Municipalities, Pension Plans, and Fossil-Fuel-Free Bonds

On November 2, Langley City Council received a delegation from World Beyond War. One of their requests was for municipalities to divest from companies involved in the fossil-fuel industry.

In BC, municipalities and regional districts are limited to where they can invest funds. Investment is limited to products offered through the Municipal Finance Authority (MFA). Local governments can also invest in provinces, other local governments, and the federal government. Local governments can put money in savings accounts or guaranteed investment certificates (GICs.)

The Municipal Finance Authority is “owned” by all local governments in BC and had $3.2 billion in pooled short-term investments on behalf of local governments.

For 2-5 year investments, municipalities can invest in fossil-fuel-free bonds or bonds that could include companies involved in the fossil fuel industry.

Metro Vancouver Regional District board recently passed a policy to no longer invest in the fossil-fuel industry. The MFA’s fossil-fuel-free bonds enable this option.

People elected to local governments have been calling on the MFA to provide fossil-fuel-free investment options.

Another major investor that is “part-owned” by all local governments is the Municipal Pension Plan (MPP). The MPP holds close to $60 billion in investments used to support municipal workers’ pensions.

In 2015, people elected to local governments called for the MPP to study divestment from the fossil fuel industry. The MPP recommended against this, and instead proposed a Climate Action investment strategy.

Currently, the MPP is signed on to the Climate Action 100+ program to “engage systemically important greenhouse gas emitters and other companies across the global economy that have significant opportunities to drive the clean energy transition and help achieve the goals of the Paris Agreement.”

The program’s goals are to “improve governance on climate change, curb emissions and strengthen climate-related financial disclosures.”

For more information on why the MPP took this approach, please read “Primer on Fossil Fuel Divestment.”

Municipal governments can help reduce greenhouse gas emissions directly through how we build our communities and where we put our money.