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 UnsoeldThe 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.
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.