December 6, 2016

San Francisco moves towards fossil-fuel divestment

Learn more about local divestment campaigns on Fossil Free SF's Facebook page

Learn more about local divestment campaigns on Fossil Free SF’s Facebook page

On Oct. 9 the Board of the San Francisco Employees’ Retirement System took a first step towards selling off its fossil-fuel stocks, with a unanimous decision to join shareholder-advocacy efforts at engaging the industry, and to study divestment of these investments from its $16 billion fund.

“This is a small yet historic step forward,” said Jay Carmona, divestment-campaign manager for, an organization helping lead the national divestment movement. “For the first time, the managers of a major-city pension fund have made it clear that there is a problem with investing in the fossil-fuel industry and that action must be taken.”

“Your duty is to protect the benefits of retirees like me,” Jack Fleck, a retired San Francisco transportation engineer, testified at the hearing. “How can it be to my benefit if the very climate is being destroyed?”

“How do you want to be seen by future generations?” Supervisor John Avalos, asked the retirement board at the meeting, reminding it that the Board of Supervisors had unanimously urged the retirement board to take action but had yet to see any. Supervisor London Breed and an aide to Supervisor Eric Mar also testified for divestment.

The retirement board’s divestment policy has three tiers of action.

  • Tier 1 requires signing on to shareholder resolutions (subject to Board approval);
  • Tier 2 requires actively authoring resolutions and urging companies to take action;
  • Tier 3 is full divestment.

Supervisor Malia Cohen, who sits on the retirement board, moved to immediately initiate Tier 2 divestment. The resolution got the votes of Board President Victor Makras and retiree Herb Meiberger, certified financial analyst, but failed to pick up the necessary fourth vote to pass.

The retirement board then voted unanimously to initiate “Tier 1”, actively supporting shareholder resolutions that push the fossil-fuel industry to address its climate impacts. The Board also requested that staff study the possibility of Tier 2 action.

Last April, the San Francisco Board of Supervisors passed a unanimous resolution calling on the retirement board to divest over $532 million from the 200 fossil-fuel companies that own the majority of the world’s coal, oil, and gas reserves–about 3% of the total retirement-fund assets.

Since then more than 20 other cities, including Berkeley and Richmond, have committed to the goal of divestment. In June, San Francisco State University’s foundation announced it would cease investing in coal and tar-sands companies.

The local divestment effort is part of the national Go Fossil Free divestment campaign that has spread to over 300 colleges and universities and 100 cities and states across the country. The movement is now spreading to Australia, New Zealand, Canada, and Europe, as well. According to a recent study by the University of Oxford, the Go Fossil Free effort is growing faster than any previous divestment campaign.

The 200 fossil-fuel companies targeted by Go Fossil Free were chosen because they control the vast majority of the world’s carbon reserves. According to top scientists and analysis by groups like the International Energy Agency, nearly 80% of those reserves must go unburned if the world is going to keep global warming below 2°C, a target that the United States and nearly every other country on earth has agreed to meet.

Unchecked global warming could have a devastating effect on the Bay Area. A recent report by the San Francisco Bay Conservation and Development Commission found that a 55-inch sea-level rise by the end of the century would put $62 billion of Bay Area shoreline development at risk and require at least $14 billion worth of static structures to protect California’s shorelines.

The San Francisco Employee’s Retirement System is a roughly $16 billion pension fund that serves more than 52,000 active and retired San Francisco employees and their survivors. System executive director Jay Huish told the Board, “We have the resources to entertain any level of engagement that you would adopt.” In other words, staff did not foresee any technical obstacles to divestment.

According to a new report by the Aperio Group, a group of financial advisors based in Marin, fossil-fuel divestment would increase portfolio risk by a mere 0.01%. The report’s lead author, Patrick Geddes, told reporters on a recent webinar that, “Statistically, it’s basically noise.”

On the other hand, the retirement system faces a much greater risk if it stays invested in fossil fuels, according a growing number of financial analysts. For example, a recent report by the bank HSBC warned that, if countries agree to meet the 2° C target and pass regulations strong enough to keep 75 – 80% of known fossil-fuel reserves in the ground, the write-off of those reserves could cause loss in market value of up to 60% for fossil-fuel companies like BP, Shell, and Chevron.

The exact language of the retirement board’s resolution follows.

Moved by Stansbury/seconded by Paskin-Jordan:

Level One – to direct staff to prepare a report and analysis of current proxy voting policies and guidelines related to issues of climate risk, climate risk disclosure, political lobbying and sustainability related to SFERS holdings in companies included on the Carbon Tracker list to present to the Board for its consideration and approval;


Level Two – to direct staff to prepare a report and analysis regarding proactively advocating that companies, investors and governments consider the benefit of climate change mitigation in formulating business strategies, disclosure requirements, corporate values and behavior, including direct communication with the Carbon Tracker companies in the SFERS portfolio and/or participation in collaborative initiatives such as Investor Network on Climate Risk to present to the Board for its consideration and approval.

Motion passed: 7 – 0.

For more information see:

The San Francisco Employee’s Retirement System’s latest financial report:

San Francisco Chronicle article on the Board of Supervisors’ resolution:

Full list of divestment commitments:

Guardian article on Oxford Study:

The Bay Conservation and Development Commission’s report on sea-level rise:

An article on the HSBC report:

An article on the Aperio Group report:


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