San Francisco’s public pension fund has decided against dropping its $530m holdings in fossil fuels firms, preferring instead to “engage” with companies to stimulate business changes.
The fund was set to become the first of its kind to divest from fossil fuels, after announcing on Wednesday that it would be considering the divestment option at its next board meeting.
It had previously ditched shares in Sudanese companies and tobacco. For this reason, many from the San Francisco Employees’ Retirement System board, which governs the fund, expected to see a similar decision in relation to its 3% holdings in Chevron, Exxon Mobil and others.
However, the board announced on Friday that it would not be dropping its high-carbon investments. Members said that trying to engage with companies to change their behaviour would be a more effective way to address the environmental challenges linked to fossil fuels.
“If you go to some of the biggest assets in our portfolio, Chevron, Exxon Mobil, you see they are not just a fossil-fuel company. They are involved in solar, they are involved in natural gas”, said board member Brian Stansbury.
“You can’t just turn off the spigot to fossil fuels and turn on something else. I do not see our portfolio without energy.”
The fund’s decision echoes a letter sent by Harvard president Drew Faust who, replying to students calling for divestment, said that having links with the industry would make it easier for the university to call for more sustainable practices.
In July, major Norwegian pension and insurance provider Storebrand announced it would be divesting from 19 fossil fuels companies to ensure “long-term stable returns”. Such stocks, it said, would be “worthless financially” in the future.