The San Francisco Employees’ Retirement System and University of California Board of Regents -- two local entities targeted by campaigns urging them to divest of their fossil fuel investments -- remain resistant to the change despite official statements of support.
In April of last year, the San Francisco Board of Supervisors voted to push SFERS to divest from fossil fuels. Now, more than a year later, sponsoring Sup. John Avalos questioned Mayor Ed Lee during the July 15 Board of Supervisors meeting about what needs to happen to move toward divestment. Groups such as Fossil Free SF and 350 SF are asking the same question since the issue of climate change is nearing a critical threshold.
Kimberly Pikul and Jed Holtzman of 350 SF told the Guardian that now is the time for action. “There is only so much carbon that we can release before we cook the planet beyond a level to which we can adapt,” Holtzman told the Guardian.
Pikul and Holtzman explained that carbon reserves owned by publicly traded fossil fuel companies represent five times what would be required to “cook the planet.” Only 20 percent of owned reserves can actually be used without massive environmental consequences, so they say stock in a fossil fuel companies is overvalued, making it a risky investment.
“To protect the long-term financial health of the pension fund and the benefits of city workers and retirees, it is a certainty that SFERS needs to divest from its fossil fuel holdings,” said Holtzman.
Despite the unstable investments and risk of environmental change, Mayor Lee seemed more concerned with jobs and green projects when Avalos questioned him about the Retirement Board’s progress at the Board of Supervisors meeting.
Lee told Avalos: “Our commitment of $4.5 million a year to GoSolarSF will continue to create local green collar jobs and ... contribute [to] the creation of locally produced 100 percent green energy. These are the kinds of meaningful investments that actually deploy dollars, create jobs, and move the needle on green energy.”
Despite SF’s support of green jobs, Avalos, Fossil Free UC and 350 SF see divestment as one of the pathways toward long-term environmental change and more sustainable energy projects.
But, as Avalos pointed out, the Retirement Board has “yet to take any steps to divest from fossil fuels or limit the retirement fund's exposure to the financial risks posed by climate change.”
The only step taken so far is to initiate “Level 1” shareholder engagement with fossil fuel companies. Pikul and Holtzman explained that Level 1 engagement “is largely cosmetic and only calls for SFERS to vote their proxies on climate-related shareholder votes.” The next step is Level 2: shareholder advocacy and engagement with fossil fuel companies. The ideal is Level 3, or investment restriction/divestment.
SF isn’t the only city to seek divestment. Oakland and Berkeley are also pursuing the cause, as are Portland and Seattle. The University of California has also been deliberating the issue and plans to vote on divestment in September.
But the UC Board of Regents seems skeptical, despite the push from students. UC President Janet Napolitano told the Daily Bruin, "Using divestment as a tool is something that should be done rarely, if at all."
An open letter from faculty to the UC Regents, posted on Fossil Free UC’s website, bases the argument for divestment on students’ well-being: “Current students will be at the peak of life in 2050, identified by numerous studies as a point at which the global community will have either adequately responded to climate change, or will be suffering horribly from it.”
When Harvard rejected divestment in 2013, University President Drew Faust told the San Francisco Chronicle that she found “a troubling inconsistency in the notion that, as an investor, we should boycott a whole class of companies at the same time that, as individuals and as a community, we are extensively relying on those companies' products and services for so much of what we do every day."
Stanford University had a similar dependence issue, which is why it compromised by divesting from coal companies, instead of all fossil fuel companies. Before divestment, the university received $19 billion from coal-related investments, money that will now be invested in other things.
While the partial divestment is a step in the right direction, Fossil Free UC student organizer Silver Hannon said, in a press release following July 16 Regents meeting, “While partial divestment could stigmatize the dirtiest energy source, we need to see the Regents take a real leadership position on the issue by adopting a comprehensive fossil-free investment strategy.”
As for SF, Mayor Lee promises that divestment will happen after the Retirement Board has considered the consequences. Since there doesn’t seem to be a study currently underway, the best course of action is to keep Lee and other officials accountable for SF’s climate and clean energy goals, said Pukil and Holtzman.
Lee seems confident that SFERs will divest, even if the timeline is currently unclear.
“I know the commission does seriously consider the fiscal consequences of divestment, and sometimes they decide the benefits outweigh the costs,” Lee told the supervisors. “I trust the Retirement Board and staff to make the right decisions in this regard.”