The Portland City Council held the last meeting in its current form today. Its final decision? Ceasing investing city tax dollars in all corporate bonds.
At least for a few months.
In a somewhat dramatic turn (and amid a reluctance among city council members to stand specifically against some companies) the council promptly turned what was supposed to be a hearing on several corporate bad actors into a decision to direct the city’s treasurer to cease corporate investments altogether.
The move was partly choreographed—advocates pushing for divestment from private prisons had been told of a deal before this afternoon’s hearing. And the decision neatly allowed the city council to sidestep singling out companies like Wells Fargo and Caterpillar, which community members have pressed especially hard be put on the city’s “Do Not Buy” list.
Those two companies were among a list of nine corporations that a city committee recommended Portland officials rule out for tens of millions in city investments. Others included Walmart, Credit Suisse, and JP Morgan Chase. Last month, the Mercury examined the push to divest from Wells Fargo because of its role in funding private prison companies.
Headed into this afternoon’s hearing, it looked like most of those companies wouldn’t be added to the Do Not Buy list. After a hearing on November 30, Commissioner Steve Novick had introduced a resolution that would have placed Credit Suisse, Nestlé, and Walmart on the list (pending council approval).
Last Friday, Novick told the Mercury those were the companies he felt were most defensible to have on the list. (Novick noted that only around 50 companies issue bonds that meet Portland’s strict criteria for investment, and that adding nine of them to the list would have meaningfully cut the city’s options.)
But something changed. At the outset of this afternoon’s hearing, Novick introduced an amendment that would add Wells Fargo and Caterpillar to the list (Caterpillar was a target for its role selling weaponized bulldozers to Israel, which uses them to raze settlements in the West Bank). Then Fritz introduced another amendment directing City Treasurer Jennifer Cooperman “to suspend direct investments of cash assets in corporate debt securities” until council had adopted another investment policy next year.
“You’ve won,” Fritz told people who’d come to speak at the hearing—many of them pressing divestment in specific corporations. “We aren’t going to invest in things you don’t like.”
That message wasn’t readily embraced by folks in the crowd for a couple reasons.
First: Fritz’s amendment doesn’t forever preclude the city from investing in corporate bonds. Rather it directs the treasurer to amend the city’s investment criteria to ensure corporations meet “a to-be-determined minimum rating at the time of purchase,” as determined by an “environmental-, social- and governance-based investment research provider.”
Since no one knows what that rating will be, no one can conclusively say Walmart or Credit Suisse or Wells Fargo would be disqualified.
“Let’s not repeat work that’s already been done,” said Jamie Trinkle, a research coordinator with the group Enlace, which has pushed divestment from Wells Fargo. “What you’ve set in motion is powerful and visionary, but it’s not worth the paper it’s written on if you don’t implement it.”
More pressing for folks in the audience: By applying to all corporations, Fritz’s amendment didn’t end up slapping the wrist of very specific corporations that might be doing wrong.
“Saying we’re not going to buy any companies is very different from singling out the worst of the worst,” one woman told city council.
Council wasn’t moved, declining to add the companies Novick had put forward for the Do Not Buy list and instead unanimously ordering that the city stop purchasing corporate securities (that move doesn’t have any bearing on corporate investments that have yet to mature).
“We really need to be very careful about how we move forward,” Fritz said.
Of course, the decision will come at a cost. Cooperman, the city treasurer, told council the city makes between $4.5 million and $5 million more via corporate investments each year than it would investing in lower yield products (like treasury bonds).
Cooperman plainly did not like this solution (even though the city didn’t invest in corporate bonds until 2009). When asked by Commissioner Nick Fish whether ceasing buying corporate bonds for a time might present less risk, she batted the suggestion aside.
“There is an opportunity lost by not investing in something Oregon state law allows us to do,” she said.
The decision created a situation where Novick’s last vote as a city commissioner somewhat undid one of his earlier efforts. He was the person who suggested the city develop a socially responsible investment policy, with a citizen committee that helped identify bad actors. Under Fritz’s amendment, that process will be effectively automated, eliminating the need for a committee, according to Fritz’s office.
“As far as I know, this is unique in the country,” Novick said before casting his vote, noting that while other cities might have blanket policies, they hadn’t adopted “specific criteria” for not investing in companies.
“We’ve learned why they don’t,” he said. “It’s hard.”