City Councilors agreed last Wednesday to review where city pensions are currently invested and to potentially divest retirement funds from companies and industries that are not socially responsible.
Councilors Lydia Edwards, Michelle Wu and Matt O’Malley co-sponsored the hearing order that was presented and agreed to by city councilors during the weekly midday meeting at City Hall Nov. 7. The hearing, assigned to the Committee of Ways and Means, will examine where and how city pension funds are invested and recommend divestment from companies that are deemed socially irresponsible, including those in the private prison, gun manufacturing and fossil fuel industries.
“It’s not just about fiscal responsibility, it’s about the moral character of the city,” said Edwards, who hopes the hearing will make the investment of retirement funds a more transparent process.
“Where we choose to invest our money is an indication of where we prioritize not only our hearts,” said Edwards, “but our understanding of where the world should go, and also our understanding of what we should be investing in for our future.”
Aside from ensuring the city’s moral character is aligned with financial decisions made on behalf of city employees, as Edwards suggested, the hearing is also an opportunity to make better economic decisions, said O’Malley.
“We can do something good here,” said O’Malley. “We can also make sure that we are getting the best return for the employees and retirees of the City of Boston.”
Creating what he called a “win-win” situation, O’Malley added that while protecting the environment is important, “more often than not it’s also much better business sense to invest funds in renewable energy sources.”
He cited decisions made by the governments of Denmark and Sweden to divest from fossil fuels in 2012 and 2014 respectively, as well as New York City Mayor Bill de Blasio’s announcement earlier this year to divest $5 billion from “black energy” industries.
Closer to home, Somerville’s Board of Aldermen filed in February for a home rule that enables them to withdraw public funds from companies involved in the non-renewable energy industry.
Wu agreed with her colleagues that it is important for city officials to be “moral beacons” while at the same time making “an economically sound decision.” Adding to this she said, “I also want to make sure we are recognizing how much influence we have, how much power we have,” not just as councilors but as participants in the pension fund investment market.
While the order’s co-sponsors, as well as Councilor Frank Baker, spoke of their disapproval of pension fund investment in industries including, but not limited to, fossil fuels, prison privatization and gun manufacturing, Edwards urged that the hearing not be issue-specific. Instead, she would like to see the council focus on setting the standards for divesting and investing. This conversation, she said, must start with transparency.
According to Edwards’ Policy Director Joel Wool, little is known about the companies or industries that public pension funds are currently paid into. It is hoped the city’s Chief Financial Officer Emme Handy and members of the Boston Retirement Board, among those tapped to testify at the future hearing, can provide some of the answers councilors are seeking.
This is not the first time that the investment of public dollars and city employee pensions has come under scrutiny. In 1984, the council and the state passed a statute that mandated all public money be divested from South Africa during apartheid. Thirty years later, the council passed a resolution urging the Commonwealth of Massachusetts to divest from fossil fuels, following a hearing ordered by Councilors Wu and O’Malley in 2014.
Calling Wu and O’Malley members of a “new generation of councilors,” Edwards said, “We all want to be able to go to sleep one day thinking that we did everything we could to ensure that our morals, our characters and our financial investments are aligned.”