BY THE MICHIGAN DAILY
Published September 25, 2013
Ann Arbor is now considering reducing its investments from fossil-fuel holdings at the urging of the city’s Energy Commission. Specifically, the Energy Commission is suggesting that the city’s pension fund divest its financial assets from fossil-fuel industries. Divesting from fossil fuels would further Ann Arbor’s environmental objective — of reducing its carbon footprint. Although the pension fund needs to be a risk-averse investment to protect its beneficiaries, Ann Arbor can pursue existing and innovative strategies of making investments that protect public employees' pensions and avoid fossil fuels.
Despite being independent of the Energy Commission, the Ann Arbor City Council is seriously considering passing the suggested resolution to divest its pension fund from nonrenewable energy. Via its Climate Action Plan, the council has made it clear that reducing the city’s carbon footprint is a priority. This plan commits Ann Arbor to the goal of reducing its greenhouse-gas emissions by 90 percent by the year 2050. Yet, the council is conflicted when it comes to risking its pension fund. “I really want to be able to vote for this, but I'm really, really struggling with our responsibility to our city taxpayers,” said Councilmember Stephen Kunselman. It has been suggested that instead of divesting from fossil fuels, the city should invest in green energy.
The Energy Commission's initiative in suggesting this resolution is an admirable example that should be followed by other cities and institutions. By reducing its financial engagement from these energy companies, Ann Arbor will join other institutions and municipalities in advocating the transition to ‘green’ energy. The city council’s decision here will reveal its commitment to its own mandate set in the Climate Action Plan.
While implementing an environmentally conscious plan, it's possible for the city to maintain the reliability of its pension fund. As the University's endowment invest shows, fossil-fuel companies tend to be very safe investments. But Nancy Walker, the executive director of the city's retirement system, has said that there are other financial portfolios that provide equally safe returns without resorting to coal and oil companies. In doing this, the pension fund needs to take care in verifying that the investments made are low risk so as not to jeopardize employee pensions.
It’s estimated that the University has more than $900 million invested in the fossil fuel industry, though specific data on the University’s investments are not available to the public. The Divest and Invest campaign, a group of students, faculty and community members, has called on University administration to be transparent with its endowment investments — with the ultimate goal of divesting from nonrenewable energy industries. With the influx of donations coming to the University, administration should take the opportunity to examine its existing investments and withdraw from those that don’t align with its mission. The University should follow Ann Arbor’s example and consider responsible divestments from fossil fuel industries.