In a historic move, Somerville has become the first municipality in the state to divest its retirement system from the fossil fuel industry.
The Somerville Retirement Board has enacted a comprehensive fossil fuel divestment plan by moving $9.2 million in assets into a fossil fuel free index fund as of June 21. The board voted 4-0 at its May 25 meeting to adopt a subcommittee recommendation of a four-step plan to move its assets out of funds that include the top 200 fossil fuel companies, with today’s divestment representing the first of those four steps.
This vote is a critical victory in the fight against climate change and demonstrates not only a prudent abandonment of an industry about to be made obsolete by the parallel stresses of stranded assets and the booming renewable energy sector, but also the power of municipalities to challenge the institutional underpinnings of the fossil fuel economy.
“We’re so thankful to the SRB for taking this momentous action,” said Colby Cunningham of Fossil Free Somerville. “After a thorough and prudent investigation of the issue over the last 18 months, the board has realized that it is in the best interests of the pension system to phase out investment in an industry that is experiencing a historic period of volatility and subscribes to a business model that is incompatible with the long-term survival of the human race.”
The board’s vote transfers all assets held with fund manager Rhumbline Institutional Index Management into a fossil fuel security free S&P 500 index fund. This transfer of $9.2 million represents 4 percent of the pension system’s nearly $250 million portfolio. The SRB’s new plan calls for three additional initiatives, including discussions with its largest equity fund manager, Congress Assets, about future possible equity divestment, an RFP process for a fossil fuel free bond fund solution, and an exploration of energy efficiency and climate vulnerability in its real-estate holdings.
The move is believed to be the first of its kind taken by any municipality in Massachusetts, and only the third in the country.
“This is a huge success for the people of Somerville, and it provides a blueprint to divestment for the other 105 cities and towns across Massachusetts that manage their own pension systems,” Fossil Free Somerville member Shoshana Blank said. “Somerville has shown the way on this issue, and we look forward to working with people throughout Massachusetts as they move their own communities toward divestment.”
Fossil fuel companies are an increasingly bad bet for investors, with long-term global trends continuing to favor renewable energy over the dirty fuels of the past. Despite moves by the current U.S. presidential administration to abandon the country’s climate change commitments and shore up a coal industry in inevitable decline, the outlook is clear — the world is moving away from fossil fuels, and smart investors will get out before those securities crash completely.
About Fossil Free Somerville
Fossil Free Somerville is a citizens advocacy group that has been working to encourage the Somerville Retirement Board to divest the city’s pension fund from the top 200 fossil fuel companies. It led a successful petition drive to convene a hearing of the Board of Aldermen to vote on a divestment initiative in March 2014. The board approved a nonbinding resolution in support of divestment in June 2014.