The City of Boston is poised to give final approval to a law that would divest city funds from the fossil fuel industry, a symbolic but forceful message supporting green energy investment as Massachusetts officials are set to similarly debate where to devote state resources.
In a unanimous vote, the City Council passed an ordinance Wednesday that would prevent the city treasury office from investing any funds in the fossil fuel industry, including infrastructure. The ordinance does not place any restrictions on pension investments, however, since those are governed by state law, but the overwhelming support sends a message as the state also weighs how to invest pension funds.
The ordinance was sent to Mayor Michelle Wu for final approval. Wu’s office did not immediately respond for comment. But as a councilor, Wu cosponsored the ordinance earlier this year, suggesting that the measure is likely to be among the first legislation she will sign as mayor. Wu supported similar reviews of ways to divest from fossil fuels through her eight-year tenure on the council.
“As we’ve stated many times, our budget is a statement of our values,” City Councilor Lydia Edwards, a lead sponsor of the ordinance, said at Wednesday’s council hearing, urging colleagues to support the measure.
“Where we invest our money is a statement of our priorities, and this is following the rich history of this city saying we will not invest in things that aren’t helpful, that will not bring a more equitable future, and that now, today, don’t bring about a more green future, an infrastructure that we need,” she continued.
The ordinance requires the city’s collector-treasurer to divest city funds out of “stocks, securities or other obligations of any company which derives more than fifteen percent of its revenue from the combustion, distribution, extraction, manufacture, or sale of fossil fuels, which shall include coal, oil and gas, or fossil fuel products.”
The city’s treasury department oversees investments totaling about $2 billion, but a third of that portfolio is governed by state laws and restrictions, leaving Boston officials in control of just over $1.3 billion worth of investments, city officials said. Already, the city in recent years has moved to invest more in green energy. The proposed city ordinance would go further by essentially restricting any investments in the fossil fuel industry.
Edwards said the ordinance would remove about $65 million in city investments from fossil fuels, though the legislation would set a 2025 deadline for full divestment.
The vote came as welcome news to advocates in the state who have been pushing for divestment. “A little bit adds up to a lot,” said Cabell Eames, political director for 350 Massachusetts, a climate action group. “If Boston does it, who’s to say that Northampton won’t do it? And if Northampton does it, who’s to say that Haverhill won’t do it?”
The city has historically prevented investments in other controversial industries, such as the tobacco industry, as a way to send a social justice message. The council passed a similar ordinance in 1984 divesting public funds in companies doing business in the Republic of South Africa.
City Councilor Matt O’Malley, who cosponsored the legislation with Edwards and Wu, said the measure also makes financial sense. Investing in green energy industries is more profitable than those involved in fossil fuels, he said.
“It’s not only the right thing to do when we talk about divestment but also, we do have a fiduciary responsibility to our taxpayers,” O’Malley said. “This is not only good for the planet, but it’s good for our bottom line.”
The city’s approval of the law could push the state to take equal action, part of a broader push to divest taxpayer funds from fossil fuels. The state — which boasts a $95 billion investment portfolio — has resisted divesting, despite 17 years of calls from residents for it to do so.
Earlier this year, State Treasurer Deborah Goldberg announced that the state pension plan will pursue incorporating an environmental, social, and corporate governance framework into its investment decisionmaking process, but what that will look like remains unclear.
Mary Cerulli, cofounder of Climate Finance Action, said that Goldberg has used the powers of her office to fight the climate crisis in other ways, including voting against reinstating former Exxon CEO Lee Raymond on the JPMorgan Chase board of directors. She also voted this year against CEOs, chairmen, and directors at seven major oil companies, three global banks, and six utility companies, according to Cerulli.
Bill McKibben, a leader of the divestment movement, said, though, that state officials could do more, calling the divestment in fossil fuel resources an “easy and obvious place” for climate action in Massachusetts.
He pointed to successful divestment campaigns in Maine, New York State, and Quebec, as well as the recent decision by Harvard University to divest, and said it is a “crazy fact that the state pension fund is still investing in fossil fuels.”
“When you’re trailing Harvard University on these things you know you’re behind the curve,” he said.