The mayors of London and New York are calling on cities to move municipal pension funds away from fossil-fuel assets in a bid to help avert climate breakdown.
In a new C40 report, “Divesting from Fossil Fuels, Investing in Our Future: A Toolkit for Cities”, the mayors encourage cities to follow their lead and look to more sustainable investments.
“Over the last three years, London has led from the front on divesting from fossil fuels and addressing the climate emergency,” said Mayor Khan. “At City Hall, I am working with the London Pensions Fund Authority to take all possible steps to divest its remaining investments in fossil fuel industries.”
The London Pensions Fund Authority’s investments in direct extractive fossil fuels are now just £13.6 million or 0.2 percent of its £6.459 billion of assets under management. The fund is also undertaking analysis on how its portfolio aligns with the 1.5C goal of the Paris Agreement for early 2020.
“With New York City’s Green New Deal, we are leading the nation in fighting the political power and corporate money of the fossil fuel industry,” said New York Mayor Bill de Blasio. “We are proud to join with London and C40 Cities to offer our expertise in how to invest in the future of our planet. These are not easy steps, but they are absolutely necessary.”
Case studies from Berlin, London, Oslo and Stockholm show that divested city pension funds have not suffered a negative impact on portfolio performance, and some have seen better performance from their fossil-fuel free investments.
“Divesting from fossil fuels and increasing investments in sustainable assets is an effective way for cities, their pension funds and other investors to protect their assets in the long term and take advantage of the shift towards a green economy,” Friederike Hanisch, Senior Manager, C40 Divest/Invest Forum told Cities Today.
Analysis from the Institute for Energy Economics and Financial Analysis (IEEFA) has indicated that stock market performance in the oil and gas sectors has been lagging and has a relativity weak outlook.
“Research has found, for example, that The New York State Common Retirement Fund would have earned US$ 22.2 billion more if it had divested its fossil fuel stocks ten years ago,” added Hanisch.
C40 will hold a Divest/Invest Forum in New York from 16-18 March 2020, where city leaders will come together to share their progress in divesting from fossil fuel companies and increasing investment in climate solutions.