San Francisco city council asks pension fund to divest its oil shares
Climate activist claims ‘big victory’ for fossil fuel divestment movement
Exxon Mobil, one of the oil companies in which the city council holds shares. Photograph: Reuters
A campaign by climate activist Bill McKibben's 350.org has scored its biggest victory so far by persuading San Francisco's city council to call on its pension fund to divest $583 million (€447.5 million) worth of shares in major oil companies.
The decision, made last Tuesday, called on the San Francisco Employees’ Retirement System to sell all of its holdings in companies such as ExxonMobil, Chevron, Shell, Occidental Petroleum and China’s National Offshore Oil Corporation over the next five years.
“Divestment is an important part of our city response to climate change,” said John Avalos, a member of the board of supervisors, as the city council is archaically called. “The retirement board can divest responsibly without affecting the fund’s security or yield.”
Mr McKibben described it as a “big victory for the burgeoning fossil fuel divestment movement”, saying San Francisco “will spend billions adapting to climate change – it makes no sense at all to simultaneously invest in the corporations making that work necessary.”
Norm Nickens, executive director of the municipal pension fund, told the Huffington Post that it had taken a number of “divestment actions” over the past few decades on issues such as tobacco, South African apartheid, Northern Ireland and Sudan. Divestment is widely credited with helping to end apartheid after 155 colleges and some 130 state and local governments in the US removed their money from companies doing business in South Africa. Now 350.org wants them to do the same for fossil fuels.
San Francisco is the third major American city, after Ithaca (New York) and Seattle, to push for fossil fuel divestment. If its retirement board complies with the city council’s request, it would become the largest pension fund in the US to divest from “Big Oil”.
Washington-based clean energy advocate Silvio Marcacci said fossil fuel companies “rely upon the ability to emit endless amounts of carbon into the air without financial penalty, but the global growth of carbon markets may soon flip that equation upside down”.
According to Paul Spedding, HSBC bank’s oil and gas analyst, “business-as-usual is not a viable option for the fossil fuel industry. Management should already be looking to new business models that reduce the risk of stranded assets destroying shareholder value”.
HSBC has calculated that up to 60 per cent of total oil and gas industry market capitalisation could be at risk from a “carbon bubble” as vast quantities of oil and gas would become effectively unburnable if global warming was to be limited to 2 degrees.
Cut to levels
350.org wants to see the level of carbon dioxide in the atmosphere reduced to a “safe” 350 parts per million (ppm) to avoid dangerous climate change; it is now nearly 400 ppm, the highest level for three million years, according to observations in Hawaii last week.
Earlier this month APR, Citibank issued a warning to investors in fossil fuel companies. “If the unburnable carbon [scenario] does occur – even with carbon capture and storage technology – it is difficult to see how the value of fossil fuel reserves can be maintained,” it said.
Lord Stern, author of an influential 2006 report on the economics of climate change, agreed: “Smart investors can see that investing in companies that rely solely or heavily on constantly replenishing reserves of fossil fuels is becoming a very risky decision.”