Hearing raises questions about Boston investments
A group of Boston city councilors urged the city Thursday to scrutinize its pension and treasury funds with an eye toward divesting from fossil fuels and other industries considered environmentally or socially harmful.
Councilor Lydia Edwards called for greater transparency on the investments.
“We weren’t sure where any of our money was going,” said Edwards, who cosponsored a hearing on the matter along with Councilors Michelle Wu and Matt O’Malley.
In opening statements, the sponsors made plain their opposition to further investments in certain assets.
“It’s important that our money reflects the value of our city,” O’Malley said, before taking aim at fossil fuels. “It is high time we defund and denounce the industry that contributes the most to climate change, funds climate denial, and prevents climate action.”
State law regulates how and where pension funds are allocated and invested. A state entity shot down previous attempts by Somerville and Cambridge to steer investments.
Boston has more autonomy when it comes to treasury funds, and in the past used a city ordinance to divest assets tied to apartheid-era South Africa.
Thursday’s hearing was an effort by councilors and activists to press the issue. Last year, a network of community groups approached city officials to discuss divestment from companies involved in the private prison sector.
That conversation eventually widened to include divestment from a range of industries and companies including weapons manufacturers and fossil fuels — industries considered damaging to the environment or the community at large.
Pat Tomaino, who works at socially responsible investing firm Zevin Asset Management, said before Thursday’s hearing that investing in “harmful” industries can be riskier than putting money into more sustainable investment opportunities.
“With fossil fuel companies, you’re talking about assets that big oil companies are investing in that will be stranded in 40 years time,” said Tomaino.
City councilors and activists made clear that the point wasn’t merely to cease investment in certain fields, but to encourage reinvesting in sustainable sectors, such as green energy and affordable housing.
Documents provided to the Globe by a city official show money from the pension fund had been invested into a number of trusts and hedge funds. Some were involved in student lending; others were connected to car rental companies. At least two of the funds were tied to the private prison industry, according to an activist group.
Administrators who testified Thursday highlighted investment partners involved in sustainability such as ArcLight Capital Partners, a private equity firm focused on energy infrastructure.
“Recently we’ve implemented initiatives that will enable us to make sustainable activist investments while maintaining our strong financial practices,” said Emme Handy, the city’s chief financial officer.
Thursday’s meeting occurred the same day the Walsh administration announced the city would invest $150 million in environmentally and socially conscious businesses, as well as local financial institutions and community banks.