LOS ANGELES,CA - Today Councilmember Bob Blumenfield introduced legislation to authorize a comprehensive review of city civilian pension investments and craft a plan to divest from companies perpetuating and expanding the effects of climate change.
“It’s time to look into our collective financial health and, for the sake of future Angelenos, ensure that we no longer invest in companies that are literally killing our world,” said Blumenfield. “As the second largest city in the nation, it’s imperative that we lead by example and show the world that you can have profitable investments without embracing climate change enablers.”
Los Angeles City Employees' Retirement System (LACERS) has invested more than $100 million in oil companies, many of which have shown no interest in moving towards renewable energy. Consistent with the City's commitment to combating climate change, the City has a responsibility to divest LACERS pension holdings from fossil fuel companies that are unwilling to turn away from the production of oil. It is time for the leadership of Los Angeles to divest from oil companies that are actively contributing to the global problem of climate change and subjecting Los Angeles to unnecessary risk.
Importantly, climate change is not only a global environmental threat it presents a significant financial risk to shareholders of the companies that perpetuate it. From financial losses because of extreme weather to asset re-pricing as the global economy moves towards a low-carbon economy, investments in fossil fuel companies pose a climate-transition risk that may endanger the financial vitality of LACERS investments.
Some major cities such as San Francisco have already initiated a coordinated effort to divest their pension funds from fossil fuel companies. On October 10, 2018 the board of the $25.5 billion San Francisco Employees Retirement System (SFERS) voted to divest its shares in seven fossil fuel companies because they posed the highest climate transition risk according the SFERS’ Climate Transition Risk Framework that is based on 1) Fossil Fuel Reserves, 2) Operational Emissions, 3) Climate Policy Approach, and 4) Financial Health.
In Los Angeles 'fire season' has become a year-round event forcing evacuations of hundreds of thousands of people throughout the region, burning communities down to their foundations, and leaving municipal governments with billions of dollars in damages. According to NASA, the five warmest years on record have taken place since 2010. With much of the excess heat being absorbed by the oceans, global oceans have warmed by half a degree and the sea level rose eight inches in the last 100 years. Fires are burning longer and moving faster than ever before, coastal cities are faced with unprecedented storms and flooding, and hurricanes continue to devastate major populations centers like Houston, through the Gulf of Mexico, and up the eastern seaboard.
Blumenfield’s motion specially directs LACERS and city departments to report on:
· Recommendations on the feasibility for the LACERS Board to adopt a similar Climate Transition Risk Framework to SFERS’ to identify investments in fossil fuel companies that pose an environmental and financial risk;
· Options to create a climate-change watch list that will report the riskiest investments in fossil fuel companies and develop a strategy to engage with the respective companies to reduce their oil and gas reserves and increase their efforts to move towards renewables and address climate change;
· A plan to divest from uncooperative fossil fuel companies and appropriately reinvest capital;
· A watch list to identify other LACERS investments such as in tobacco and firearm companies that contradict the City Council’s official positions and goal to provide a healthy and secure future for Angelenos.
Blumenfield’s motion will soon be heard in the Budget and Finance Committee in which he is a member. It was seconded by Councilmembers Mike Bonin, Mitch O’Farrell and Marqueece Harris-Dawson.
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