By Ted Gleichman
In a local political shocker, the Portland City Council, deeply divided, has voted to divest all corporate securities from its investment portfolio. A majority also said they will consider creating a public bank. This surprise turn to a decade of arguments over corporate behavior and city investments came at the end of a four-hour public hearing April 5.
Raging Grannies sing their testimony to Portland City Council. Credit: Ted Gleichman
The city commissioners had wrestled for years with ruling on which companies should or should not be able to use cash owned by the people of Portland. In the end, they voted 3-2, over strong opposition from new mayor Ted Wheeler, to eliminate all corporate securities from the city’s portfolio, which approaches some $2 billion. Currently, $539 million of that is invested in corporate bonds and commercial paper. These funds will be moved into non-corporate investments (generally, government bonds) as each specific corporate security reaches its maturity date or can be redeemed early for greater profit.
Long term, the most important piece of the dramatic meeting may turn out be an informal commitment by a majority of the commissioners to consider creating a city-owned bank, as the vehicle to manage the city’s portfolio. If that happens, the City of Portland would join the State of North Dakota as owners of the only public banks in the U.S.
The April 5 decision came through the approval of the city’s 2017 investment policy, a document required annually under Oregon law. In past years, up to 35% of city funds could be invested in top-quality corporate securities, with current specific exclusions on a “Do-Not-Buy List” as a result of earlier battles: Walmart, and the Carbon Underground 200 list of the largest publicly-owned fossil fuels companies globally, 100 coal and 100 oil and gas, all ranked by the size of their proven reserves – a “keep it in the ground” tool.
Fracking on public land in Wyoming.
Credit: Pinedale BLM Field Office, Wikimedia Commons public domain
In 2013, as divestment battles from many perspectives heated up, the city council created the Temporary Socially Responsible Investing Committee (SRI) to advise them. In 2014, they recreated it without the “Temporary” label. The new SRI committee, in a remarkable document, recommended in September 2016 that as many as ten companies should be kept on or added to the Do-Not-Buy List. The proposed additions were Wells Fargo, Caterpillar, Nestle, Amazon, and five other global banks. After a difficult hearing in December, the then-council imposed a four-month moratorium on any new purchases and directed City Treasurer Jennifer Cooperman to come up with a new policy for 2017, taking everything into account.
The treasurer’s proposed policy essentially ignored the SRI recommendations, and about 150 activists showed up on April 5; 40 testified. No one supported the treasurer’s recommendations; the corporations singled out most often in the testimony as “the worst of the worst” were Caterpillar and Wells Fargo. Oregon Sierra Club added its voice to the process; Beyond Gas & Oil Team chair Gregory Monahan and I called for a commitment to SRI and transparency, based on the critical importance of environmental justice in Sierra Club.
Then Commissioner Dan Saltzman, the longest-serving member of the city council, startled the room by proposing an amendment prohibiting any new corporate investments. Commissioner Saltzman said he was deeply frustrated about the amount of time these debates took away from other work every year, and wanted them over.
Treasurer Cooperman said that decision would cost the city from $3-$5 million a year in lost profits. That was a key factor in opposition to the amendment by Mayor Wheeler and Commissioner Amanda Fritz. The mayor also made a strong statement opposing divestment on principle, with a lot of detail about his six years as state treasurer. Nonetheless, the Saltzman amendment passed with support from Commissioners Nick Fish and the newly-elected Chloe Eudaly. The council then unanimously approved the revised policy, putting the city in compliance with the state requirement.
Most of the activists in the room were shocked; none of the leaders of the environmental and faith organizations present had predicted this. One local divestment leader told me that she didn’t see it as a win, “because now we can’t call out the worst corporations by name.” Others (including me) felt that a general policy against corporate investing sends a strong positive message on our city’s priorities.
Mayor Wheeler and Commissioners Fish and Eudaly all responded positively to testimony advocating for a public bank, and it’s clear that idea is going get more attention. Commissioner Eudaly said she and her staff are preparing a report evaluating the options.
The new divestment policy is not a fire sale; corporate securities will leave the portfolio when the treasurer deems the time is right, not overnight. On the current schedule, the final piece of Portland’s corporate portfolio is a $10 million Wells Fargo security that will pay the city 2.15% profit when it comes due in December 2019.
Dakota Access Pipeline in Iowa. Credit: Carl Wycoff, Creative Commons 2.0
Currently, Wells Fargo – a key financier of the Keystone XL and Dakota Access pipelines – is Portland’s top corporate issuer, with almost $78 million in holdings.
Ted Gleichman serves as policy advisor with the Chapter’s Beyond Gas & Oil Team