SDUT: SHOULD SAN DIEGO’S INVESTMENTS BE BASED ON SOCIAL RESPONSIBILITY OR JUST ON MAKING MONEY FOR TAXPAYERS?

November 9 – SDUT – David Garrick reports – A new proposal spearheaded by Councilman Chris Ward would require San Diego to shift the city’s investment strategy away from companies involved with fossil fuels, the border wall, private prisons, firearms and other controversial subjects.

Ward and other supporters say San Diego should have a socially responsible investment policy that supports the city’s values and denies financial support to companies that operate contrary to city principles.

Critics say the goal should be securing the highest possible investment returns for taxpayers, regardless of what activities or products the companies are involved with.

They also contend divestment from questionable companies would be a complex process, and that many companies’ activities are so diverse it could be hard for city officials to determine if they align with San Diego’s principles.

By adopting such a policy, San Diego would be following the lead of more than 1,100 cities, pension funds, foundations and nonprofits that have adopted socially responsible investment policies in recent years.

The primary motivation for the policies has been opposition to the fossil fuel industry, which many cities and environmental groups blame for the greenhouse gas emissions that are accelerating climate change.

Fourteen cities in California have decided to divest themselves of fossil fuel companies. They include San Francisco, Oakland and Santa Monica.

But the San Diego proposal would go beyond fossil fuels to include a long list of other industries.

Those include companies making products related to smoking or vaping, companies that operate private prisons, companies involved in designing or building the border wall, companies that manufacture firearms and companies that make single-use plastics.

In addition, the proposed city policy would mandate divestment from investor-owned utility companies, such as San Diego Gas & Electric. San Diego decided this year to join with other cities to create a government-run alternative to SDG&E.

During a hearing on the proposal last month, Ward said divestment would send a strong public message that these harmful industries are inconsistent with San Diego’s community values.

It’s not clear how much of San Diego’s $2 billion investment portfolio is invested in each of those areas. City officials say about $30.1 million is invested in companies involved in the extraction of fossil fuels.

Climate Action Campaign, a local nonprofit, praised the city proposal during the hearing, an Oct. 24 meeting of the City Council’s economic development committee.

“Divestment is a no-brainer,” said Maleeka Marsden, the nonprofit’s justice advocate. “It makes sense that San Diegans would like to see their city’s investments align with their city’s values and do everything we can to fight for a safe, healthy, sustainable, equitable and ethical San Diego.”

Nancy Cottingham of Hillcrest Indivisible, a group that opposes President Donald Trump, said the city needs to have its actions match its words.

“I think at some point we have to remember to put our money where our mouth is,” she said.

Councilman Mark Kersey, however, said he is concerned the policy could be too broad and subjective.

“I’m trying to decide who makes the judgment call over what is socially responsible,” Kersey said.

He also stressed that it’s not always clear who to blame for certain problems, questioning whether car companies should be targeted along with the fossil fuel industry because they make devices that produce greenhouse gases.

Kersey said the policy could jeopardize San Diego’s longtime corporate partnership with Toyota, which supplies all of the city’s red-and-white lifeguard trucks.

The biggest problem, he said, likely would be how diverse many companies are.

“Some of these companies are frankly doing so many different things, I think you could fall into a trap,” he said. “The reality is most companies do some things right and some things wrong. I think this is going down a rabbit hole we really shouldn’t go down.”

Councilwoman Barbara Bry expressed support for the policy, but agreed with many of Kersey’s concerns.

She asked how the city would know whether a company it’s investing in is making wood that ends up being used for the border wall.

Bry also said any divestment policy should focus first on the city’s pension fund, the San Diego City Employees Retirement System, which has $8 billion in invested assets.

Tony Young, a former councilman who now represents SDG&E, said that company illustrates Kersey’s point about complexity.

SDG&E furthers key city values by promoting sustainability, hiring union workers and frequently awarding contracts to women and minorities, Young said. He urged San Diego leaders to be cautious about closing the door on such companies.

Kent Morris, the city’s chief investment officer, said he has concerns about how the city would comply with a new socially responsible investment policy.

He said the policy would prevent the city from continuing its participation in a state investment pool that typically earns San Diego $250,000 per year.

The policy, as initially proposed, would also require Morris and his staff to provide the council an annual summary of how the city’s social priorities have been prioritized and incorporated into the investment portfolio.

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