The largest public pension fund in Washington, D.C. has purged its $6.4 billion fund of all direct holdings in fossil fuels, city council members and climate activists announced Monday.
The District of Columbia Retirement Board (DCRB) spent the last few years quietly selling off $6.5 million in oil, natural gas and coal investments, amounting to a mere one-tenth of 1 percent of the organization's total holdings, but made the public announcement at a press conference on Monday.
While other American cities including San Francisco have pledged to clear their pension funds of fossil fuels, Washington D.C. may be the largest fund in the nation to complete this step, though the amount divested was small. The DCRB joins more than 500 cities, philanthropies, universities and other organizations worldwide with assets totaling more than $3.4 trillion that have divested from at least some fossil fuels or pledged to do so.
"This is a decision that is morally and ethically the right thing" from a climate perspective, said D.C. council member Charles Allen at a recent press conference. "It is also financially the right thing," he added.
Some of the companies culled from the D.C. pension fund include Peabody Energy and Arch Coal, which both filed for bankruptcy this year, as well as ExxonMobil Inc., an oil giant being investigated by several attorneys general for possibly misleading the public and shareholders on the business risks associated with climate change.
Allen joined the city council weeks after it passed a resolution in December 2014 urging local pension fund managers to explore ways to minimize their carbon risk, including by divesting. Months before, the DCRB, which manages the retirement funds for the District of Columbia retirement plans for police officers, firefighters and teachers, had updated the investment policies to be more socially responsible. Allen quickly became an advocate on the issue and he co-sponsored a resolution in 2015 mandating DCRB to divest from fossil fuels over five years. That resolution, however, was never voted on.
DC Divest, a grassroots organization, spearheaded the city's divestment campaign and helped organize the Monday press conference.
Washington is showing "cities across the globe what they can do to lead on climate," DC Divest spokesman Hayden Higgins told InsideClimate News. He also said he hoped the successful campaign would send a message to Congress that it is time for decisive action on climate.
Last summer, the city's mayor signed a 20-year power purchase agreement to supply 35 percent of the district government's electricity needs from wind energy. Allen said the city council's goal is for 50 percent of the electricity purchased by the city to come from renewable energy sources by 2050.
Ellen Dorsey, executive director of the Washington D.C.-based philanthropic organization Wallace Global Fund, also hailed the news on Monday. "If we own fossil fuels, we own climate change," she said. The Wallace Global Fund largely completed its process of divesting in 2012.
The fossil fuel divestment campaign started on a small liberal arts college campus in New England in 2011 and has since spread across the globe with a steady stream of commitments. Recent divestment pledges have come from the University of Massachusetts and the Church of Scotland.
City and state pension funds have begun to join the trend. Last year, the California legislature ordered the state's two public pension funds California Public Employees' Retirement System (CalPERS) and California State Teachers' Retirement System (CalSTRS) divest their holdings from coal. The two funds, among the largest in the country, are worth nearly $500 billion combined and represent 2.4 million retirees.
This week, Rep. Ted Lieu (D-Ca.) sent a letter to the CalPERS chief executive Anne Stausboll calling on the group to divest from ExxonMobil. "Public funds should not be invested in a company that has repeatedly misled the American people on climate change," he wrote. "Divesting is not only the moral action to take, it is the only action left that can potentially provide an immediate catalyst for change at ExxonMobil."
Dorsey said she hopes the next wave of action is for cities to invest in climate solutions, energy efficiency and clean technology. "I think the potentials are enormous and the return on investment will be incredibly beneficial financially," she said.