After five years of organizing, the campaign to force New York City to divest its public pension funds from fossil fuel holdings has won. On Wednesday, Mayor Bill de Blasio announced his intention to divest over $5 billion in city pension money from fossil fuel stocks by 2022. It was a declaration of war against the fossil fuel industry.
New York City’s pensions are divided into five distinct funds: firefighters, police, teachers, Department of Education managers and a general public employees fund. Each fund has its own board of trustees but often these trustees work together, sharing information and perspectives. In total, city pensions control $189 billion in assets.
At its inception, the divestment movement’s focus was on universities and foundations. Globally, institutions with assets surpassing $5 trillion dollars have divested from fossil fuel holdings since 2012. Norway, whose wealth is primarily due to oil, has even asked its Central Bank to divest its $1 trillion sovereign wealth fund from fossil fuels in order to protect the nation from the inevitable plunge fossil fuel stock values.
Pensions, however, are the big prize. Pensions as a sector are the largest investors on the stock market, larger than investment houses and banks. Pensions are also the largest holding of capital for workers. For union members, pensions represent an area of political power that has been largely ignored. One important breakthrough of New York City divesting from fossil fuels is that it puts the use of pensions for social purposes — within limits of financial security for current and future retirees — on the agenda of U.S. unions.
In New York, unions, together with the climate movement are in the driver’s’ seat when it comes to climate protection.
De Blasio’s announcement followed the initiation of a lawsuit against the world’s five largest oil companies — ExxonMobil, Chevron, BP, Shell, ConocoPhillips — for damages to the city due to climate change, notably Hurricane Sandy. It also accuses the companies of hiding the science behind global warming and of failing to disclose the impact of greenhouse gas emissions. At a press conference, Wednesday, de Blasio, Comptroller Scott Stringer and Public Advocate Letitia James all indicated support for moving the city toward a greater use of renewable energy and strict regulations around energy efficiency. Building emissions account for 71 percent of the city’s carbon footprint.
Included in the press conference were 350.org’s Bill McKibben and Naomi Klein, author of No is Not Enough and This Changes Everything: Capitalism vs. the Climate. Klein presented a militant approach to ending the fossil fuel economy: holding the industry accountable and creating policy that advances the interests of those most affected by the climate crisis — poor people and people of color. She advanced the idea of a “just transition” that ensures workers in the fossil fuel industry be retrained for jobs in a renewable energy economy and not lose their livelihoods.
De Blasio invited states, nations as well as other cities to join together to defeat the fossil fuel industry and invest in more climate-friendly industries. He and other speakers noted that, in the present political moment, with Trump moving to exacerbate climate catastrophe, it is incumbent upon cities and states to move in as aggressively possible to protect the planet. We will not “make the mistake of waiting on our national government to act when it’s unwilling to,” de Blasio said. “This city is acting. We want other cities to act. We want other states to act. Together we can make a huge difference.”
Building a Movement
The continuous pressure grassroots groups placed on elected leaders likely lies behind the decision to divest. Divest NY, the movement’s main organizing team in New York, worked for five years with unions, 350.org, the DivestInvest Network, NY Communities for Change, the Peoples Climate Movement and others, providing educational materials to the public, holding demonstrations and lobbying public officials. But the last year of the campaign brought much more energy and participation. The recent Sandy 5 march, commemorating the fifth anniversary of Hurricane Sandy included divestment in their list of demands. Composed largely of people of color, the march made a huge difference in expanding the support and reach of the divestment demand.
Meanwhile, Divest NY teamed up with Public Advocate Letitia James, who spoke frequently at rallies and meetings and played a key role in reaching out to unions beginning in early 2017. She organized a public hearing in late November on climate change that focused significantly on divestment. While James was invited to speak at de Blasio’s press conference, she was fairly late on the agenda. To the unschooled eye, it looked like Stringer and de Blasio were the initiators of divestment but, in truth, it was Letitia James who started and kept the ball rolling.
Stringer is a bit of a Johnny-come-lately. Divest NY bird-dogged the comptroller, who kept pushing instead for “shareholder activism,” using the weight of the city’s investments to change the policies of the big fossil fuel companies. Perhaps sensing an opportunity to score points at the expense of his political rivals in the city, Gov. Andrew Cuomo announced on Dec. 19 his interest in divesting New York State’s $192 billion public pension funds from fossil fuels, putting him at odds with State Comptroller Thomas DiNapoli and the state’s public service unions.
With top state officials in Albany at loggerheads, Stringer indicated he was now in favor of divestment. When de Blasio told Divest NY that he was coming out for divestment with Stringer by his side, we knew that there was a bit of a pissing contest going on. Well piss away, we said to ourselves, as long as it is in the right direction!
Unfortunately, the city’s public service unions played a minor role in this drama. While the Professional Staff Congress, representing the 27,000 faculty and staff at CUNY, participated fully in the divestment movement over the last year, no other unions jumped into the fray. Henry Garrido, Executive Director of AFSCME District Council 37, indicated his support for divestment, but there was very little organizing on that behalf in the union. While United Federation of Teachers (UFT) President Michael Mulgrew spoke at the Mayor’s press conference, little prior activity or support for divestment was seen in the UFT.
But that is all water under the bridge. It seems that de Blasio has secured the support of public sector unions, certainly enough to move forward. The hope among activists is that these developments will initiate environmental committees within these unions that can continue to advance climate policies and engage rank-and-file members as well as their leaders.
National and International Impact
Nationally, the Labor Network for Sustainability (LNS) hosted over 50 unions to discuss strategies and tactics for advancing climate justice, including divestment efforts. The advances the movement has made in New York will undoubtedly catalyze divestment pushes in unions beyond the city and state. Trade Unions for Energy Democracy, a global network of over 120 unions from 50 nations, is also advancing efforts to combat climate change. All these developments work synergistically and are helping to move the climate movement forward.
One frequent of the concerns around divestment, raised by pension fund trustees, is financial. Will divesting from fossil fuels harm the economic viability of pension funds? Noting that the value of fossil fuel stocks has been dipping over the last several years, Tom Sanzillo, a former acting comptroller of New York State, asserts that such stock is over-valued because valuations are heavily based on estimates of oil and gas still in the ground. If that fuel is actually unearthed and used, it will cause such catastrophic climate change that human life on earth will become untenable. As the market moves away from fossil fuels toward renewable energy, that oil and gas will become “stranded assets” that can deeply devalue the stock.
The importance of New York City’s lawsuit against the oil and gas companies is not just economic — demanding that polluters pay for damage inflicted upon the city and the planet — symbolic as well. The suit names the fossil fuel industry as a public enemy, one that must be rooted out and supplanted by a renewable energy economy. Although this sort of suit has been filed previously by smaller municipalities lacking the resources to fight a prolonged legal battle, New York is prepared to move forward aggressively.
For the climate movement in New York, these developments are a reason to celebrate even as there is still much work to be done, like planning out how we want our pension funds invested. Renewable energy projects, public banks, affordable housing, public transit? But for the moment, let’s break out the champagne and savor the moment.
Nancy Romer is an activist with DivestNY and People’s Climate Movement-NY and a member of the environmental justice working group of the Professional Staff Congress-CUNY (AFT Local 2334).
Photo (top): Mayor Bill de Blasio hosts a press conference announcing plans to divest from fossil fuels, Wednesday, Jan. 10, 2018. Credit: Benjamin Kanter.