Below's my memo that I sent to the Water District Board yesterday - we'll decide Monday or Wednesday whether to move it forward. Many many thanks to Jay Carmona at 350.org for their work and her research help.
(BTW, I'll be offline until Monday, can respond to questions then. "Unburnable carbon" deserves its own blog post....)
SUBJECT: Recommendation on developing a Climate Divestment Policy for the Water District
DATE: July 18, 2013
Our residents and the Water District itself are paying millions of dollars and incurring significant risks from climate change. We are losing water supplies in the Sierras, forced to use more water in reaction to rising temperatures, face increased risks from stream and tidal flooding, and manage environmental degradation from climate change. Why then should we finance the industry promoting the same problem that we work so hard to fix?
I urge the Board to direct staff to return at an appropriate time with a proposed Climate Divestment Policy using the model under consideration in a number of cities (see attachments) developed by the non-profit 350.org. The effect would be to exclude from investment the top 200 fossil fuel companies. Our reserve investments in corporate financial instruments are relatively small and limited to bonds, so I assume it will not be difficult to put a policy into place with few if any financial implications. Pension funds and OPEB funds are controlled by CalPERS, so I recommend in addition that we direct staff to return to the Board with a draft letter that the Board can send to CalPERS asking it to begin climate divestment.
In addition to climate divestment being in the best interest of our residents, not to mention the general public interest, it may also be in our direct financial interest. Recent studies have shown fossil fuel companies underperforming the broader market. More generally, the stock and collateral value of the industry is based in large part on the value of their fossil fuel reserves, but those reserves contain far more carbon that can be burnt safely. This “unburnable carbon” constitutes overvalued equity and underestimated risk.
We have made a commitment to achieve carbon neutrality by 2020. I believe we can make use of the 350.org list and exempt any company that makes a similar commitment. While eliminating fossil fuels is impossible right now, I believe this proposal is a practical and feasible way to help get us to a global carbon neutrality as soon as is practicable, something we should do for our own sake and that of everyone else.
Memo from Councilmember Worthington, City of Berkeley, including draft letter to CalPERS
Staff Report, City of Santa Monica
350.org article on financial performance of fossil fuel industries, available at http://gofossilfree.org/analysts-fossil-fuel-free-portfolios-outperform-investments-that-include-carbon-polluters/