A Divest & Invest Guide for Local Governments

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February 27, 2019
By: Satya Rhodes-Conway, James Irwin, & Matthew Braunginn

Local leaders are careful stewards of their communities’ resources, and plan with caution to avoid future catastrophe. Climate change poses a tremendous risk to communities and the investments that their retirees and others will rely on in the future. There is a growing toolbox of measures cities can take to combat climate change. One of these tools, divestment from fossil fuels, is ethical, viable, and a moral imperative.

 

Fortunately there is also a significant and growing array of reinvestment opportunities, from traditional market funds to targeted community investments. Some of these require more diligence and financial sophistication than others. In all cases, it is possible to construct an investment structure that mitigates financial and carbon risk while investing in projects that offer market returns and fight climate change. Successful divest/invest strategies are a matter of political will. As the saying goes, political will is a renewable resource in and of itself.

 

First steps a city should take:

  • Determine if you have funds that should be divested and work to reduce your carbon risk. Reinvest the capital moved from fossil fuel stocks – consider a Green Bank or Revolving Loan Fund
  • Identify what opportunities there are to attract “fossil free” investments to sustainable projects in your city via green bonds or other mechanisms
  • Ensure that any jobs created through this process are quality jobs