The $24bn San Francisco Employees Retirement System (SFERS) resisted calls from activists to divest from fossil fuels, instead approving a more limited plan to identify and engage with the worst sources of greenhouse gas emissions.
SFERS held a special board meeting January 24 to consider divestment, which was supported by board member Victor Makras and opposed by the system’s investment staff and consultant NEPC. In May, Makras made a motion to divest all fossil fuel holdings in its public markets accounts within 180 days. NEPC estimated that the divestment would cover about $500m in assets, or about 4.5% of SFERS’ public equity potfolio.
Investment staff countered with a proposal that would create a separate $1bn “carbon constrained” passive account strategy that aims to reduce carbon emissions by 50% compared to the S&P 500 Index, and take a phased approach to identifying and engaging with the “worst of the worst” companies in carbon emissions. The approved plan would also hire a director of socially responsible investing and partner with other pension plans, including the California State Teachers’ Retirement System (CalSTRS), NYC Retirement Systems and the New York State Common Retirement Fund, on carbon emission reduction efforts.
SFERS board approved the investment staff’s proposal at the meeting, drawing criticism from activist groups in attendance. San Francisco’s investment team prepared a 164-page report in response to the divestment resolution, saying that divestment would not do anything to reduce fossil fuels.
“This cannot be emphasized enough: divestment does not reduce fossil fuels,” Executive Director William Coaker wrote in a 164-page report. “Staff is concerned that fossil fuels are causing global warming. However, divestment does not reduce the amount of fossil fuels; it simply changes ownership.”
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Published by Money Management Report/Pageant Media.