Three years after the Board of Supervisors called for divestment of pension funds from the fossil fuel industry, hundreds of millions of dollars remain invested in companies like Exxon and Chevron.
The sluggish pace by which San Francisco is moving toward divesting has put the retirement board and its staff in the hot seat.
The Board of Supervisors adopted a resolution in 2013 calling on the San Francisco Employees’ Retirement System to divest from fossil fuel companies as part of a growing movement to fight climate change through investment power wielded by institutions like universities and local governments.
But the lack of progress since then has raised concerns.
“In San Francisco, we get some pretty good marks for having good plans, having good urging resolutions, but when it comes to action I don’t think that we are living up to the emergency that is before us today,” said Supervisor John Avalos, author of the divestment resolution.
On Thursday, Jay Huish, executive director of SFERS, was asked to explain the progress — or lack thereof — of divesting from the fossil fuel industry, before the Board of Supervisors Rules Committee hearing.
As the retirement board faced accusations of moving at a “glacial pace” or succumbing to “status quo” mentality, retirement board member Victor Makras confirmed to the San Francisco Examiner on Thursday he has requested a motion that would divest pension funds from thermal coal companies to be calendared at the retirement board’s Nov. 11 meeting. It would be the first vote to actually divest any portion of the fossil fuel investments.
The thermal coal investments are quite low at about $10 million, but it would signal the board is serious about divesting. Makras has also requested the retirement board staff provide a list of the 10 worst polluting fossil fuel companies in the portfolio to begin analyzing divesting from them as well.
To address social concerns, the retirement board usually turns to shareholder voting rights and activism, as it currently is supposed to be doing so with fossil fuel companies, before actually voting to divest funds. In the past it has divested from tobacco companies and firms connected to genocide in Sudan and apartheid-era South Africa.
The failure to schedule meetings over the fossil fuel divestment issue has come under criticism, as well as gaps in the policies already adopted. The retirement board staff, for example, only notified the board after the fact of important shareholder proxy votes on climate–related resolutions for companies like Exxon and Chevron. Huish acknowledged “these were slipping through,” but the issue was since “remedied” and vowed advance notice for the 2016 proxy season.
The retirement board had voted in April to invest $100 million in fossil-free fuel index funds. “We are in the process of final contract negotiations with the index provider. I would anticipate that the investment would be in place by the end of this year,” Huish said.
The growing fossil fuel divestment movement is based on the belief that these companies are driving climate change with the assistance of these investments and a withdrawal of the funds would incentivize carbon-free energy.
Brett Fleishman, a senior analyst with 350.org, an environment group, said, “Fossil fuel divestment has become a powerful part of the spectrum of social, political and economic movements addressing climate change.” He noted that 455 institutions, comprising $2.6 trillion in assets, have committed to divestment and that “many of these divestments haven’t cited moral impetus for the divestment as their motivating factor” but instead the “carbon risk,” as the value of these types of stocks have declined.
In 2013, San Francisco’s pension fund was valued at $15 billion with $565 million in fossil fuel investments. Today, the pension fund is valued at $21 billion and fossil investments have dipped below $480 million.