This blog post was written by Ana Marques, Low Carbon Cities Senior Officer at ICLEI World Secretariat.
In April 2015, Councilor Jinty MacTavish of Dunedin, New Zealand made a compelling presentation on fossil fuel divestment at the ICLEI World Congress in Seoul. Since then, Dunedin has finalized a policy on ethical investments and divested from fossil fuels. “The development of the ethical investments policy promoted some really good discussions on sustainability in the community”, said Councilor MacTavish.
It all began in 2013 when a group of young Dunedin residents asked the Council whether there were fossil fuel investments in the municipally owned and managed equities fund. This, said the residents, would run contrary to Dunedin emissions reduction efforts.
The Council responded, verifying that fossil fuel investments were in fact part of the portfolio. After establishing that the city had no formal policy to guide investments, the Council consulted the public to develop an ethical investment policy.
The Council first proposed to formally exclude ammunitions and tobacco and asked the public which other equity types, if any, the Council should avoid. The public also suggested excluding equities involving fossil fuel exploration, gambling and pornography, among others.
With this inputs from the public, city staff developed an investment policy, becoming one of the first councils outside of the United States to exclude fossil fuels from its portfolio.
The Dunedin Council approved the new ethical investment policy on 2015, to be implemented over the following two years. The policy excludes the top 200 fossil fuel companies, ranked by potential carbon emissions calculated based on their reserves. It also specifies materiality thresholds for other excluded sectors, which clarifies the point above which interests in excluded sectors would become problematic within the new policy framework. These thresholds ensure that the policy is workable in cases where companies the city works with have very minor interests in excluded sectors.
Different factors contributed to Council approval of the divestment policy. Some councilors supported the new policy as the ethical choice in responding to climate science, while others supported it for financial reasons. The value of fossil fuels equities had been in decline in for several years, so divestment was seen as financially prudent. The knowledge base in the community, thanks, in part, to a strong university, was also an enabling condition for the new policy.
Divesting from fossil fuels remains fairly simple for local governments in New Zealand because they have their own funds to manage. In other locations, however, it may not be so easy to unpack the composition of the funds in which local governments and other public authorities are investing.
Today, Dunedin has completely divested from fossil fuels in compliance with the ethical investments policy and its materiality clause. It joins a significant and increasing number of other local and subnational governments in the ICLEI Network taking the same step, including Paris, France, Stockholm, Sweden, San Francisco, USA and the Australian Capital Government, Australia – one of the governments actively engaged in the Global 100% renewable Energy Cities and Regions Network.
Image: By Tristanb at en.wikipedia CC-BY-SA-3.0, from Wikimedia Commons
To learn more:
Who has committed to divestment?