December 21, 4:00 PM click here to comment > 30
An update on fossil fuel divestment
On November 7 members of Seattle’s Green Ribbon Commission joined Bill McKibben of 350.org in my office for a roundtable discussion on climate change. The Green Ribbon Commission has been preparing recommendations that will inform Seattle’s work toward reaching carbon neutrality by 2050.
Bill offered his thoughts and advice on how Seattle as a city can help the worldwide effort to limit carbon emissions into the atmosphere. His article in Rolling Stone this summer, “Global Warming’s Terrifying New Math”, is the cornerstone to his new approach. His tour, which launched here in Seattle, is called Do The Math. Their tour focuses on this new math and the role fossil fuel corporations play in increasing carbon emissions:
It’s simple math: we can burn 565 more gigatons of carbon dioxide and stay below 2°C of warming — anything more than that risks catastrophe for life on earth. The only problem? Fossil fuel corporations now have 2,795 gigatons in their reserves, five times the safe amount. And they’re planning to burn it all — unless we rise up to stop them.
350.org is asking schools, churches and governments to immediately freeze any new investment in fossil fuel companies, and divest from direct ownership and any commingled funds that include fossil fuel public equities and corporate bonds within 5 years.
After the roundtable, I spoke to my finance administrator about this issue. That night, I announced from the stage at the “Do the Math” kickoff event at Benaroya Hall that I would look at how the City of Seattle can move toward divestment from fossil fuel corporations. Since then, I’ve been working with City staff to examine the steps we must take to make divestment a reality. Here’s what we’ve found.
The City oversees three sets of investments: 1) $1.4 billion in cash balances for daily operations – essentially the City’s checkbook balances; 2) $700 million of our employees’ investments from the City’s deferred compensation plan; and 3) our pension system, with holdings valued at $1.9 billion. The first category is the only one I control directly. City staff report that none of that money is currently invested in fossil fuel companies. I have directed the City’s Finance Director, Glen Lee, that the City will not invest in those cash balances in fossil fuel companies in the future.
I do not have sole control over employees’ deferred compensation plans or our pension system. Employees decide where to invest their money in the deferred compensation plans, which are administered by the Deferred Compensation Plan Committee. I have written to the Committee to ask that they offer our employees options to move their investments out of fossil fuel companies, offer fossil fuel free investment choices to them, and begin the process of divestment. I have also offered the assistance of city staff.
Seattle’s pension system is managed by a governing board that is made up of appointees and individuals elected by City employees. Two of the system’s top 10 investments are with ExxonMobil and Chevron. The pension system has currently $17.6 million invested with these two firms, which represents just under 1% of the system’s $1.9 billion in assets. It is likely the system has investments in other fossil fuel-related entities as well.
I have written to our pension system governing board to request that they refrain from investing in fossil fuel companies in the future, and begin exploring options for moving existing investments from fossil fuel companies. I will work with the City Council, City staff and the pension board on pursuing divestment in that portfolio.
Photo courtesy of 350.org
Divestment is just one of the steps we can take to address the climate crisis. Through the Green Ribbon Commission, we are working to integrate our climate goals with our job creation and social equity goals. Cities that do so will be leaders in creating a new model for quality of life, environmental sustainability and economic success. We’ve got a head start on that here in Seattle, but there’s a lot more work to do.
Posted by: Mayor Mike McGinn