Aspen officials elect to divest from fossil fuel-driven corporations

Aspen City Council zeroes in on Berkshire Hathaway and Wells Fargo corporate bonds

Aspen City Council on Monday agreed to divest the municipal government’s holdings in corporations that finance fossil-fuel development.

The move was at the urging of environmental group 350 Roaring Fork, which has specifically asked council to divest from Wells Fargo and Berkshire Hathaway through a petition submitted to the city prior to Monday’s work session.

The city’s ownership of corporate bonds in those two companies “is inconsistent with the city’s environmental values, not to mention its laudable efforts on climate change, to be invested in two institutions propping up and profiting from climate destruction,” according to the petition signed by 172 area residents and submitted by Will Hodges, coordinator for 350 Roaring Fork. “We are urging the city of Aspen to adopt a policy against investing in the financing, production and delivery of fossil-fuel energy.”

As council members directed staff to continue working toward an investment policy, they also agreed to divest its $3.1 million from Berkshire Hathaway when the bonds mature in August.

Berkshire does get a bad environmental score rating from the city’s investment adviser, Insight Investment, which makes recommendations for investment and reinvestment of the municipal government’s pooled resources.

Insight has a team of analysts who conduct research on environmental, social and governance issues for publicly traded firms and has been able to provide a scoring of the current corporate investments within the city’s portfolio, according to City Finance Director Pete Strecker.

Based on that scoring, Wells Fargo ranks as a leader in the environment, which raised questions by some council members.

Strecker couldn’t provide council with details on the criteria used to determine scoring, other than to show a slide that indicates carbon, natural capital and pollution considerations.

“It’s important for us to know where these numbers are coming from,” said Councilmember Skippy Mesirow, adding that the city ought to have its own criteria of evaluation. “We know that (Wells Fargo) invests in extraction. … Divestment means moving away from investing in companies that take up fossil fuels and so this may move us in a direction of getting a little bit more divesting, but it is not getting us to divestment.”

Hodges said Wells Fargo is the second leading financier of ongoing and new coal, oil and gas projects, to the tune of $198 billion since 2016.

“It’s ludicrous that Wells Fargo could be considered on the highest environmental rating,” he said Monday afternoon.

The city has $2.9 million invested with Wells Fargo, with the bonds maturing in October 2022.

Councilwoman Rachel Richards said having city staff researching corporations that do billions of dollars in business globally to ensure that their holdings and subsidiaries align with the city’s values is too much of a burden on a small team.

She asked that Strecker bring back more information about measures other government entities use to evaluate the ethics of their investments.

Council members agreed with Strecker’s recommendation to consider reinvesting as corporate bonds mature to avoid a lower yield than what is currently guaranteed by the portfolio.

“I think that we should be moving away from Berkshire Hathaway, … and I think we can send a message to Wells Fargo that we are watching their environmental and their social ratings and we will take that into consideration as we invest in the future,” Councilman Ward Hauenstein said. “Climate is on the brink.”

The city has previously elected to withdraw from corporate holdings that were directly tied to the fossil-fuel industry, including Chevron and Exxon Mobil, according to Strecker.

“Both of these investments were eliminated from the city’s portfolio upon maturity and are not being considered for future investment opportunities despite not having a formal investment policy tied to a greening initiative — so there are conscious decisions occurring at the staff level to ensure that the city’s investments reflect the environmental values of the community,” he wrote in a memo to council.

The city has roughly $140 million in investments, with over 80% in government agencies and bonds, as well as municipal bonds, all of which have lower yields than corporations.

“In some ways we picked up a little bit of yields for the public’s funds when were able to invest in corporates,” Strecker told council.

There is no scoring for U.S. treasuries or other U.S. backed investments, Strecker noted.

Under the city’s current investment policies, the three main considerations center around risk, return and liquidity.

Return on investment is always sought to be maximized but is never done without also considering how risky an investment is, and how long it will be held, according to Strecker.

Mayor Torre said he also questions Wells Fargo’s environmental ranking and wants more information on how the scoring was conducted and against what criteria.

“This is the start of a process, the start of something really great that I think the citizens of Aspen will support,” he said, noting that Strecker will return with an investment policy related to the city’s environmental values. “I like the direction we are going, I like taking a step forward and I see this as probably two steps forward.”