Pittsburgh City Council to take up fossil-fuel divestment
January 4, 2016 12:00 AM
Pittsburgh City Council President Bruce Kraus told a group of activists from the Divest Pittsburgh campaign that his office is working from a draft measure the group submitted to council members in December and hopes to have a bill ready soon for introduction.
By Robert Zullo / Pittsburgh Post-Gazette
Among the first pieces of legislation city council President Bruce Kraus will put forward in 2016 will be a bill aimed at extricating the city pension funds’ investments from fossil fuels.
At a council meeting last week, Mr. Kraus told a group of activists from the Divest Pittsburgh campaign that his office is working from a draft measure the group submitted to council members in December and hopes to have a bill ready soon for introduction.
“Any large investment firm can put together a fossil-fuel-free portfolio,” said Gabriel McMorland, who has worked with the Thomas Merton Center, a nonprofit peace and social justice organization, on the initiative for about a year.
The draft bill directs the city to “identify the public fund’s direct or indirect holdings in the top 100 public oil and gas companies and the top 100 public coal companies measured by size of fossil-fuel reserves,” within 90 days of its effective date and compile them into a list.
Once the list is done, the pension fund “shall take divestment actions to sell, redeem, or withdraw all publicly traded securities of the aforementioned fossil-fuel companies as quickly and prudently as practicable within five years from the effective date of this ordinance.”
The bill also directs the city to create a committee “to investigate the feasibility, costs and impacts of reinvesting a portion of the funds divested … into socially responsible investments.”
Mr. McMorland and other supporters characterized the legislation as a fiscally prudent move for the pension fund, not just a blow aimed at man-made climate change.
“We think it would be good for the pension fund,” said Greg Kochanski, a software engineer from Point Breeze. “Over the next 30 years, we’re going to have to shut down the fossil-fuel industry.”
Mr. Kochanski, who trained as a physicist, said he has read much of the scientific literature on climate change and began participating in the divestment campaign last summer.
“It’s real and it’s coming. It’s going to happen,” he said. “So you’re sort of looking for something to do to stop it.”
As of October, the city’s pension funds had nearly $660 million in assets, including about $378 million in its invested portfolio. With about $1.2 billion in liabilities, it has a funded ratio of about 58 percent and is considered in “moderate distress” by the state Auditor General’s Office.
James Wesner, a managing partner with Marquette Associates, the city’s pension fund advisers, said the firm has helped its clients divest from a variety of unwanted investments, including alcohol, tobacco, gambling and firearms businesses.
“It’s something we’re accustomed to dealing with,” he said.
However, few large public pension plans have totally divested from fossil fuels because of the large part oil, gas and coal companies play in the S&P 500 index, a standard benchmark, Mr. Wesner said. Instead, they shift to “greener portfolios” but find it tough to totally pull out of energy investments.
Mr. Wesner said the firm works with clients to help achieve “secondary objectives,” but he pointed out that the main priority of the fund is maximizing returns for the city’s retirees.
The city’s plan for reducing greenhouse gas emissions presented by Mayor Bill Peduto at the 21st Conference of the Parties climate summit in Paris last month includes a “fossil-fuel divestment strategy for city of Pittsburgh funds” by 2030.
“The climate agreement is a strong signal to the markets that investments are going to be stronger in sustainable and renewable energy sources,” said Tim McNulty, the mayor’s spokesman.
Mr. Kraus said any final legislation would be developed with input from the financial advisers.
“I wouldn’t take any action without speaking to Marquette,” he said.
Robert Zullo: firstname.lastname@example.org or 412-263-3909. Twitter: @rczullo.
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