This week, Mayor Brandon Scott signed into law legislation requiring Baltimore’s three employee pension funds to divest themselves from the fossil fuel industry. Given how controversial divestment proposals have been in the past when social responsibility has run up against high profitability (guns, tobacco, and alcohol to name a few), leaving Exxon Mobil, Chevron and their peer stocks behind proved rather anti-climactic. No protests. No harangues about pension costs down the road. No dissenting voices, frankly. Perhaps this was because other large cities have already taken similar action from New York City on down. But here’s another likely culprit: the world’s fossil fuel producers have seen better, more profitable days. As this newspaper reported last May, city pension officials were already taking money out of Big Oil simply because the stocks weren’t doing particularly well compared to the rest of the market.
Attention should be paid. The mistake here is not that pension decisions were guided by politics, it’s that they weren’t guided by pragmatism soon enough. Man-made climate change may be controversial on the talk radio and right-wing cable circuit but it’s established science. At this point, any reasonable person should recognize that burning fossil fuels at current levels isn’t just unpopular in some trendy manner, it’s disastrous on a frightening scale. We are witnessing its adverse impact every day from droughts and wildfires in the west to global sea level rise, extreme temperatures and more severe storms just about everywhere. Even Big Oil recognizes this and that’s why (after spending so many years recklessly trying to convince the public that climate change did not exist), they’re diversifying their own portfolios. How can greenhouse gas emissions be reduced by half unless a lot of petroleum, coal and natural gas remains in the ground?
The folks who make pension investment choices don’t have the power to predict the future, of course. It’s not easy to know where bitcoin will be in 10 minutes, let alone 10 years. Facebook? It looked like a sure bet a few days ago before its apps went down Monday and a compelling whistleblower started talking. And who could have seen sports wagering and recreational marijuana as legitimate growth industries a decade ago? Or are they? Even now that jury is out. Yet climate change is different. Investing money in companies that make billions of dollars by producing a product that is so destructive and deadly isn’t, as they say in business school, a sound practice. One recent study estimated that extreme weather caused by climate change is taking 5 million extra lives per year. And that’s today. Imagine where that number may be headed.
Some naysayers (committed oil shareholders, perhaps) will suggest that Baltimore has more immediate problems with gun violence to fret about climate change. Yet that’s like suggesting the city should not care about maintaining water and sewer lines or decent health care or traffic safety. A community has to care about all of it. Climate isn’t some far-off concern. Now is exactly the time to do something about it before it’s too late. And to Mayor Scott’s credit, he seems to be aware of the urgency of environmental issues even as he makes public safety his top priority with an announced return to curbside recycling pickups and implementation of a ban on plastic shopping bags.
And here’s the beauty of an enlightened approach to investment decisions. It’s good for city taxpayers, too. The pensions funds did not take a big financial hit when Baltimore turned away from putting their dollars in South Africa to protest apartheid or from Sudanese companies to protest genocide in Darfur. Exxon Mobil is regarded as a market laggard even as oil prices are up and predicted to go higher. Consumer sentiment makes a difference. And so do forecasts that see the world’s energy future ultimately going in a different direction. Pension managers surely have clout, but they also need some moral bearings. It simply doesn’t pay to invest in a business model that can’t be sustained. At least not in the long-term, and if anyone thinks long-term, it should be those individuals who are planning retirements a generation or more ahead.
That’s not to give Mayor Scott too much credit (even as he’s nursing a COVID-19 positive diagnosis). This was City Council member Mark Conway’s initiative, and we trust he’ll keep pushing Baltimore to act on climate change, which poses an existential threat to all city residents but, as with many environmental harms, may have the worst impact on lower income communities of color.
Baltimore Sun editorial writers offer opinions and analysis on news and issues relevant to readers. They operate separately from the newsroom.