A resolution on divestment from fossil fuel companies has been approved by the Ann Arbor city council on a 9-2 vote.
Dissent came from Ward 2 councilmembers Jane Lumm and Sally Petersen. Petersen was not in favor of a resolution that had no “teeth,” and would have been inclined to support a proactive resolution that provided direction for investment in clean energies.
The action came at the council’s Oct. 21, 2013 meeting, which was the third time the resolution had been in front of the council. When it was initially considered on Sept. 3, 2013, the council voted it down. But on Sept. 16, 2013 the resolution was brought back for reconsideration, then postponed until Oct. 21.
The resolution was amended at the table to soften it – at the suggestion of Christopher Taylor (Ward 3). For example, the word “urges” was replaced with “requests” throughout the resolution. Also from the first resolved clause the word “immediately” was deleted. Another piece of language from Taylor’s amendments: “…to investigate whether it can reasonably divest…” The phrase “consider ensuring” was used instead of just “ensuring.”
The council’s resolution was based on an energy commission resolution passed on July 9, 2013 recommending 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 defines 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 cites 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 warns 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.
Nancy Walker, executive director of the city’s employee retirement system, has reviewed for the council at its meetings the implications of fossil fuel divestment on 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.
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]