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Last month, as you may recall, I posted an urgent action diary asking Ann Arbor Kossacks to contact the City Council regarding a proposal to divest the city's pension fund of all fossil fuel holdings. Several of you did do so, and/or spread the word to your Ann Arbor friends.

As it happened, the Council voted at that meeting to set aside the question until the Pension Board (officially: The Ann Arbor Employees' Retirement System Board of Trustees, or AA ERS) could weigh in on the matter.

Unfortunately, I forgot to keep tabs on the new date for consideration, which took place at the City Council meeting last Monday, the 21st. Fortunately, the resolution was taken up for discussion, and PASSED by a vote of 9-2. This makes Ann Arbor among the first dozen or so municipalities in the U.S. to take such a step.

Now, there were some changes introduced to the resolution which could have the effect of watering it down, or delaying implementation. As the Ann Arbor Chronicle reports, language requiring immediate action has been deleted, and language that "urges" the board to take action has been replaced by "requests." (For more details please see the Chronicle link; official meeting minutes will not be posted until after they are approved at the next scheduled City Council meeting.)

That implementation may be weakened is a possibility, especially given the hostile position taken by the AA ERS Board, stated in a section of their report titled "Other Considerations." [1]

It is important to re-emphasize that the Board only considered the anticipated direct costs associated with adopting a fossil fuel divestment policy. Clearly, the impact to risk and return would need to be seriously considered.

In addition, it is important to note that the definition of socially responsible investing (SRI) not only varies by individual and community but also over time. If one SRI issue is adopted as part of an investment approach, the Board and/or City Council will likely be presented with other SRI issues (i.e., alcohol, tobacco, firearms, emerging manager allocations, alternative energy investments, etc.). Analyzing the relative merits of numerous SRI issues could be time consuming.

In addition, preliminary research indicates that only three city councils have approved the submission of fossil fuel divestment recommendations to their respective retirement boards. At this time, fossil fuel divestment has not yet been adopted by those retirement boards.

The AA ERS report also states that about 13% of the fund is invested in plans that cannot be managed in such a way as to divest from fossil fuel corporations "without exorbitant costs (that would clearly outweigh any potential benefit) or changing investment strategies." So we shall see what develops over time with that position.

In truth, it is hard to anticipate exactly what the short-term costs might be to the retirement fund. The AA ERS felt comfortable giving a figure only for their estimate of an increase of $125-175,000 annually in management fees. Compared to the total assets in the fund of $540 million, that is a small expense to take on.

However, other city entities have gone on record in solid support of a divestment program. The city's Energy Commission is the body that prepared the resolution for City Council consideration in the first place.  In that resolution, they cited the current climate action plan for Ann Arbor which sets goals for the municipality to "[reduce] greenhouse gas emissions by 25% by 2025 and 90% by 2050."[2]

While I'm in that document, let me reprint a couple of other Whereases which I found rather heartening and endearing:

WHEREAS, The City of Ann Arbor has a stated and moral responsibility to protect the lives and livelihoods of its inhabitants from the threat of climate change;

WHEREAS, The City of Ann Arbor believes that its investments should support a future where all citizens can live healthy lives without the negative impacts of a warming environment and the health impacts from particulate pollution produced by the continued burning of fossil fuel....

Isn't that lovely? It certainly is pleasant to have something to celebrate.

Credit for the success of this resolution goes to the nine City Council members who voted in favor of it: Sabra Briere and Sumi Kailasapathy (Ward 1), Stephen Kunselman and Christopher Taylor (Ward 2), Marsha Higgins and Margie Teall (Ward 4), and Mike Anglin and Chuck Warpehoski (Ward 5), plus the mayor, John Hieftje. Of the two who voted against the resolution, Sally Petersen apparently felt the resolution was not strong enough. Time will tell whether her reservations were well-founded.

Many thanks are also due to the local climate change activists who pushed this all the way through this protracted process. I know the names of only a few, and so in order not to neglect anyone I will not name the ones I know. But I will send you to the aa350.org page which has some celebratory and congratulatory words about the accomplishment, including thanks to some particular activists on the city Energy Commission, and plenty of other interesting information as well.

I owe special thanks for this diary to ShoshannaD, who always does a great job of passing on information of interest. This time, she alerted several of us to the recent Ann Arbor development and provided the media commentary besides. You do good work, sh!

NOTES
As far as I can tell, there are no direct URLs for the two documents I reference. They both may be found as PDF attachments for the related agenda item for Monday's Ann Arbor City Council meeting, under the city's resolution tracker. [1] is called ""AAERS- Fossil Fuel ltr to City Council 10-17-13" and [2] is called "Approved Resolution of the Ann Arbor Energy Commission to City Council to Urge City of Ann Arbor Employees’ Retirement System to Divest from the Top 200 Publicly-Traded Fossil Fuel Companies." Please note that the latter PDF does NOT include the revised language that was approved at the Council meeting.

Originally posted to peregrine kate on Thu Oct 24, 2013 at 04:54 PM PDT.

Also republished by Climate Change SOS, Michigan, My Michigan, Motor City Kossacks, DK GreenRoots, Your Government at Work, and State & Local ACTION Group.

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