Today, Michelle Wu signed a measure into law for the first time as mayor of Boston. The measure is to divest city funds from the fossil fuel industry. This is an astronomical move for a city like Boston and will create the groundwork for many cities nationwide to do the same. Not only will it divest from fossil fuels, but it will from tobacco and prisons as well. Earlier this year, the state of Maine passed similar legislation to divest their state pension fund from fossil fuels. The state of Massachusetts as a whole, however, has not been nearly as proactive.
Despite being leaders in many ways, Massachusetts as a state (or commonwealth) has failed to lead in the matter of divesting from fossil fuels. In this instance, we should follow the path that Maine and now Boston set this year by divesting our $73 billion pension fund from fossil fuel companies.
According to the International Energy Agency we need to leave 80% of the world’s fossil fuels unburned to achieve our goals of keeping the world’s warming under 3.6 degrees fahrenheit. We’ve seen rising sea levels, historic flooding, fires burning the west, and even storms ravaging states like Iowa. The time for Massachusetts to take more action was yesterday.
Financially speaking, this has never made more sense. With the Biden administration determined to be progressive with the environment and rising pressure from the public, the time would be now to move money in pension funds from fossil fuels to renewable energy. Forbes has even recently reported that yields from renewable energy investments more than double that of fossil fuels.
Having a Republican Governor in Charlie Baker certainly doesn’t help the matter. With 2022 approaching, it is time for Massachusetts Democrats to prove they aren’t just NIMBY liberals. We must mobilize around Democratic candidates who will take bold action on fighting climate change, our state and planet cannot wait.
The House and Senate (collectively) are no saints on the matter, though. Democrats have had a veto-proof majority in the capital for years now yet have failed to act. There certainly have been Senators and Representatives willing to fight for bold legislation, but the two chambers collectively have failed to do so. So while we should be fighting for a Democratic Governor who will be bold, we should also be unafraid to primary anyone in the Senate and House who is unwilling to take action.
The earth is at a breaking point. I know that sounds like hyperbole, but it is not. We need to move away from fossil fuels immediately, and Massachusetts needs to be a part of that change.
I didn’t realize prisons were something you could invest in.
Parnassus Mid Cap Growth Fund.
Border industry
Incarceration and detention facilities, immigrant monitoring and surveillance, militarization of the U.S.-Mexico border
$29.71M invested…2.68% of portfolio
One of the more insidious GOP lies of the last decade or so has been its “outsourcing” of prisons, claiming that private for-profit firms are able to operate prisons “more efficiently” than state and federal government.
The result is the creation of an entire industry that profits from high incarceration rates. Since non-violent offenders presumably cost less than violent offenders, this is an industry that particularly favors high incarceration rates for non-violent offenders.
I know this is shocking and surprising, but this new industry uses some of its revenue to lobby state and local governments to enact legislation that is “beneficial” to private prison operators. In other words, they lobby state and local governments to incarcerate more people — especially non-violent people.
This is one reason why America incarcerates such a high portion of its population.
High prison populations help keep unemployment numbers low and the cost of the free food, lodging, and medical care are not considered “welfare” so it helps the “books” look good with a capitalist state.
I’ve never understood private prisons. Seems to me even the most limited-government libertarians would understand that criminal justice is one of the handful of things government is definitely supposed to do.
Hi Luke,
Thank you. This is a great write up. What are your thoughts on the Maine Question #1 vote that stopped the 145 mile hydro electric corridor through Kennebec Valley?
I understand not wanting to own fossil fuel stocks as a moral choice. I don’t understand how divestment has any impact on the production or use of fossil fuels. Can you explain that to me?
If you aren’t invested in fossil fuels the companies can’t use your money to continue to extract such fuels. If enough people withdraw their money these companies might not be able to sustain their business.
Unfortunately, that’s not how it works. If the City pension fund sells its shares, another person or entity (maybe a mutual fund) will buy the shares. No money is withdrawn from the company. The company will never even notice. Now if a large number of investors exited the fossil fuel sector, the price of their shares might go down, possibly encouraging other investors to buy the stocks at a “discount.” Given the huge size of these companies, and the large number of investors involved, the likelihood of any adverse impact on their ability to operate is remote. Then the companies would have a reduce ability and incentive to find, process and sell fossil fuels.
A bigger impact would result from a reduction in demand for oil and gas. That’s the angle, in my view.