Skip to main content
MENU
Subscribe
  • Sign Up Free
  • LOGIN
  • Subscribe
  • Topics
    • Alternatives
    • Artificial Intelligence
    • Consultants
    • Defined Contribution
    • ESG
    • ETFs
    • Face to Face
    • Hedge Funds
    • Industry Voices
    • Investing
    • Money Management
    • Partner Content
    • Pension Funds
    • Private Equity
    • Real Estate
    • Regulation
    • SECURE 2.0
    • Special Reports
    • Washington
    • White Papers
  • Rankings & Awards
    • 1,000 Largest Retirement Plans
    • Top-Performing Managers
    • Largest Money Managers
    • DC Money Managers
    • DC Record Keepers
    • Largest Hedge Fund Managers
    • World's Largest Retirement Funds
    • Best Places to Work in Money Management
    • Excellence & Innovation Awards
    • WPS Innovation Awards
    • Influential Women in Institutional Investing 2023
    • Eddy Awards
  • ETFs
    • Latest ETF News
    • Fund Screener
    • Education Center
    • Equities
    • Fixed Income
    • Commodities
    • Actively Managed
    • Alternatives
    • ESG Rated
  • ESG
    • Latest ESG News
    • The Institutional Investor’s Guide to ESG Investing
    • ESG Sustainability - Gaining Momentum
    • ESG Investing | Industry Brief
    • Innovation in ESG Investing
    • 2023 ESG Investing Conference
    • ESG Rated ETFs
    • Divestment Database
  • Defined Contribution
    • Latest DC News
    • The Plan Sponsor's Guide to Retirement Income
    • DC Money Manager Rankings
    • DC Record Keeper Rankings
    • Innovations in DC
    • Trends in DC: Focus on Retirement Income
    • 2023 Defined Contribution East Conference
  • Searches & Hires
    • Latest Searches & Hires News
    • Searches & Hires Database
    • RFPs
  • Research Center
    • The P&I Research Center
    • Earnings Tracker
    • Endowment Returns Tracker
    • Corporate Pension Contribution Tracker
    • Pension Fund Returns Tracker
    • Pension Risk Transfer Database
  • Careers
  • Events
    • View All Conferences
    • View All Webinars
Breadcrumb
  1. Home
  2. GOVERNANCE
August 07, 2017 01:00 AM

San Francisco board split on staff-opposed measure to divest fossil-fuel companies

  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    Updated

    The investment staff of the San Francisco City & County Employees' Retirement System and its general investment consultant, NEPC, have come out in opposition to a plan to divest fossil-fuel company holdings, including industry giants like Exxon Mobil, Royal Dutch Shell and Chevron Corp.

    Meanwhile, the retirement board is split on how they will vote, four years after the San Francisco Board of Supervisors passed a resolution calling on the $23 billion pension fund to divest of fossil-fuel company securities. The issue was expected to be voted on Wednesday, but was later removed from the agenda due to the absence of two board members.

    The retirement board, which operates independently from the board of supervisors, approved divesting of a small portion, $446,000 of its $40 million-plus thermal coal holdings on May 16, but up to now had taken no action on its larger $442 million stock holdings and its $31 million in fixed-income securities in oil companies. Fossil-fuel stocks make up 4% of the pension plan's equity portfolio.

    William Coaker Jr., chief investment officer, said in a memo posted on the system's website that staff is "aware and concerned" about the "potential negative effect" fossil-fuel holdings in the portfolio could have on the environment and climate change.

    But Mr. Coaker rejected divestment. "We recognized that SFERS divestments from fossil-fuel holdings will not reduce carbon emissions — it simply changes ownership of these securities. With divestment, SFERS will forfeit its standing as a shareholder to engage these fossil-fuel companies to transition their business plans to a low-carbon economy in line with the Paris agreement."

    In a 164-page report, Mr. Coaker argues that while alternative energy sources are growing, fossil fuels still account for 84% of energy usage and that rate will still be 78% in 2040. He said "fossil fuels make modern life possible" and the fuels are used to make a broad range of devices including cell phones, toothbrushes and perfumes.

    In a separate report dated Aug. 9, consultant NEPC said that fossil-fuel stocks have been one of a limited pool of assets that have performed well in environments of higher inflation. "For example, during the most recent period of high inflation from 1973 to 1981, the S&P 500 index returned a cumulative -26% in real terms whereas equities in the energy sector returned +154% in real terms."

    The NEPC report also says that divestments have not been broadly adopted by U.S. institutional investors. "While a select number of U.S. foundations and endowments, non-U.S. institutions (including the Swedish AP7 fund), and a few U.S. corporate pensions have pursued a fossil-fuel divestment strategy, broad action on fossil-fuel divestment has been avoided by public funds."

    SFERS board member Victor Makras, who introduced the resolution to divest of fossil-fuel companies on May 17, called Mr. Coaker's and NEPC reports "dishonest." In a phone interview, Mr. Makras said no analysis was done by either the investment staff or NEPC as to how fossil-fuel stocks performed compared to a broader stock market index over recent time periods of one, three, five and 10 years.

