. and Mrs. Joe average, their only interest is will their little investment make a good profit.
They are the ones that need to be educated.

Posted by David Sloane on Apr. 13, 2013 @ 7:03 pm
Posted by Awayneramsey on Apr. 15, 2013 @ 10:00 am

But the 1% invest in offshore hedge funds and the kile, not mom'n'pop shares like Exxon. Most Exxon shares are held by institutions, i.e. the IRA's and 401K's and retirement plans of American workers.

Posted by Guest on Apr. 15, 2013 @ 10:42 am