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https://almanacnews.com/blogs/p/print/2015/02/01/divestment-not-a-good-way-to-fight-climate-change


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By Steve Levy

Divestment Not a Good Way to Fight Climate Change

Uploaded: Feb 1, 2015

Next week the city council will discuss a memo from council members Berman, Burt, Holman and Kniss seeking to ask CalPERS to divest holdings in companies associated with fossil fuels. I appreciate their intentions with regard to climate change but do think divestment is a poor strategy with some unintended negative consequences.

I know these council members and endorsed Berman and Holman in the recent election. I listened yesterday to the council retreat and appreciate the good will and ideas from council members Burt and Kniss, especially Liz's passionate plea to include healthy communities as a priority for Palo Alto. I also have many friends who will probably support this memo because they feel passionately about climate change.

I think climate change is real and actions are needed. I support America's efforts to engage international partners and federal legislation to encourage higher mileage vehicles and alternative energy development where cost effective. I support California's laws regarding low carbon fuel standards, the cap and trade system to reduce GHG emissions and have been part of the Air Resources Board team of economists who confirmed that AB32 regulations would not harm the state economy. I support Palo Alto's efforts to reduce the need for car travel and hope we can do something to encourage cost effective energy retrofits of buildings.

So why not divestment, too? First, I believe that individuals have the right to do what they wish with their own initiatives to fight climate change—to sell their stock in these companies. Here we are talking about investments that affect other people, not personal choices.

One, I don't like the idea of elected officials telling financial professionals how to invest money. I also would not support Palo Alto council members telling doctors and hospitals how to deliver health care. It may be true that going forward other investments may offer returns as good as those from fossil; fuel companies but that should be the decision of the financial advisors.

Two, there will be unintended victims of divestment. Divestment is about stock ownership. If successful, divestment will push down the prices of stock in targeted companies as well as possibly making future operations more costly. That stock and the associated losses will hurt innocent investors. Moreover causing financial distress to the companies may undermine the very measures we are seeking—investment in cleaner fuels and alternative energy sources.

Three, divestment does not raise a dollar to improve CalTrain, retrofit buildings, invest in traffic mitigation measures in Palo Alto like shuttles, encourage China, India and Brazil to reduce GHG emissions.

There are better ways to achieve these goals and to address climate change and they deserve our full attention.

I also believe in walking the talk. Though I do not support divestment, we have owned a hybrid since 2002 and now own a plug in EV. My wife is conscious about efficient light bulbs and keeping close control of our energy use. But we have not abandoned air travel (a big fuel user) and I do not check every item in our daily lives to see if it is the most effective response to climate change.

I am hopeful that responders will honor two requests.

One, address all three of my points. It is fine to disagree but state a position on all points so readers know your reasoning.

Two, if you believe that divestment is a good policy for the city to tell others what to do, please tell readers how you are "walking the talk" in your own personal lives (a good idea for the colleague memo's authors as well) including that you have examined the holdings in any mutual funds or stocks you own or are managed for you and sold any that have fossil fuel companies.

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