    He said the analysis could help the board determine from a historical perspective whether eliminating fossil-fuel companies from the portfolio hurts investment performance or not.

    Mr. Coaker and NEPC officials could not be reached by press time for comment on Mr. Makras' statement.

    The seven-member retirement board is split on whether to divest. Board member Leona Bridges seconded Mr. Makras' May 17 resolution; and board member Malia Cohen, who is also a San Francisco city supervisor, is supportive of the measure. Board members Joseph Driscoll, Brian Stansbury and Wendy Paskin-Jordan are expected to vote against the divestment measure.

    That would leave the deciding vote in the hands of board member Al Casciato, who has not indicated his position.

    Related Articles
    Boston University to avoid coal, tar sands oil investments
    Ireland discussing bill to require fossil-fuel divestment by sovereign wealth f…
    Riverside Church to audit endowment, divest from fossil-fuel companies
    Montgomery County Council resolves to divest pension fund's fossil-fuels holdin…
    Investors move to limit impact of climate change on their portfolios
    San Francisco City & County Employees slates $185 million for private equity
    SSGA supports more climate-change disclosure proposals in first half of 2017
    San Francisco approves raising hedge funds to 15%, eliminates core bonds
    New York governor calls on Common Retirement Fund to move away from fossil-fuel…
    NYC Retirement Systems to move toward divesting fossil-fuel companies
    San Francisco City & County Employees approves plan to reduce fossil-fuel holdi…
    Recommended for You
    paycheck 1550_i.jpg
    CEO compensation hits second highest level – AFL-CIO tracker
    Securities_and_Exchange_Building_i.jpg
    Investor groups defend SEC's proxy authority
    Carving a Path For Fixed Income Through Shifting Scenarios
    Sponsored Content: Carving a Path For Fixed Income Through Shifting Scenarios
    Sponsored
    White Papers
    2023 Hot Topics in Retirement and Financial Wellbeing
    Bonds: Shaken, but Not Stirred
    Today’s rate cycle and US equities in target date portfolios
    A Study of Allocations to Alternative Investments by Institutions and Financial…
    Unlocking Hidden Value in Japan
    The Art of the Possible in Data Automation for Institutional Investors
    View More
    Sponsored Content
    Partner Content
    The Industrialization of ESG Investment
    For institutional investors, ETFs can make meeting liquidity needs easier
    Gold: the most effective commodity investment
    2021 Investment Outlook | Investing Beyond the Pandemic: A Reset for Portfolios
    Ten ways retirement plan professionals add value to plan sponsors
    Gold: an efficient hedge
    View More
    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today
    December 12, 2022 page one

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    130 E. Randolph St.
    Suite 3200
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Custom Content
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • Topics
      • Alternatives
      • Artificial Intelligence
      • Consultants
      • Defined Contribution
      • ESG
      • ETFs
      • Face to Face
      • Hedge Funds
      • Industry Voices
      • Investing
      • Money Management
      • Partner Content
      • Pension Funds
      • Private Equity
      • Real Estate
      • Regulation
      • SECURE 2.0
      • Special Reports
      • Washington
      • White Papers
    • Rankings & Awards
      • 1,000 Largest Retirement Plans
      • Top-Performing Managers
      • Largest Money Managers
      • DC Money Managers
      • DC Record Keepers
      • Largest Hedge Fund Managers
      • World's Largest Retirement Funds
      • Best Places to Work in Money Management
      • Excellence & Innovation Awards
      • WPS Innovation Awards
      • Influential Women in Institutional Investing 2023
      • Eddy Awards
    • ETFs
      • Latest ETF News
      • Fund Screener
      • Education Center
      • Equities
      • Fixed Income
      • Commodities
      • Actively Managed
      • Alternatives
      • ESG Rated
    • ESG
      • Latest ESG News
      • The Institutional Investor’s Guide to ESG Investing
      • ESG Sustainability - Gaining Momentum
      • ESG Investing | Industry Brief
      • Innovation in ESG Investing
      • 2023 ESG Investing Conference
      • ESG Rated ETFs
      • Divestment Database
    • Defined Contribution
      • Latest DC News
      • The Plan Sponsor's Guide to Retirement Income
      • DC Money Manager Rankings
      • DC Record Keeper Rankings
      • Innovations in DC
      • Trends in DC: Focus on Retirement Income
      • 2023 Defined Contribution East Conference
    • Searches & Hires
      • Latest Searches & Hires News
      • Searches & Hires Database
      • RFPs
    • Research Center
      • The P&I Research Center
      • Earnings Tracker
      • Endowment Returns Tracker
      • Corporate Pension Contribution Tracker
      • Pension Fund Returns Tracker
      • Pension Risk Transfer Database
    • Careers
    • Events
      • View All Conferences
      • View All Webinars