Local Governments Reconsider Fossil Fuel Investments Following OC Oil Spill

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In Orange County towns like Irvine, as well as agencies like the South Coast Water District, officials have directly and indirectly invested millions of public dollars in the fossil fuel industry in hopes of replenishing their coffers. and finance government services.

But that could come to an end soon, as officials from those governing bodies – and from Southern California – have signaled they may reconsider the budget strategy, following a leak from an offshore pipeline that eventually coated with oil. Tar the iconic Orange County coastline in October.

It comes as towns in the county are also increasingly calling for the elimination of offshore drilling from the California coast.

In Irvine, a divided city council voted at its November 23 meeting to explore ways to end the city’s oil and gas holdings, among other types of investments deemed inconsistent with the city’s values, to following a board discussion that revealed this fact:

The city has $ 5 million stake in the large oil and gas company known as the Exxon Mobil Corporation (ExxonMobil), city treasurer Don Collins said at the meeting when the issue arose.

“We have seen devastating fires, oil spills and the increasing severity of our drought, and I just want to make sure that we don’t invest in companies that go against our values,” said the Mayor Irvine Farrah Khan at the meeting.

She and her fellow council members Tammy Kim and Larry Agran have all voted in favor of the city’s annual investment policy in general, for the year 2022.

But their approval depended on the condition that the town hall begins to find “all investments that are with companies that go against our environmental and social objectives” and “immediately begin the process of divestment of these entities and identify New investment opportunities, Khan said. before the vote.

Council members Mike Caroll and Anthony Kuo voted against this direction without saying anything.

There also seemed to be some uncertainty over the city treasurer’s idea.

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Collins ahead of the vote defended ExxonMobil’s investments as being fully in line with state and local policies and said he preferred the board to wait to vote until the state issues clearer guidelines on divestment.

“There are a few cities that have implemented (divestment) policies, as well as restrictive policies that boil down to an individual’s interpretation,” he said. “I would like to table this until the state or the federal government produces clearer guidance that we can follow, as opposed to my interpretation or your interpretation of what is right and wrong.”

Khan, in response, said: “Are we not in a position, as a city, to decide what to invest in? “

“We are… but, for example, you ask me about Exxon and the investment in Exxon, and I would ask you if you know that they invest $ 1 billion a year and support over 100 entities that are looking for alternative energy sources? ”Collins replied.

Khan replied, “I think I would support ExxonMobil if it was a renewable energy company and not an oil company like it is today, no matter how much they invest” in the renewable energies.

“I wouldn’t argue with you at all, however, they’re in transition and as you well know British Petroleum and Shell are too, not to mention the fact – well – I’m not going to get into an argument about who controls the oil in this country, ”Collins said.

Before the vote, Agran said: “It’s not really such a difficult question.”

“Why do we wait for the state to rule us? We must lead so that other cities follow, other institutions follow, the state itself (follow), ”he added.

A discussion of divesting from the fossil fuel industry is also on the horizon for the South Coast Water District – starting next January.

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The agency provides water and sanitation services to approximately 35,000 residents each year along the county’s southern coast, including Dana Point, South Laguna Beach, and the areas of San Clemente and San Juan Capistrano.

“A growing number of agencies have sent requests” to the state’s public employee pension system, CalPERS, asking the agency to divest itself from fossil fuel companies as part of its investment strategy – “So I hope you can join them,” said local environmentalist Hoiyin. Ip to agency directors at a meeting on November 18.

CalPERS is the largest government employee retirement fund in the United States – administering the pensions of 1.8 million members, such as those in the South Coast Water District – and has been criticized for its investment in fossil fuel deposits .

Specifically, a statewide divestment advocacy group known as Fossil Free CA says the agency has invested $ 30 billion in the fossil fuel industry. Miriam Eide, the group’s coordinating director, said in an email Thursday that the figure was based on an analysis of investment data by a third-party research group.

CalPERS did not respond to questions about the accuracy of that figure on Thursday.

Asked about the agency’s position on divestment in a phone interview, CalPERS spokesperson Wayne Davis said, “We believe engagement is the right approach. We have had great success in our relations with public enterprises.

The agency also took a position in an online public statement, saying it was the most effective in raising awareness among companies on “environmental, social and governance issues … including climate change, availability of natural resources and respect for human rights ”.

“The engagement is yielding real results,” the agency writes, adding that the divestment “increases the risk” while losing the agency’s money and its “voice” as a shareholder in such companies, “loser thus our best way to influence a company to act in accordance with our core values ​​and principles.

The agency’s website also states: “The divestment call has become an increasingly popular tool to promote an important cause or belief. As laudable as the underlying motivations may be, divestment has unintended consequences for the CalPERS fund, our board of directors and our members.

CalPERS listed companies like ExxonMobil, among other oil and gas companies, as part of its annual investment report for the year 2020.

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In response to comments from Ip – a member of the Sierra Club – the directors and staff of the South Coast Water District board suggested that the issue of divestment be discussed at a future meeting.

“We should have him on the (Administration and Finance) committee,” said Wayne Rayfield, director of the board, at the November 18 meeting.

“Definitely,” said agency chief executive Rick Shintaku.

Asked on December 2 when this conversation could take place, district spokeswoman Sonja Morgan said the plan was to bring her back to the administration and finance committee in January next year.

In neighboring San Diego County, the town of Encinitas voted unanimously in September to urge CalPERS to take such a divestment step and update the town’s investment policy which has no direct stakes in fossil fuels.

However, the city has invested in companies that do so, through its participation in “mutual funds,” according to a report from city staff.

Likewise, 1.26% of the South Coast Water District’s investment portfolio represents stakes in JP Morgan Chase & Co, according to its holdings report in September. The institution has been identified by the Sierra Club’s environmental lobbying organization as the “world’s largest fossil fuel banker”.

During the meeting, Ip praised the 1.26% investment figure as an indicator of the “quaint” water district’s dependence on fossil fuel resources.

In Laguna Beach, however, city officials are also facing calls to pull similar investments from fossil-fuel-friendly banks.

The city council is expected to discuss its investment policy in general at its next meeting on December 14.


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