Saturday, December 07, 2013
Reject Fossil Fuel Divestment Campaigns
Although we aggressively support renewable technologies to operate our society, these sources alone cannot provide the amenities required by Americans. Fossil fuels are, and should remain, a vital part of the energy mix in America and throughout the world.
Global warming is a very important issue and the Center is working very hard to mitigate its negative consequences. We believe that technological innovations provide the best opportunities for reducing greenhouse gas emissions into the atmosphere. The Center is promoting multiple approaches and technologies to address climate change.
Coal, natural gas and gasoline provide the energy that powers America. To call for their complete elimination is to call for significantly reducing the standard of living in the United States. Why divest from resources that provide incredible benefits to American society? Why divest from stocks that provide dependable and profitable returns? We hope you will find the information below on fossil fuel divestment campaigns to be useful.
District of Colombia
Bill encouraging divestment from fossil fuels
A hearing on DC Bill 20-481, Fossil Fuel Divestment Act of 2013 was held on Tuesday November 26th. The bill requires the divestment, and prohibits the investment, of public funds in the stocks, securities, or other obligations of certain companies which hold the largest fossil fuel reserves and provides for the identification of companies with the largest fossil fuel reserves. D.C. Council Chairman Phil Mendelson, along with four others, is sponsoring the measure. This is similar to efforts in other cities.
The Center opposes this bill.
General Background on Divestment Campaigns:
Divestment Campaign Would Hurt American Retirees and College Students
Oil and natural gas company stocks outperform all other asset classes in public pension funds and college/university endowments
In 2012, activist Bill McKibben and his group 350.org launched a divestment campaign to encourage colleges, cities, and churches to fight climate change by selling their fossil fuel stocks. According to 350.org, “the movement has already spread to over 300 colleges and universities and 100 cities and states in the United States, Australia, and Canada. Over 15 cities, six colleges, and numerous religious institutions, have already committed to dump their fossil fuel holdings.”
Pension funds and colleges/universities have enjoyed strong returns from their investments in America’s oil and natural gas companies over the last decade. State pension fund investments in oil and natural gas companies are providing very healthy returns for teachers, firefighters, police officers, and other public pension retirees, far outperforming other public pension holdings.
A series of studies have found that while 2.1 percent of endowments in fiscal year 2010-2011 were oil and gas stocks, that 2.1 percent generated 5.7 percent of all endowment gains. During that period, oil and natural gas stocks achieved returns of almost 53 percent, far better than the pension funds and endowments’ performance as a whole and the performance of the S&P 500.
While oil and natural gas stocks made up an average of 4.6 percent of holdings in the top public pension funds, they accounted for an average of 15.7 percent of the returns in these funds over a five-year time period for the 48.1 percent of U.S. workers who participate in state and local government pension plans. In fact, they also outperformed as a whole and outperformed every other asset class examined in their investments.
Cities and Colleges Reject Divestment Proposals
The City of San Francisco recently rejected a proposal to divest.
Harvard University announced that the institution will not divest from the fossil fuel industry. The President of Harvard said that the “strength and growth” of the endowment, which pays for more than one-third of Harvard activities each year, is crucial to the support and opportunities the university can provide to its students, faculty, and researchers.
Yale and many other schools have turned down this idea.
Middlebury College, McKibben’s school, announced, after an extensive process of open meetings and group discussions with both sides, they decided too many questions raise serious concerns or remain unanswered for the board to support divestment. The college went on to note, “Given its fiduciary responsibilities, the board cannot look past the lack of proven alternative investment models, the difficulty and material cost of withdrawing from a complex portfolio of investments, and the uncertainties and risks that divestment would create.”