Above: People wait in the lobby of the Washington State Investment Board prior to the board's meeting on April 17 in Olympia. Several speakers with a local climate crisis group addressed board members during the public comment period.
By Janine Unsoeld
The Washington State Investment Board (WSIB) heard from
current and retired state workers, community members, and members of a local climate
crisis group during their meeting held April 17. Speakers were united in their request for Washington State to divest from fossil fuel companies and the companies that serve them.
The WSIB was created in 1981 and has a staff of 79 employees who work in three divisions: Investments, Operations, and Institutional Relations. The board, which accepts public comment at its monthly meetings, is composed of 15 members. All were present during public testimony except for Representative Sharon Tomiko Santos.
Divestment Testimony
Testimony and personal stories from several local
citizens did not overlap, providing the board with compelling information and
facts about the divestment issue.
Glen Anderson, a member of the Confronting the
Climate Crisis group sponsored by the Olympia Fellowship of Reconciliation,
said he started working for the state in 1972 and retired in 2006.
“I enjoy my pension and appreciate your efforts to
wisely protect it. I understand your responsibility to avoid unnecessary risk,”
said Anderson, who mentioned that many cities throughout the United States have
divested from fossil fuels.
Seattle divested in November 2012 and by May 2013,
11 cities had committed themselves to divest because of the climate crisis.
Anderson said that during the 1980s, he and other
state employees organized an effort they called “State Employees for Socially
Responsible Investment” and persuaded the state’s Committee for Deferred
Compensation to offer a socially responsible alternative to the regular mutual
funds. Anderson said the committee initially assumed that the investments would
produce lower returns than the regular mutual funds, but the group convinced
the committee that they would be strong.
“The past few decades have proved we were right,”
said Anderson.
Retired Ecology state employee Patricia Holm says
she depends on her pension. She said that just last week, Archbishop Desmond
Tutu added his voice in support of the growing divestment movement and called
for an anti-apartheid style campaign against fossil fuel companies, which he
blames for the “injustice” of climate change.
Holms asked the group to start the process of
divestment now, before stranded assets like the earlier banking crash and real
estate and technology bubble takes them by surprise.
“....Then, it could be too late to retain
investments. As a pensioner, I care about this….Clean energy is not costly, but
inaction is. Costly in terms of lives, livelihoods and economies if governments
and business continue to allow climate change impacts to escalate.”
Boutai Hargrove, a retired state employee, urged the
board to divest on behalf of her grandchildren’s and their grandchildren’s
future.
Rhonda Hunter, a retired 25 year employee of the
state, said that the Intergovernmental Panel on Climate Change recently declared
that most remaining fossil fuels must remain in the ground.
As for clean energy, Hunter said Goldman Sachs is declaring
the renewable energy sector one of the most compelling, attractive markets, investing
$40 billion in wind and solar.
“Goldman says the window for coal globally is
eroding and closing rapidly….Bloomberg New Energy Finance says power from wind is now cheaper than power
from new natural gas plants….Warren Buffett’s utility company just invested $1
billion in Iowa wind turbines and $5.6 billion to buy Nevada Energy. Are you worried about returns? Aperio
Group reports that divesting from the top 200 fossil fuel companies in an
indexed portfolio increases theoretical return risk by only .003 %.
“Don’t hope you can just get the industry to clean
themselves up – they won’t,” she told the investment board. “Their business
plan requires burning five times what the climate can afford. Please conduct a serious risk assessment to
divest our pensions from fossil fuels.”
Donna Albert, a current state employee with 20 years’
experience managing capital construction and a master’s degree in civil
engineering, said it is technically and economically feasible to transition
away from fossil fuels to 100 percent renewables. She read portions of an open letter written
and signed by 93 Harvard University professors addressed to the president of
Harvard University asking Harvard to purge its $33 billion endowment of
holdings in oil and coal companies.
Stewart Henderson, a current state employee, also
addressed the board:
“When the Manville Corporation went bankrupt in
1982, it was the largest corporation ever to go bankrupt in the U.S. Enron
stock went for $90.75 per share in mid-2000, then plummeted to less than $1 by
the end of November, 2001.
“Lehman Brothers held over $600 billion in assets
when it filed for bankruptcy in 2008. In
each case, a Fortune 500 firm that seemed like a Grade A investment years,
months, and even days earlier, suddenly left investors holding pennies on the
dollar. In each case, the corporations
were engaging in highly risky economic activity. In each case, they were
concealing that risk. And in each case, they were manipulating the political
process and public perceptions to further conceal the risks.
