Pension funds push for responsible investments

The Seattle City Employees’ Retirement System (SCERS) will meet today to discuss shedding its shares in oil and gas companies as part of the city’s fight against climate change.

Although he does not control the fund, mayor Mike McGinn last month proposed that SCERS – with almost $2 bn in assets – divest in companies including ExxonMobil and Chevron.

Announcing his intention for Seattle to move toward divestment from fossil fuel firms, McGinn explained that two of the pension fund’s top 10 investments are with the oil and gas giants – with $17.6 mn invested in the two companies.

This represents less than 1 percent of the investor’s $1.9 bn in assets, but McGinn added that ‘it is likely the system has investments in other fossil fuel-related entities as well’.

According to SCERS investment policy, investments ‘will not be selected, rejected, or divested from based solely on geopolitical and social issues,’ although ‘serious consideration’ will be given to such issues. McGinn also committed to making sure that city funds do not invest in such companies in the future.

The call to move away from fossil fuel investment in Seattle is the result of an ongoing campaign by 350.org, led by US environmentalist Bill McKibben. ‘Divestment, historically, is one of the few tools that has worked to take on entrenched corporate power,’ says McKibben. ‘Just ask Desmond Tutu, who watched its power in the fight against apartheid, and has now called for fossil fuel divestment.

‘No one expects that [divestment] will bankrupt ExxonMobil,’ he explains. ‘The point is not the direct and immediate financial effect. Instead, it begins to remove the legitimacy that has allowed [oil and gas companies] to dominate the politics of energy; it's a way of leveling the playing field against the richest industry on earth.’

This is the latest example of US funds looking to rid themselves of ‘irresponsible’ investments, following moves to divest in gun manufacturers after the Sandy Hook tragedy in December.

The California State Teachers’ Retirement System (CalSTRS), whose $154.3 bn portfolio makes it a giant among pension funds and the second largest in the US, decided to sell its 2.4 percent share in Freedom Group – which manufactures the Bushmaster rifle used in the massacre.

This was followed by an announcement from private equity firm Cerberus to sell Freedom Group, as well as decisions by both New York and Chicago funds to investigate gun divestment.

Chicago mayor Rahm Emanuel yesterday called on mutual funds to divest and blacklist in any gun manufacturer opposing ‘commonsense reforms’ after last week asking commercial banks to stop providing financial services to companies blocking reform.

‘Just like the banks and pension funds, I believe that these mutual funds can exert an enormous amount of influence by taking a stand against gun manufacturers that continue to refuse to support commonsense reforms like required background checks and an assault weapons ban,’ says Emanuel in a press release. ‘This has to be about doing what is morally right and not what is financially beneficial to their bottom lines.’