Councillors debated withdrawing any City of Nanaimo financial investments in the fossil-fuel industry, but ultimately decided to move forward with essentially a status-quo investment portfolio.
The city’s finance and audit committee, at a meeting Wednesday, Oct. 20, recommended choosing socially responsible investments only when the return is within five-per cent of maximum available yields. Using 2021 as an example, the city would not have chosen any socially responsible investments this year.
At a meeting a month and a half ago, councillors had asked for a staff report on options for divesting from fossil fuel companies. That staff report was presented this week, showing that while the city does not directly invest in the fossil fuel sector, it invests tens of millions in guaranteed investment certificates, which may or may not include investments in fossil-fuel companies.
Laura Mercer, the city’s director of finance, reported that the city must adhere to certain community charter requirements and suggested a “slow and measured approach” to socially responsible investing. She said when the city invested $25 million this summer, it made inquires with 30 brokers about socially responsible investments, and none provided any options.
“Either they had nothing to offer or the rates were so low they didn’t quote us,” Mercer said.
The Municipal Finance Authority of B.C. offers a fossil-fuel-free short-term bond fund, but Mercer said if the city had invested its $25 million there, the annual return would be $205,000 compared to the $380,500 that the GICs will earn.
Councillors were presented with three options and Coun. Zeni Maartman made the motion to go with the most fiscally responsible, saying council’s “responsibility to the taxpayers is of utmost importance.”
Councillors Ben Geselbracht, Tyler Brown and Don Bonner all spoke against the motion, preferring an option that would have updated the city’s policy to allow only socially responsible investments.
“I think if you declare a climate emergency, if you put forward values, you have to live by them…” Brown said. “Essentially, to delay is to deny a better future for our children and grandchildren.”
Geselbracht said the fossil-fuel industry is causing “extreme environmental degradation” and not to consider that in decision-making is “denialism.”
He said the city needs to accept lower returns on investment now in order to take leadership and help create demand for socially responsible investment opportunities, and Coun. Don Bonner agreed that the city “should be making these policies that say we’re interested in becoming part of the solution and not part of the problem.”
Mayor Leonard Krog and Coun. Ian Thorpe didn’t think that the City of Nanaimo changing its investment strategy would have much of an impact in combatting climate change. Krog said he wants “practical solutions” and Thorpe said fiscal responsibility is a mandate of city council.
“The reality is that a drastic change to our investment policy, in my opinion, will have absolutely zero beneficial effect on the global climate situation, absolute zero. What it will affect is our city’s revenue stream and that in turn will affect our taxation and our ability to fund future projects,” Thorpe said.
Coun. Erin Hemmens said she favoured a compromise option that would have moved 10 per cent of the city’s portfolio into socially responsible investments, saying she didn’t think taxpayers would support moving 100 per cent of investments there.
“While I do believe it’s our job to be leaders in the city and bring new ideas forward and to kind of be at the leading edge of that, I also think we have to respect that we need to represent a great number of people,” Hemmens said.
When the vote was called, Maartman’s motion passed 5-4 with Brown, Bonner, Hemmens and Geselbracht opposed. Geselbracht then attempted another motion on the same topic, was deemed out of order, challenged that decision and lost his challenge 7-1.
The finance and audit committee’s recommendation will still need to go to the council table for consent.