“Just as Manville hid the danger and costs of
asbestos, and Enron hid its high-risk accounting practices, and Lehman Brothers
hid their credit default swaps, the fossil fuel industry is hiding the facts
that they are cooking their books with bogus assets, and their entire business
model rests on their ability to escape paying for the costs of the
externalities they are imposing on citizens, on governments, and on other
corporations.
“As fossil fuels continue to drive climate change,
the fossil fuel industry is directly contributing to – but not paying for more
severe storms, including hurricanes, typhoons, and tornadoes, more severe
winter storms across the U.S., increased heat waves, increased drought,
increased wildfires, sea-level rise, ocean acidification and, as pointed out
recently by Governor Inslee, the increased rainfall which triggered the
mudslide in Oso, for the victims of which flags are flying at half-staff
throughout the state today.
“As this connection between fossil fuels and the
unpaid bills they cause becomes clearer; as alternative fuels become every day
more affordable; and as it becomes clearer that – as a United Nations panel
recently revealed – three quarters of the assets (the underground reserves) of
these fossil fuel companies are completely worthless, because we cannot afford
the cost of burning them; with each coming day it will become clearer that the
fossil fuel industry is in fact the greatest bubble the world has ever
seen.
“It is the legal and ethical responsibility of this
body to examine that risk far more carefully and publicly than it has done to
date. Sooner or later, the State Fund will be unloading these stocks. Let’s do it today, at the top of the market,
not years, or months, or days from now, at pennies on the dollar. We can’t
afford the risk.”
Rozanne Rants, spoke to the board in poetic terms:
“I will just add a few grace notes to the sad
symphony of possible futures you have heard here this morning…. I do not expect
you, individually or as a group, to make a quick decision about this question.
The question: shall we, must we, can we, choose to cut off support to companies
who profit greatly, while doing great damage to the earth, by mining and
selling fossil fuels….Maybe the best thing we can do is listen to the quiet
voices of those who have moved through denial, fear, and despair, and now sing
songs of hope.”
Bernie Meyer, who portrays Mahatma Gandhi throughout
the United States and India, said he is not a retired state employee, but
worked in human services during his working career, and has his retirement fund
in a socially responsible PAX world mutual fund account.
“Passover is this week, when Jews liberated
themselves and it’s the Holy Week for Christians, celebrating Jesus giving away
his life for humanity. These events represent growth. Like Gandhi, we must live
by truth and express it with love. In our time…we are experiencing….climate
change.”
Board
Response
Board Chair, State Treasurer James McIntire thanked
those who appeared before the board.
“We do listen and take this matter to heart. We operate
here as fiduciaries, to produce the highest return with minimal risk. We do
belong to a number of organizations that try to understand the risks associated
with standard assets, and I think we will continue to review your comments,
investment patterns and portfolios and how we move forward as investors.
“As a policy, the board has not supported divestment
for several decades…so from that perspective, we will be doing our own self-reflection.”
Prior to the group’s testimony, Liz Mendizabal,
institutional relations director for the Washington State Investment Board, explained
the board’s position on divestment to members of the Confronting the Climate
Crisis group in a letter on April 9:
“....You
may be interested to know that the WSIB is a member of the Boston-based Ceres,
a coalition of investors and companies that advocate for sustainable business
practices, as well as several other organizations working on long-horizon investment
issues. These include the Millstein Center for Corporate Governance, the
International Centre for Pension Management, the Council of Institutional
Investors, and the Asian Corporate Governance Association. The priority of all
of these organizations is to help investors better understand the risks
associated with short-termism, how responsible or poor governance impacts
investment returns, and the risks posed by potential stranded assets.
“Through
our corporate governance program activities, coalitions with other funds, and
participation in the organizations mentioned above, we believe divestment from
the fossil fuel industry would not be wise or effective as a means for the WSIB
to advance progress towards addressing climate change. The most productive and
meaningful strategy for the WSIB as a large institutional investor and
shareholder at this time is to use our influence to actively engage with fossil
fuel and other companies whose practices have come into question to encourage
them to place a higher priority on transparency, mitigation, and implementing
strategies focused on the long term that will be good for shareholders, the
environment, and all concerned.
“We
appreciate hearing your perspectives and value your concerns and suggestions.”
Group
Letter to Governor Jay Inslee
The Confronting the Climate Crisis group wrote and presented
a letter to Governor Inslee in February urging him to place a moratorium on all
new permits and infrastructure for fossil fuels in Washington.
The group has a
meeting with an aide to the Governor to discuss the issue in early May.
For
more information about the Washington State Investment Board, go to: www.sib.wa.gov or call (360) 956-4600.
For
more information about the Fellowship of Reconciliation’s Confronting the
Climate Crisis group, go to: www.olympiafor.org.
Above: Pictures of Washington State Investment Board members hang in the lobby of the agency.
