Seattle Mayor Ed Murray is asking the board that manages pension investments for city employees to remove coal companies from its holdings and re-evaluate its position on fossil-fuel investments in general.
Seattle Mayor Ed Murray is calling on the board that manages the pension system for city employees to purge coal companies from its $2.5 billion in assets and re-evaluate its position on fossil-fuel investments in general.
Murray sent a letter to the Seattle City Employees’ Retirement System (SCERS) board of administration asking the board to “divest any holdings the fund has in companies whose primary business is the mining or burning of coal.”
The letter requests that the board re-evaluate its position on fossil fuels by updating a legal and fiduciary analysis of the issue. The board always must put the financial interests of SCERS beneficiaries above political considerations.
“Over the last month, I’ve heard from many Seattleites who have asked about our city’s pension system, specifically whether the investments in the system adequately represent the values of City of Seattle employees,” Murray said in his letter Tuesday.
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“The advocates and employees I’ve heard from have made compelling arguments about the need to divest pension investments from fossil fuels, and our exposure to financial risks if we don’t do so. I believe these arguments have merit,” he added.
Although members of the SCERS board include two members of Murray’s cabinet, the board is an independent body that the mayor has no direct control over.
As SCERS board members, the cabinet members are supposed to serve current and former city employees rather than Murray. Their responsibility is to make sure people enrolled in the pension system receive their guaranteed monthly payouts.
“I find this personally frustrating, but I also respect the limits of executive authority,” the mayor said in his letter, which he copied to members of the Seattle City Council.
Councilmember Tim Burgess chairs the SCERS board. Other members include Susan Coskey, director of the city’s Department of Human Resources, and Glen Lee, the city’s finance director. In their regular jobs, Coskey and Lee report to the mayor.
Murray’s letter comes amid a push by activists seeking to combat climate change for the SCERS board to divest pension funds of companies associated with coal, oil and gas.
Several dozen activists, including leaders from the environmental group 350 Seattle and the Sierra Club’s Seattle chapter, sent a letter to Murray and the SCERS board in January requesting divestment of pension investments in fossil fuels.
The mayor’s move also follows closely on the heels of votes by the City Council to stop doing business with Wells Fargo because of the bank’s involvement in a consumer fraud scandal as well as its role as a lender to the Dakota Access Pipeline project, and to explore how the city might avoid contracting with other major banks because of their involvement with the Keystone XL Pipeline project.
Any changes to SCERS investment strategy likely would be accompanied by close scrutiny from former city employees who receive pension checks from the system.
The activists, calling themselves Northwest Divest, say Seattle has lost $65 million in the past 10 years by investing in coal, oil and gas corporations. They say fossil fuel-free portfolios often outperform those with companies such as Exxon-Mobil and Shell.
And they say nearly 500 city employees have signed a divestment petition. In a news release from the activists Wednesday, two city employees hailed Murray’s letter.
“Divesting from fossil fuels is not only the right thing to do morally, it also makes financial sense,” said Bruce Flory, principal economist for Seattle Public Utilities.
“The survival of human society depends on the majority of fossil-fuel reserves being left in the ground. When this fact becomes clear to the market, the value of fossil-fuel stocks will crash. Smart investors will have already divested,” Flory added.
This isn’t the first push for SCERS divestment of fossil fuels. But in 2014, a SCERS board-commissioned report warned against such an action.
Clark Williams-Derry, energy-finance director for the Seattle-based Sightline Institute, an environmentalist think tank, says a dollars-and-cents case can be made for divestment.
Oil and gas investments may be headed for struggles similar to the collapse of the coal industry’s in recent years, he says, noting that investors in coal “lost their shirts” five years ago.
“You could do well by doing good — do well in a financial sense by doing good in a climate sense,” Williams-Derry said. “That said, the markets are fickle and you can’t know for sure what’s going to happen.”
The SCERS board next meets Thursday, April 13, and a representative from 350 Seattle is asking Burgess to make it and future meetings more public by holding them in the council’s chambers and having them recorded for the Seattle Channel.