A CAMPAIGN TO DIVEST FROM FOSSIL FUELS
Hurricane Sandy decimated the New York City area, causing $65 billion in damage, causing power outages, destroying homes and leaving a path of wreckage from the Rockaways to Riverside Park. It’s time for NYC to stop investing our pension funds in oil, gas and coal, and go fossil free!
Sign the petition to divest NYC from fossil fuels here. If you are the head of an organization that would like to endorse our city council resolution to divest NYC you can find the endorsement form here.
We know that Sandy was fueled in part by Atlantic waters that were 5 degrees warmer than average, a result of human-induced climate change. Mayor Bloomberg has taken steps to make our city an example of low-carbon urban living, from painting bike lanes to mandating energy retrofits — and much much more must be done.
And yet, New York City’s pension funds for city employees, teachers, police, firemen and school employees are all invested in coal, oil and gas companies that dump carbon into the atmosphere for free, and rig the political system so that they can continue to do so.
If it is wrong to wreck the climate, then it is wrong to profit from that wreckage. After Hurricane Sandy, New York City should be a shining light in the fight to combat climate change — to do that, its pension funds must freeze and divest from fossil fuels.
Please sign the divestment petition to Comptroller Scott Stringer now. Learn more about our campaign below:
Fossil Free NYC: An Introduction to 350NYC’s Divestment Campaign
350.org is building a global grassroots movement to solve the climate crisis. Their online campaigns, grassroots organizing, and mass public actions are led from the bottom up by thousands of volunteer organizers, like 350NYC, in over 188 countries.
350 means climate safety. To preserve our planet, scientists tell us we must reduce the amount of CO2 in the atmosphere from its current level of 392 parts per million to below 350 ppm. But 350 is more than a number—it’s a symbol of where we need to head as a planet.
350NYC, founded in 2010, is a local volunteerled group affiliated with 350.org. It has been involved with projects such as pulling together a thousandsstrong Moving Planet rally at the UN in 2011 pushing for global progress on clean energy, the Don’t Frack NY rally in Albany, and coordinated hundreds to bus to Washington DC for the recent Forward on Climate rally on the National Mall.
The Climate Math
We can only burn 565 more gigatons of carbon dioxide and stay below 2°C of warming — anything more than that risks catastrophe for life on earth. Fossil fuel corporations now have 2,795 gigatons in their coal, oil and gas reserves, five times the safe amount. These companies must keep 80% of their fossil fuels underground.
Making New York City’s Investments Fossil Free
Of all the institutions that ought to be looking out for the public good, surely our local and state governments are foremost among them. They have a responsibility to divest from an industry that’s destroying our future, and reinvest in solutions to climate change. Even as extreme weather events like Hurricane Sandy threaten to overwhelm local budgets, federal inaction to solve this crisis is all but stalled. We have the solutions, but we won’t see any political progress on the issue until we can weaken the power of the fossil fuel industry.
The bottom line is this: divestment is the only moral choice for governments that care about their citizens. Solving the climate crisis is the only practical choice for governments that care about their solvency.
What are we asking for?
200 publicly held companies own the vast majority of fossil fuel reserves underground their stock prices and business plans depend on digging up and burning these reserves, which would lead to a 6-12 degree, or more, warmer future. It may not sound like a lot, but a global 6-12 degree rise in average temperate would make most of the planet uninhabitable.
If it’s wrong for these companies to wreck the planet, then it’s wrong to profit from that wreckage. We believe that educational and religious institutions, city and state governments, and other institutions that serve the public good should divest from fossil fuels. We want New York City 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.
The NYC Pension Funds
The total NYC Pension Fund assets under management as of 2012 is $127,458,000,000 and includes the city’s cash balances, the Board of Education Retirement System (BERS), Employees’ Retirement System (NYCERS), Fire Department Pension Fund (Fire), Police Pension Fund (Police), and Teachers’ Retirement System (TRS) The Comptroller is the custodian and investment advisor to the Boards of the five Pension Funds, and therefore can exert powerful influence over the Boards on responsible investment issues.
For example, former Seattle Mayor Michael McGinn recently wrote in a public letter: “I have directed the City’s Finance Director, Glen Lee, that the City will not invest cash balances in fossil fuel companies in the future…. 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.”
The Financial Risks of Investing in Fossil Fuels
Stranded Assets: There are a few ways that coal, oil and gas reserves could become “stranded assets” basically, assets that have lost their value. The first way is if we limit global warming to 2 degrees through government regulation and cheap and abundant clean energy. If global warming is limited to 2 degrees, then this essentially means roughly 80% of fossil fuels have to stay in the ground, devaluing the coal, oil and gas reserves that these 200 companies have on the books.
On the other hand if there is no limit to how much fossil fuel we burn unabated and we head towards 6 degrees of warming, then vulnerable sectors will be affected. Agriculture, infrastructure, property and insurance sectors will suffer across asset classes. Hurricane Sandy caused $65 billion in damages alone, and wasn’t limited to the fossil fuel sector. 21st Century stranded assets could result due to extreme weather, crop production yields declining, acidifying oceans, health concerns and many other climate related drivers.
Using the NYC comptroller’s clout, shareholders can and have moved companies to adopt more environmentally responsible practices. The comptroller should continue to lead shareholder advocacy campaigns with companies in a wide range of sectors to set greenhouse gas emission goals, improve energy efficiency across operations and source more renewable energy.
But, there is an inherent conflict of interest for investors to advocate that coal, oil and gas companies stop the production of fossil fuels given that it is their core business. Investors might persuade a coal company to put more protective linings in the land pits where it stores coal ash, but there is little rationale for investors to ask a company to stop pursuing the very activity that generates its revenues. So while shareholder advocacy remains an excellent vehicle for improving corporate sustainability in many areas, it is less effective as a tool for changing the overall orientation of industries whose business models depend on producing fossil fuels.
Being a fiduciary responsible for investing other peoples’ money means that you have a say in how investment risk is measured and recommendations implemented. There is significant latitude in the laws governing fiduciaries to encompass fossil fuel divestment. Adam Kanzer, managing director and general counsel of Domini Social Investments recently wrote: “First and foremost, fiduciaries must be dedicated to their beneficiaries’ financial goals. This requires a deep understanding of risk and opportunity, including those relating to “social issues” that affect consumer demand and the broader economy, or impose legal risks and operational costs (e.g., cleanup costs). The debate has moved on from the artificial, bifurcated view of reality that views the investment portfolio in isolation from the real world. A modern fiduciary must understand how the corporation affects the health of the systems upon which it depends for its long-term survival.”
While we do not require that the city reinvest in specific areas, New York City could benefit from reinvesting funds into new building projects, energy efficiency, public transportation and other green infrastructure projects, all of which often have better returns than fossil fuel stocks and bonds.
For references and more information visit: 350nyc.org/resources/divestment.