In June, the Oakland City Council unanimously approved a resolution by Councilman Dan Kalb to divest city funds from companies that hold the largest reserves of coal, oil and natural gas, and to encourage the California Public Employees’ Retirement System – the largest public pension fund in the nation – to do the same.
A growing number of local elected officials and CalPERS beneficiaries say CalPERS should follow the lead of Oakland, Richmond, Berkeley, San Francisco and Santa Monica, and join a fast-growing movement across the country to divest from fossil fuels that includes more than two dozen cities.
The evidence is clear that climate change is happening now and we are feeling its effects.
Gov. Jerry Brown recently noted that California, with its severe drought, historically low Sierra snowpack and devastating wildfires, is “on the front lines of climate change” and that “humanity is on a collision course with nature and we’re just going to have to adapt to it in the best way we can.” The world’s scientists and the United Nations’ Intergovernmental Panel on Climate Change agree that without rapid and robust transformation of our energy use – reducing greenhouse gas emissions while shifting to clean energy – adequate adaptation will become increasingly costly and difficult.
There’s also a big risk to keeping CalPERS dollars in dirty fossil fuels.
The International Energy Agency has concluded that “no more than one-third of proven reserves of fossil fuel can be consumed prior to 2050” if the world is to limit global warming to 2 degrees Celsius. That goal “offers the best chance of avoiding runaway climate disruption.”
That means if the world’s governments take responsible action to prevent climate catastrophe, fossil fuel companies will have to leave some 75 percent of their reserves in the ground. These companies are valued by Wall Street analysts on the basis of their reserves. Meanwhile, fossil fuel companies continue to spend hundreds of billions of dollars on exploration for new reserves. A growing “carbon bubble” – overvalued companies, wasted capital and stranded assets – poses a huge risk to investments in fossil fuels.
CalPERS holds almost $10 billion in major fossil fuel company stocks and recognizes this financial risk. It recently adopted “investment beliefs” that include consideration of “risk factors, for example climate change and natural resource availability, that emerge slowly over long time periods, but could have material impact on company or portfolio returns.”
Exxon Mobil Corp. and the fossil fuel industry – in concert with the likes of the Koch brothers – have poured millions of dollars into sowing doubt about climate science; lobbying against clean energy and in favor of oil subsidies; and working to undermine the low-carbon fuel and other standards that have made California the leader in efforts to address climate change.
The good news is that clean energy regulations not only fight climate change, they also help clean the air we breathe and make our communities healthier. When state and local governments are working overtime to implement ambitious climate change programs, and to prepare for and respond to climate impacts, our public pension dollars should not subsidize the companies that are fighting against us.
It’s time to put our money where our mouths – and lungs – are.
As elected officials, we believe our investments should instead support a future where residents can live healthy lives without the negative impacts of climate change and dirty air. It’s time for CalPERS to take our public pension dollars out of dirty fossil fuels and reinvest in building a clean energy future, for the sake of our health, our environment and our children.
Tom Bates is mayor of Berkeley. Gayle McLaughlin is mayor of Richmond. Jean Quan is mayor of Oakland.