OPINION:
Last month, through a proposal that would require the city to sell off its investments in fossil-fuel companies, the D.C. City Council placed the nation’s capital — and its retirees — at significant financial risk. What’s worse, they did so in pursuit of a financial move that runs contrary to the fiduciary responsibilities of the city to its public retirees, from police officers and firefighters to teachers and government employees.
The proposal to divest from fossil-fuel companies has been rooted — in the District, as well as in places such as San Francisco, and at institutions such as Middlebury College and Harvard University — in an environmental appeal led by supporters of the legislation. These supporters mistakenly say that compelling entities such as District of Columbia to divest from fossil-fuel investments will, somehow, fundamentally alter the way this nation and, indeed, this planet produces and consumes energy.
Unfortunately, this is misleading and unrealistic. For the District’s residents, the reality of this poorly reasoned proposal is a dampened economic outlook and a genuinely negative impact on the means by which retirees’ pension funds are maintained.
In short, this is bad policy driven by unattainable idealism rather than sound economic or energy policy.
One question should be asked to reframe this discussion: What benefit, either to our city or to the environment, would this proposal provide?
At the American Association of Blacks in Energy, we take seriously the threat of climate change. However, fossil fuels play an important role in our energy economy. Energy companies are part of an expansive, international industry, and there is not one quick fix to environmental issues. Our nation is not at the point at which we can rely solely on renewable-energy sources, a goal that proposals such as this presumably seek. As a result, coal, natural gas and oil provide reliable energy resources for the global community.
Singling out the fossil-fuel industry would do nothing to help the environment. This is what The Washington Post meant when it called this divestment proposal a “feel-good policy that would accomplish little, except possibly denying the city’s retirement funds investment return.” Calling for an elimination of our investments in fossil-fuel companies will do nothing but reduce the standard of living and undermine the retirement fund of those who have been servants to our communities, such as firefighters, policemen and teachers.
Each year, oil and natural-gas company stocks are some of the best and most reliable investments available, providing very healthy returns for pension holders and retirees, and far outperforming other public-pension holdings. In fact in recent years, “the average rate of return on investments by pensions in oil and natural-gas stocks was seven times greater than the average return on their investments in all other assets.”
This is not the first time a divestment proposal has been considered for city or private institutions. In fact, the city of San Francisco, Middlebury College and Harvard University have each rejected similar proposals. Why? Because the financial security these investments provide our colleges and public workers produce a larger good for our community — and the return that they provide to the District of Columbia is no less vital.
The American Association of Blacks in Energy shares a desire to protect the environment. Divestment from funds upon which our community relies so heavily, though, provides quite literally no public service and manages to do much harm in the pursuit of misleading “feel-good” rhetoric.
Forging ahead with such shortsighted policies, like this legislation that mistakes diverting funds as real change, will cause economic harm while distracting from real progress that is being made in the energy sector to improve the environment. The energy sector — and the nearly 10 million Americans that work in its orbit — are at the epicenter of our nation’s economic recovery.
We can be certain that this divestment proposal is the wrong move for our city. We hope our elected officials quickly come to the same conclusion.
Paula R. Jackson is the president and CEO of the American Association of Blacks in Energy.
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