Is Seattle Really Committed to Fossil Fuel Divestment?


The environmental group is pushing the “Fossil Free” divestment campaign to get educational and religious institutions, city and state governments, and other institutions that serve the public good to divest their stock portfolios from fossil fuel companies. They believe that it’s wrong for these institutions to profit from wrecking the environment.

Modeled after campaigns against apartheid in South Africa, the “Fossil Free” campaign urges institutions to freeze any new investments in fossil fuel companies and divest from owning any commingled funds that include fossil fuel stocks and bonds within five years. So far, nine colleges and universities, 25 cities, two counties, 23 religious institutions, and 19 foundations have committed to this divestment pledge. Currently, there are active divestment campaigns at both the University of Washington and Seattle University.fossil free

Seattle was the first city that committed to pursue divestment. Following Seattle’s example, 10 other municipalities, including San Francisco, Boulder, and Madison, also announced their intention to seek divestment. In 2012, former Mayor Mike McGinn pledged that Seattle would investigate the most responsible way to divest its pension plan from fossil fuels.

Mayor McGinn was a strong proponent of divestment. At a divestment forum last October, McGinn said “Isn’t it fiscally irresponsible as well as morally irresponsible to invest in companies whose very business model depends upon destroying the climate we depend upon?”

A Closer Look

The city manages three major investment sets:

  • Daily operations: $1.4 billion
  • City employee’s deferred compensation plans: $700 million
  • City employee’s pensions: $1.9 billion

The daily operations fund is basically the checking account of the city, and currently none of that money is invested in fossil fuel companies. The second category, the deferred compensation plans, is determined by the city employees themselves. Before he left office, former Mayor McGinn had instructed the Deferred Compensation Plan Committee to offer employees fossil fuel free options.

That leaves the third category, the city employee’s pension fund. Two of the pension fund’s top 10 investments are with ExxonMobil and Chevron.  These two funds represent just under 1% of the fund, with $17.6 million in assets. The pension plan likely has other fossil-fuel investments as well.  Mayor McGinn had requested that the pension system governing board stop making any future investments in fossil fuel companies, and begin to move existing investments out of those companies.

Does It Really Make a Difference?

Some environmentalists have argued that divesting really does nothing to affect fossil fuel companies’ bottom line. And if we sell our stock but still buy gas from them, we are doing little to effect real environmental change.

McGinn has stated that he had similar concerns when he first heard about the divestment idea. He eventually came around to it, he said, because he heard Bill McKibben,’s founder, ask simply “Which side are you on?” McGinn came away from the conversation convinced that divestment was the right approach.

However, since the returns of fossil fuel companies are predicated on them burning over five times the safe amount of carbon, there is increasing evidence that holding stock in fossil fuel companies is a financial risk over the long term.  Returns on fossil fuel holdings are predicated on never ending carbon pollution. At some point, the carbon bubble will pop, and these holdings will quickly decline in value.

In addition, a number of studies, including one done by MSCI, Imperio Group, and Impax Asset Management, have shown that even in the short term, fossil-free portfolios perform similarly to those with fossil fuels.

Where We Go From Here

Unfortunately, current Mayor Ed Murray, while stating that climate change is “the most significant issue we have ever faced as a species” just last week, has not said whether he will pursue Mayor McGinn’s divestment plans. Murray has stated that he only supports it if it doesn’t put the city’s pension at risk.

In truth, the mayor doesn’t have any control over the money in the pension funds. A seven-member board controls that. In September of last year, this pension board voted to consider investment changes for social or environmental goals only if it didn’t hurt the pension’s bottom line.

Currently, 350 Seattle is working with Councilmember Mike O’Brien’s office to craft a resolution urging the pension board to begin exploring divestment. They have also reached out to other stakeholders including city employees, retired former city employees, and the associations and unions representing them.


We hope you loved this article. If so, please consider subscribing or donating. The Urbanist is a 501(c)(4) nonprofit that depends on donations from readers like you.

Inline Feedbacks
View all comments

There are actually now 25 local governments currently committed to divesting, with many more working on it.