A resolution that was defeated at its previous meeting on Sept. 3, 2013 has now been postponed in a re-vote taken by the Ann Arbor city council at its Sept. 16, 2013 meeting. The resolution calls on the city’s employee retirement system board to stop investing in fossil fuel companies. The retirement system board is not required to follow the council’s encouragement.
The council’s vote to postpone consideration of the resolution until Oct. 21 was unanimous. The rationale for postponement was based in part on a desire to allow the energy commission, which had recommended that the council pass the resolution, to take another look at the issue. Sally Petersen (Ward 2) was keen to explore the idea of investing in clean energy companies as opposed to divesting from fossil fuels. The rationale was also based in part on a desire to give the retirement board time to consider the issue, and to hear from the retirement board on the question.
Voting against the resolution on its initial consideration on Sept. 3 were Stephen Kunselman (Ward 3), Margie Teall (Ward 4), Mike Anglin (Ward 5) and Sally Petersen (Ward 2). So at that meeting, the resolution fell short of the six-vote majority it needed on the 11-member council. Jane Lumm (Ward 2) and Marcia Higgins (Ward 4) were absent on Sept. 3.
During their Sept. 3, 2013 meeting, councilmembers had asked Nancy Walker, executive director of the city’s employee retirement system, about implications for the retirement fund. Walker had told the council that moving to separately managed accounts from the system’s preferred strategy – of using co-mingled funds, mutual funds, and particularly indexed funds – would cost 30-40 basis points more in fees, independent of any difference in the return on investment. Much of the discussion on Sept. 16 also focused on the increased costs associated with divestment.
In more detail, an energy commission resolution passed on July 9, 2013 recommended that the city council urge the city’s employee retirement system board to cease new investments in fossil fuel companies and to divest current investments in fossil fuel companies within five years. The resolution defined a “fossil fuel company” to be any of the top 100 coal companies or top 100 gas and oil extraction companies. The top three coal companies on the list are: Severstal JSC; Anglo American PLC; and BHP Billiton. The top three gas and oil companies on the list are: Lukoil Holdings; Exxon Mobil Corp.; and BP PLC. The basic consideration of the resolution is the importance of the role that greenhouse gas emissions play in global warming.
The resolution cited the city of Ann Arbor’s Climate Action Plan, which has a goal of reducing greenhouse gas emissions by 25% by 2025 and 90% by 2050. The resolution warned that fossil fuel companies have enough fossil fuel reserves that, if burned, would release about 2,795 gigatons of CO2. That’s five times the amount that can be released without causing more than 2°C global warming, according to the resolution.
By council rule, a councilmember voting with the prevailing side can bring back a question for reconsideration at the same meeting or the immediately subsequent meeting. On Sept. 16, that councilmember was Teall.
This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]